Asset Search Blog : Asset Search & Hidden Assets : Lawyer & Attorney Fred Abrams : Tax Fraud, Asset Investigations

The "Asset Search News Roundup" for this week focuses on the $1 billion asset forfeiture claim U.S. prosecutors brought against former Stanford Group CFO James F. Davis.  This $1 billion dollar claim was initially in the June 18, 2009 criminal information filed against Mr. Davis in U.S.A. v. Davis 4:09−cr−00335−1.  The information claimed that Mr. Davis had participated in the same multi-billion dollar Ponzi scheme Allen Stanford is accused of.

On August 27th Mr. Davis pleaded guilty to the fraud and obstruction charges part of his information.  At that time he consented to the forfeiture of up to $1 billion dollars in assets, as mentioned by the Court's Agreed Order of Forfeiture.  Furthermore, the last paragraph of a U.S. Department of Justice press release indicates that the case apparently involves global asset forfeiture, with assets being sought in Canada, the United Kingdom, Switzerland, etc.

"Pursuing Forced Collection Proceedings Against A Fraudster Like Madoff", described a financial fraud case in which Geneva counsel sought to interdict illicit assets in both Switzerland and the U.S.  That case demonstrates the compelling fact that forfeiting / seizing illicit assets in Switzerland may be easier than in the U.S.  This is so because Switzerland has a lower legal threshold for seizing illicit assets, than respectively exists in the U.S.

Copyright 2009 Fred L. Abrams

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In "Nominees & Hidden Assets" I emphasize the fact that some beneficial owners hide their assets through nominees (i.e. representatives).   I wrote "Nominees & Hidden Assets" because recognizing a beneficial owner's use of nominees can be critical to a successful asset search, debt collection proceeding, etc.  Other articles I have written separately show that people from a broad range of backgrounds might possibly use nominees to hide assets. 

"Three African Heads of State Sued For Hiding Assets" discusses President Denis Sassou-Nguesso, President Obiang Nguema and late President Bongo, all of whom had been accused of using nominees to hide assets in France.  "Laundering Holocaust-Era Art?" raises the issue of whether a former vice president and director of MoMA had used N.Y. art gallery owner Curt Valentin in 1939, as the nominee purchaser of Nazi-looted art transferred in Switzerland.

"A Divorce & Trade-Based Tax Fraud / Money Laundering" is about the trade-based tax fraud and money laundering scheme formerly facilitated through CNC Associates, Inc.--  which had been a nominee of California industrialist Mr. Gene Haas.  My August 11, 2009 "Asset Search News Roundup" additionally reports that former congressman William Jefferson had likely used various companies as nominees, in connection with his particular crimes. 

Finally, although I have mentioned the link chart below in my previous articles, I do so once again.  I now refer to it because the same highlights how one divorcing husband hid marital assets by using a nominee shell company along with "bearer shares".  Said link chart and the divorcing husband's formation of that nominee company, are more fully discussed at: "Bearer Shares & An Asset Search".

Copyright 2009 Fred L. Abrams

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My August 17th "Asset Search News Roundup" referred to the settlement of the case over the "John Doe" summons served on UBS in Miami.  As more fully discussed at "UBS & Its John Doe Summons", the IRS had brought the case to identify U.S. tax cheats who concealed their UBS bank accounts in abusive offshore tax avoidance schemes. 

The agreements settling the case are: the U.S. & Swiss Government Settlement, dated August 19, 2009 and the UBS Settlement With Consent To Public Disclosure.  Pursuant to the settlement, UBS is expected to supply the IRS with bank customer information belonging to about 4,450 suspected U.S. tax cheats.  UBS will also send the 4,450, (all of whom are believed to have secret Swiss bank accounts), this notice:

 

Furthermore, UBS is producing the customer information only under its tax treaties with the U.S., rather than the "John Doe" summons it was served with in Miami.  The first of these controlling agreements, is the October 2, 1996 "Avoidance of Double Taxation Treaty", described here.  The second is the January 23, 2003 Mutual Agreement, which clarified the earlier October 2, 1996 agreement.  These 1996 and 2003 tax treaties are examples of governmental authorities using formal cross-border cooperation, as described by my article: "Eliciting Evidence From Foreign Bank Witnesses".

 (Edited May 15, 2010)

Copyright 2009-2010 Fred L. Abrams

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Albert Gonzalez was arrested in the Southern District of Florida on May 8, 2008 pursuant to this warrant:

The arrest arose out of Mr. Gonzalez's alleged computer hacking / identity theft scheme which was later outlined in a May 14, 2008 New York superseding indictment.  This superseding indictment in U.S.A. v. Yastremskiy, et. al., 08-cr-00160, claimed that Mr. Gonzalez and his co-defendants had stolen credit card information through computer intrusions at Dave & Busters, Inc. restaurants.  Mr. Gonzalez and / or his co-defendants were accused of violating federal laws including but not limited to: conspiracy (18 U.S.C. §371); fraud related to computers (18 U.S.C. §1030); wire fraud (18 U.S.C. §1343 ); access device fraud (18 U.S.C. §1029); aggravated identity theft (18 U.S.C. §1028A); etc.  

Almost three months after the superseding indictment was filed against him in New York, Mr. Gonzalez was next indicted in Massachusetts.  According to the August 5, 2008 Massachusetts indictment in U.S.A. v. Albert Gonzalez, 08-cr-10233, Mr. Gonzalez had hacked computers which stored credit card information for BJ's Wholesale Club, DSW, OfficeMax, Boston Market and others.

Like the New York superseding indictment, the Massachusetts indictment accused Mr. Gonzalez of: conspiracy (18 U.S.C. §371); fraud related to computers (18 U.S.C. §1030); wire fraud (18 U.S.C. §1343 ); access device fraud (18 U.S.C.§1029); and aggravated identity theft (18 U.S.C. §1028A).  The Massachusetts indictment also essentially asserted that Mr. Gonzalez had hidden the proceeds of his hacking / identity theft scheme by money laundering through multiple jurisdictions.

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The settlement of the UBS "John Doe" Summons case in Miami and U.S. Secretary of State Hillary Clinton's seven-nation tour of Africa, are covered by the August 17th "Asset Search News Roundup":

• The case described by "UBS & Its 'John Doe' Summons" settled last week, as revealed by the docket report in U.S.A. v. UBS AG, 1:09-cv-20423.  Although the details of the settlement were not yet released at the time of this writing, the Court issued its August 12th Order closing the case.

• The article "Hillary Clinton improves ties with Nigeria" discussed the public corruption problem / lack of transparency in Nigeria, while reporting about U.S. Secretary of State Hillary Clinton's seven-nation tour of Africa.  It cited Nigeria's poor ranking by the leading anti-bribery organization, Transparency International.  Transparency International annually ranks countries in its "Corruption Perception Index", as I explained in "White-Collar Crime & A Former Top Cop".

This past July, Transparency International also described public corruption in Kenya-- another country part of Secretary Clinton's seven-nation tour.  In July, Transparency International specifically labeled the Kenya Police as the most corrupt institution in all of East Africa, as indicated by my July 12, 2009 "Asset Search News Roundup".  Pictured below is Secretary Clinton at a town hall meeting in Kenya on August 6, 2009, during her seven-nation tour of Africa.

Copyright 2009 Fred L. Abrams

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Some post-judgment creditors, divorcing spouses and other private litigants use a domestic summons / subpoena to elicit an adversary's bank account information from a foreign bank witness.  Under limited circumstances, these private litigants might serve a domestic summons / subpoena, as set forth by the Court in First American Corp. v. Price Waterhouse, 154 F.3d 16 (2d Cir. 1998). 

Assuming that a subpoenaed foreign bank witness refused to comply with a domestic summons / subpoena because of bank secrecy laws, then the issues raised by Old Ladder Litigation Co. LLC. v. Investcorp Bank B.S.C, et. al., No. 08-CV-00876 (S.D.N.Y. May 29, 2008), can be relevant.  U.S. authorities also sometimes elicit bank account information by serving a domestic summons on a foreign bank witness. 

The IRS for example, served a domestic summons on UBS AG, headquartered in Zurich, as discussed in "UBS & Its 'John Doe' Summons" & "A Domestic Subpoena / Summons In An Offshore Asset Search".  U.S authorities might also serve a subpoena on a foreign bank witness by relying on In Re Grand Jury Proceedings (Bank of Nova Scotia), 740 F.2d 817 (11th Cir.), cert. denied, 469 U.S. 1106 (1985).   Other methods used to elicit evidence from a foreign bank witness, (besides domestic summonses / subpoenas), often rely on cross-border cooperation. 

Formal methods using cross-border cooperation can involve: letters rogatory (a.k.a. legal assistance requests); executive orders; mutual legal assistance or other treaties like tax information exchange agreements.  The formal methods of obtaining evidence from foreign witnesses are generally discussed in Section 274 of the United States Attorneys' Manual.  At 9.7.10.2 (07-28-2003), Obtaining International Cooperation, the IRS Manual additionally mentions some of them, in connection with international asset forfeiture.

Copyright 2009 Fred L. Abrams

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The jury's August 5, 2009 verdict in U.S.A. v. Jefferson, found former congressman William Jefferson guilty of hiding bribery proceeds by laundering them, as described by the 12th, 13th and 14th counts of his indictment.  The August 5, 2009 verdict and a U.S. Department of Justice press release also state that Mr. Jefferson is guilty of soliciting bribes, honest services wire fraud, racketeering and conspiracy. 

An August 6, 2009 jury verdict similarly found that about $470,000 dollars in two bank accounts were criminal proceeds subject to asset forfeiture.  Under the August 6 verdict, stock shares in companies likely used as Mr. Jefferson's nominees, can be forfeited.  These stock shares are for a Nigerian company, "W2-IBBS"; a Ghanaian company, "International Broad Band Services, LLC"; a Delaware company, "Multi-Media Broad Band Services, Inc."; and a company in Indiana, "iGate, Incorporated".

As was previously reported by the media, investigators in U.S.A. v. Jefferson had interdicted $90,000 in a freezer on August 3, 2005, pursuant to a search warrant executed at Mr. Jefferson's Washington D.C. home.  A search warrant of Mr. Jefferson's congressional office had also been executed along with the one below for Mr. Jefferson's New Orleans home: 

A challenge prosecutors in U.S.A. v. Jefferson undoubtedly faced, was the fact that part of Mr. Jefferson's bribery scheme included cross-border elements in Nigeria, Ghana and other African countries.  To acquire evidence from foreign witnesses, prosecutors therefore sought relief in the form of mutual legal assistance and via letters rogatory.  These same methods are commonly used to obtain evidence from foreign bank witnesses and are discussed in my upcoming article, "Eliciting Evidence From Foreign Bank Witnesses".

Copyright 2009 Fred L. Abrams

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"Goering Hoards Nudes, Jingles Emeralds in Catalog of Looted Art", quotes Reichsmarschall Hermann Goering as having said: "During a war everybody loots a little bit".  The May 28, 1945 Time Magazine article "Art: Goring's Beauties", valued Goering's collection of Nazi-looted art at $200,000,000. 

Here is a June 9, 1945 photograph of part of that art collection recovered from Goering, as it was being cataloged and temporarily stored near Berchtesgaden in the German Bavarian Alps:  

  Photo: National Archives and Records Administration

  

Since more than 20% of Europe's art is believed to have been looted by the Nazis, it is no surprise that Holocaust-era art restitution cases continue to this day.  Articles I have written about these cases include:

*Searching For Nazi-Looted Art

*Mr. Curt Valentin's Nazi-Looted Art

*Holocaust-Era Art Restitution Revisited

*Laundering Holocaust-Era Loot?

*Asset Search News Roundup: June 25, 2009

Copyright 2009 Fred L. Abrams

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Bernard Madoff's wife Ruth, is featured in this week's "Asset Search News Roundup".  I explained in my June 27, 2009 post, "Will Ruth Madoff Keep Her Remaining $2.5 Million In Assets?", that Madoff trustee Irving Picard could file a viable lawsuit against Ruth Madoff.  Last week this actually happened, when trustee Picard filed his July 29 complaint in Irving H. Picard v. Ruth Madoff, Adversary Proceeding 09-01391, U.S. Bankruptcy Court for the Southern District of New York. 

The July 29 complaint seeks almost $45 million from Ruth Madoff under the Bankruptcy Code and New York State's version of the Fraudulent Conveyance Act codified at N.Y. Debt. & Cred. Law §§270-281.   The complaint asserts that Ruth Madoff was involved in fraudulent conveyances / was the wrongful transferee of assets from Bernard Madoff. 

To ultimately determine whether Ruth Madoff was a wrongful transferee, the Court will likely look for "badges of fraud", as explained by "Bernard Madoff & The Badges Of Fraud".  In analyzing any asset transfers to Ruth Madoff, the Court might particularly rely on Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574 (2d Cir. 1983).  According to Kaiser, the following can be badges of fraud in relation to an asset transfer:

(1) the lack or inadequacy of consideration;

(2) the family, friendship or close associate relationship between the parties;

(3) the retention of possession, benefit or use of the property in question;

(4) the financial condition of the party sought to be charged both before and after the transaction in question;

(5) the existence or cumulative effect of a pattern or series of transactions or course of conduct after the incurring of debt, onset of financial difficulties or pendency or threat of suits by creditors; and

(6) the general chronology of the events and transactions under inquiry. (Id.)
   

Copyright 2009 Fred L. Abrams 

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A true beneficial owner may try to hide his / her assets by smuggling cash across a country's border, into another jurisdiction.  My July 27th article, "A Yola, A Police Sergeant & A Restauranteur", mentioned the issue of smuggled cash.  "Smuggling Cash Across Iraq's Border" and "Offshore Bank Accounts In Liechtenstein", also raised this issue. 

According to a July 21, 2009 press release, nearly $100,000 was recently seized as it was allegedly smuggled in a box of laundry detergent at a Laredo, Texas port of entry.  This too essentially happened on March 1, 2009 in Hldalgo, Texas, when a box of laundry detergent and a spare tire were reportedly used in an attempt to smuggle the $561,132.00 pictured below.  

 

 

 Images: U.S. Customs and Border Protection

  

Copyright 2009 Fred L. Abrams

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