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

A September 27th article explained that Madoff trustee Irving Picard will sue Bernard Madoff's brother, sons and a niece this week for $198 million dollars.  Trustee Picard could assert causes of action in the suit for: negligence, breach of fiduciary duty and possibly unjust enrichment.  He will be filing suit because he seeks to interdict assets and then equally distribute them to defrauded Madoff investors, as contemplated by the Securities Investor Protection Act.

The $198 million dollar suit is however, just one of the steps trustee Picard is taking to recover assets on behalf of defrauded Madoff investors.  Trustee Picard for instance, retained the corporate financial consulting company FTI on December 30, 2008.  A May 5, 2009 affidavit indicates that FTI is basically conducting a financial fraud investigation on behalf of the trustee, regarding the assets of Bernard L. Madoff Investment Securities, LLC.

As described at the August 5, 2009 "Asset Search News Roundup", trustee Picard is also trying to recover assets by suing Ruth Madoff for $45 million dollars.  He brought the suit under the United States Bankruptcy Code (title 11, United States Code) and New York State's version of the Fraudulent Conveyance Act, codified at N.Y. Debt. & Cred. Law §§270-281.  Trustee Picard has similarly used some of these laws as a basis for the "clawback" lawsuits against the Madoff investors described by my "Asset Search News Roundup" from September 4, 2009.

In these clawback suits, investors' profits from Madoff's Ponzi scheme are deemed presumptively fraudulent and can be subject to a turnover order.  Meanwhile, an alleged 82-year-old former Madoff investor filed a letter about clawback with the Bankruptcy Court.  The letter, (redacted below for privacy reasons), claims that this investor would be forced into bankruptcy, if clawback is ultimately applied to him: 

  Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

An "Asset Search In A Chapter 7 Bankruptcy Case" talks about researching a debtor's bankruptcy petition and other court filings to help determine whether there is any fraudulently concealed bankruptcy estate property.  This type of research recently resulted in the filing of a bankruptcy fraud complaint against Kelvin Daniels, who is a New York City cop. 

Mr. Daniels is accused in U.S.A. v. Daniels 7:09−mj−02103, of fraudulently concealing bankruptcy estate property during his New York bankruptcy in the summer of 2005.  A Department of Justice press release claims that Mr. Daniels failed to schedule and otherwise disclose his deeded property on Third Street in Newburgh, New York. 

A bankruptcy debtor who conceals an asset, fails to list an asset on schedules, undervalues an asset or provides a misleading description of an asset, may violate 18 U.S.C. §152 (1) Fraudulent Concealment (punishable fine up to $500,000 for corporations and $250,000 for individuals and /or imprisonment up to five years).

Other bankruptcy fraud statutes which commonly relate to asset concealment include:

1. 18 U.S.C. §152 (2) (False oath or account);
2. 18 U.S.C. §152 (3) (False declarations);
3. 18 U.S.C. §152 (7) (Fraudulent pre-petition transfers or concealment);
4. 18 U.S.C. §157 (Bankruptcy fraud).

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

The September 23rd "Asset Search News Roundup" first discusses the importance of international cooperation, especially when assets are concealed by money laundering in multiple jurisdictions.  It then mentions how U.S. and Chinese authorities cooperated to recover cultural relics including dinosaur fossils from as early as 100 million years ago.

+An offshore asset search can sometimes require the use of letters rogatory or the other formal methods of international cooperation listed in "Eliciting Evidence From Foreign Bank Witnesses".  This kind of international cooperation is an essential element in the fight against money laundering in multiple jurisdictions.

This is of course recognized by Mr. Paul Vlaanderen, who is the president of the leading transnational anti-money laundering organization, the Financial Action Task Force.  As Mr. Vlaanderen stated during his August 21, 2009 speech in Lesotho: "Some jurisdictions expose us all to unacceptable risk by failing to implement effective AML/CFT [anti-money laundering / counter-terrorist financing] systems".

++Ten days ago, U.S. officials turned over to China cultural relics including the partial dinosaur skull pictured below.  Some of these relics were from as early as 100 million years ago.  As reported by "US turns over seized prehistoric relics to China", the relics were contraband and had been recovered because of U.S.- Chinese cooperation.  The Ministry of Land and Resources in China had apparently sought the relics which had been interdicted in Richmond, Virginia and at the Chicago O'Hare International Mail Facility. 

 Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

Five Minnesota money managers and a dozen business entities including The Oxford Private Client Group of the Van Dusen mansion in Minneapolis, have been sued by 57 investors for alleged securities fraud.  The Minneapolis Star Tribune wrote about the lawsuit in "Investment fraud suit grows more complex" and earlier on July 12, 2009. 

The investors' second amended complaint at part 1 and part 2 herein, pleaded causes of action for: fraud, conversion, civil theft, negligent misrepresentation, civil conspiracy, deceptive trade practices, breach of contract, and breach of fiduciary duty.  It asserted that the money managers had converted about $16 million belonging to the investors by inducing the investors to place monies in a foreign currency arbitrage program. 

This second amended complaint specifically claimed that some of the money managers had aired radio broadcasts to solicit investments for the foreign currency arbitrage program.  One money manager reportedly described this arbitrage program to two investors, by drawing what might be nothing more than a meaningless link chart:   

• Email This
• Print
• Comments
• Trackbacks

The criminal conviction of former Taiwanese President Chen Shui-bian; the death of suspected Ponzi schemer Danny Pang; and the dismissal of a Holocaust-era assets case; are the subjects of this week's "Asset Search News Roundup":

•  Former Taiwanese President Chen Shui-bian's arrest was discussed in the November 19, 2008 "Asset Search News Roundup".  As the New York Times and / or the BBC reported, former President Chen Shui-ban has now been convicted of public corruption charges and for hiding monies by laundering them through foreign financial accounts in Switzerland.

• "No apparent foul play in financier Pang's death" from Reuters, provided information about the circumstances of Mr. Danny Pang's death.  As my May 4, 2009 "Asset Search News Roundup" explained, Mr. Danny Pang had been arrested for the suspected structuring of deposits, in violation of 31 U.S.C. §5324.  He was additionally accused of defrauding investors out of hundreds of millions during a Ponzi-like securities fraud.

• On August 11, 2009 a New York appellate court decided Schoeps v Andrew Lloyd Webber Art Found. (2009 NY Slip Op 06155).  The August 11th decision, affirmed the trial court's dismissal of the Holocaust-era art restitution claim brought by Mr. Schoeps in Schoeps v Andrew Lloyd Webber Art Found. (2007 NY Slip Op 52183 {U}). 

Raymond Dowd, Esq. who spoke at the June 2009 Holocaust Era Assets Conference in Prague, analyzed the August 11th decision in "German and Other Foreign Heirs in New York: Standing To Sue Clarified In Andrew Lloyd Weber Picasso Case". 

As my April 30, 2009 article "Holocaust-Era Art Restitution Revisited" stated, Mr. Schoeps was also a party to another art restitution case.  In Schoeps v. The Museum of Modern Art, et. al., Index No. 1-07-CV-11074, Mr. Schoeps had argued that he was entitled to restitution of the two Picassos, “Boy Leading a Horse” & “Le Moulin de la Galette”.

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

Today's article is based on an ongoing investigation, the facts of which are changed below for privacy reasons:

Ralph claimed in his New Jersey divorce that he had a low net worth, although he was a medical doctor who once had a thriving private practice.  Ralph's claim made his divorcing wife Nancy believe that Ralph had hidden marital assets.  Nancy therefore gathered up copies of documents she obtained during the pretrial discovery phase of the divorce and before.  

These documents included Ralph's: passport, statements for airline frequent flyer miles, phone bills and financial records.  Nancy gave them to Mike, who was a licensed private investigator she had retained to perform an asset search regarding Ralph.  After conducting research for more than a month, Mike told Nancy that Ralph had hidden monies in foreign bank accounts and in Miami. 

Mike asserted that Ralph had secretly maintained about $2.5 million dollars in foreign banks located in high-risk geographical locations known for money laundering.  Ralph had also supposedly hidden another $85,000 dollars in a Miami bank account.  Mike then explained that he could perform the necessary "bank account searches" which would identify all of Ralph's secret accounts.

• Email This
• Print
• Comments
• Trackbacks

This "Asset Search News Roundup" is about two New York criminal defense attorneys who among other things, were accused of violating privacy law by possessing illegal eavesdropping equipment.  On August 20, 2009, attorneys Robert Simels and Arienne Irving were found guilty of importing and possessing illegal eavesdropping equipment in violation of 18 U.S.C. §§2512 (1) (a) & (b). 

Ms. Irving was eventually acquitted of all criminal charges on December 4, 2009 and a U.S. Attorney's press release mentions that Mr. Simels was sentenced to 168 months of prison.  Mr. Simels' jury verdict sheet additionally reveals that he was convicted of several witness tampering charges along with the bribery charge outlined by his July 10, 2009 superseding indictment.  He had apparently committed these crimes in connection with his representation of Mr. Shaheed Khan in a federal criminal case. 

An August 20, 2009 Drug Enforcement Administration press release called Mr. Khan a drug kingpin and claimed that Mr. Simels and Ms. Irving had imported the illegal eavesdropping equipment from Guyana, where Mr. Khan had used it.  My next article will again mention U.S. privacy law.  This upcoming article is called "Violating Federal Law In An Asset Search".  It describes how a private detective may have conspired to illegally access customer account information maintained at a U.S. bank.

(Edited December 12, 2009)

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

The U.S. Department of Justice believes that seizing assets from Mexican drug cartels can generally help combat cross-border murder, kidnapping, robbery, etc.  Through the person of the Criminal Division's Assistant Attorney General Lanny A. Breuer, the Department of Justice reiterated its desire to seize the illicit assets of illegal narco-traffickers.

Assistant Attorney General Breuer stated at a July 22, 2009 conference, that U.S. asset forfeiture and money laundering laws gave authorities the necessary tools to trace and then seize illicit drug-related assets.  He stressed the importance of disrupting the finances of narco-traffickers because their existence was fueled by large sums of cash.  The Assistant Attorney General also said that prosecutors should conduct financial investigations and add asset forfeiture claims to indictments in their criminal cases. 

He additionally stated in a July 9, 2009 hearing before a committee of the U.S.House of Representatives, that: "... seizing the financial infrastructure of the cartels undermines their very existence".  During the Assistant Attorney General's July 9 and July 22 statements, he specifically mentioned Operation Xcellerator, which had targeted the Sinaloa drug cartel.  A May 17, 2007 news release also discussed Sinaloa narco-trafficking.  It.claimed that Ismael Zambada Garcia, (as a supposed Sinaloa trafficker), had laundered drug monies via the following financial network:

• Email This
• Print
• Comments
• Trackbacks

I discussed "clawback" in my July 18, 2009 "Asset Search News Roundup" as well as in "Clawback Caused By A Ponzi Scheme".  These articles explained that assets may be recovered by clawback which can force an investor to return presumptively fraudulent profits, as mentioned by In re: Bayou Group LLC, et. al., 396 B.R. 810 (Bkrtcy S.D.N.Y. 2008).

The September 1, 2009 article "Madoff Liquidator May ‘Claw Back’ Charities’ Profits" similarly talks about clawback.  It explained that SIPC trustee Irving Picard may file a new round of clawback claims to recover assets dissipated during Bernard Madoff's Ponzi scheme.  If filed as adversary proceeding complaints in bankruptcy court, trustee Picard's new clawback claims would probably be based on:

1. 11 U.S.C. §542 (Turnover of property)
2. 11 U.S.C. §544 (Trustee as lien creditor)
3. 11 U.S.C. §547 (Preferences)
4. 11 U.S.C. §548  (Fraudulent transfers and obligations)
5. 11 U.S.C. §550 (Liability of transferee of avoided transfer)
6. 11 U.S.C. §551 (Automatic preservation of avoided transfer)
7. N.Y. Debtor Creditor Law §§270 et. seq.

Trustee Picard's effort to recover assets through clawback claims in the Madoff case, has already included his filing of these two adversary proceeding complaints:

 Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

An August 25 Newsweek article mentioned that Federal Reserve Chairman Ben Bernanke had fallen prey to identity thieves after Mr. Bernanke's wife had her purse stolen.  One of the people believed to have been responsible for that identity theft is Clyde Austin Gray, Jr.  Mr. Gray had conspired to commit identity theft nationwide, according to the single-count criminal information in U.S.A. v. Gray, Index No. l:09-CR-00326.  A July 22, 2009 factual statement shows that Mr. Gray was a ringleader who had stolen over 2.1 million dollars from at least ten financial institutions such as SunTrust Bank of Atlanta and M & T Trust in Buffalo. 

He and other identity thieves had acquired bank account numbers, credit cards, driver's licenses and other identifying information through pick pocketing, mail theft, the use of "insiders" at professional offices, etc.  The August 25th Newsweek article additionally mentioned that Mr. Gray pleaded guilty in July to conspiracy to commit bank fraud (18 U.S.C. §1349).  The Newsweek article also observed that identity thieves can victimize both the "mighty and powerful" and "hapless consumers".  

In a completely different identity theft case I have written about, a major illegal narcotics trafficker lost the $6.3 million he had hidden in a Cayman Island bank account.  As set forth in "A Tax Fraud & Identity Theft From Miami", that trafficker's $6.3 million was transferred by an identity thief from the Cayman Island bank account to Mexico.  The identity thief had accomplished this transfer by impersonating the trafficker in two letters to the Cayman Island bank.

The trafficker however, soon learned that he had lost his millions because of the identity thief's letters and then killed the identity thief.  Sanitized copies of these letters used by the identity thief to impersonate the trafficker, are reproduced below:

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks