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

Securities fraudster Trevor Cook, assets that might have been misappropriated from former East Germany, and over $2 million is interdicted at a U.S.-Mexican border crossing:
 

• Ex-Minneapolis money manager and securities fraudster Trevor Cook was sentenced a week ago to serve twenty-five years in prison for violating 18 U.S.C. §1341 (mail fraud) and 26 U.S.C. §7201 (tax fraud).  As Mr. Cook's sentencing memorandum reveals, he had earlier argued that the Court should impose just a twenty-year sentence. 
  
   
• Swiss banking documents that might memorialize the misappropriation of assets by parties and people's organizations from former East Germany, were turned over to the German Embassy in Bern on July 14th.  A July 15th media release issued by the Swiss Federal Department of Foreign Affairs reported that: "Germany had previously asked Switzerland for the documents in order to obtain further information about illegal financial movements before and after the fall of the Berlin Wall."
   

• Federal agents for the Calexico downtown port of entry at the U.S.-Mexican border interdicted more than $2 million dollars which possibly belongs to narco-traffickers.  The $2 million pictured below, was uncovered on August 8th during a vehicle inspection that included the use of  a currency-firearm detector dog.  A press release asserts that the $2 million had been hidden in luggage, a duffle bag and a plastic tub that were placed inside a vehicle.
   

Photo: U.S. Customs and Border Protection

Copyright 2010 Fred L. Abrams

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425 pounds of hidden marijuana; Transparency International; and the defenses to a clawback lawsuit; are discussed at the August 5th "Asset Search News Roundup":
  

• Federal agents at a U.S.-Mexican land crossing interdicted more than 425 pounds of marijuana on July 24, 2010.  As "Marijuana Encased in Cement Seized by CBP" explains, the marijuana had been concealed in the shipment of concrete lawn furniture partly shown below.
  
  
  

• Along with its news release dated July 28th, Transparency International released its sixth annual progress report.  The report rates countries on their performance under The OECD Anti-Bribery Convention and highlights the problem of corrupt politically exposed persons.
  
   
• "Madoff trustee could sue 1,000 Ponzi victims" refers to the new clawback lawsuits Madoff trustee Irving Picard is expected to commence.  These lawsuits could be filed against investors who benefited from Madoff's Ponzi scheme by acquiring so-called "false profits".  Investors subject to clawback in the aftermath of a securities fraud, sometimes assert that the Court lacks in personam jurisdiction in their case.  Other possible defenses to a clawback lawsuit are that an investor acted in good faith, made an exchange for value, or was a secondary, tertiary, etc. transferee.
   
   

Copyright 2010 Fred L. Abrams

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"Forced Collections Against A Fraudster Like Madoff" & "Competing Over Mr. Allen Stanford's Assets" described the problem of competing claimants trying to recover from a limited pool of funds.  This same problem has been encountered by the plaintiffs in The Lautenberg Foundation v. Madoff, 09-Civ-00816, whose lawsuit I mentioned at "Suing Peter Madoff For Bernard Madoff's Securities Fraud".

The Lautenberg plaintiffs are damaged investors of Bernard Madoff's Ponzi scheme and their lawsuit alleges they were injured by Bernard's younger brother Peter.  As mentioned by their lawsuit, Peter Madoff is allegedly liable for his supposed tortious conduct while working as a "control person" at Bernard L. Madoff Investment Securities LLC  ("BLMIS").

While the Lautenberg plaintiffs argue that Peter Madoff is liable to them, a complaint filed in an adversary proceeding claims that the Lautenberg lawsuit tries to wrongly recover BLMIS assets from Peter Madoff.  This May 27, 2010 adversary complaint filed by Bernard Madoff Trustee Irving Picard, asserts that the Launtenberg plaintiffs were participants in Trustee Picard's claims process for damaged investors.

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Today's "Asset Search News Roundup" examines the criminal investigation into HSBC and the SEC's case against Kenneth Wayne McLeod's estate:

• "U.S. Widens Tax Inquiry Into HSBC" reports that prosecutors are "ramping up their criminal investigation" of HSBC after U.S. taxpayers allegedly used foreign HSBC accounts to hide undeclared assets.  My April 21, 2010 "Asset Search News Roundup" mentioned these same U.S. taxpayers, who were accused of using foreign HSBC accounts to conceal assets from the IRS. 

• "Hundreds of Federal Agents Fall Victim to Ponzi Scheme" essentially describes the June 24, 2010 securities fraud case brought by the SEC against the estate of recently deceased Kenneth Wayne McLeod.  Mr. McLeod died from a self-inflicted gunshot wound on June 22nd in Jacksonville, Fla.  He allegedly ran a 22-year Ponzi scheme at his retirement benefits consulting firm and is thought to have defrauded agents from the FBI, ICE and DEA and others, out of $34 million dollars.  The securities fraud complaint filed by the SEC against Mr. McLeod's estate is available here:

 

 Copyright 2010 Fred L. Abrams

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A frequently asked questions Web page published by the Financial Action Task Force discusses multilateral initiatives and states: "Large-scale money laundering schemes invariably contain cross-border elements."  The Trevor Cook receiver undoubtedly recognizes the foregoing because he is tracking receivership estate assets across international borders, on behalf of investors damaged by Ponzi schemer and securities fraudster Trevor Cook.

Among other things, the Cook receiver is trying to interdict assets which may have been laundered through Mr. Cook's purchase of real property in Canada and Panama and by Mr. Cook's transfer of funds into Swiss bank accounts.  Swiss authorities have already frozen a one million dollar bank account at UBS AG connected to Mr. Cook, on the ground of suspected money laundering.

Swiss authorities probably froze this bank account by relying on anti-money laundering legislation including Art. 305bis of the Swiss Criminal Code.  Art. 305bis says in part:   

“Whoever commits an act suited to frustrate the determination of the origin, the discovery or the confiscation of assets that he knows or should know derive from a crime, shall be punished with imprisonment or a fine"

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Discussed today are Arizona's attempt to stop cross-border crime and Minneapolis Ponzi schemer Trevor Cook:
 

+"Goddard launches plan to fight money laundering; Rocky Point Police Chief ambushed" states that Arizona Attorney General Terry Goddard has adopted a new anti-money laundering plan.  This plan is part of Arizona's effort to combat narco-traffickers engaged in various cross-border crimes.  As "A Strategy Of Seizing Sinaloa Drug Cartel Assets" suggested, asset forfeiture can be a critically important element in an anti-money laundering program.

++The June 16th "Asset Search News Roundup" last mentioned securities fraudster and Ponzi schemer Trevor Cook.  The Cook receiver recovering receivership estate assets on behalf of Cook's damaged investors filed a motion and supporting declaration for the reimbursement of expenses incurred this past May.  The Court's June 22nd docket entry additionally reflects that Mr. Cook is next scheduled to be sentenced in his criminal case on July 26, 2010 at 3:00 PM.

Copyright 2010 Fred L. Abrams

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The financial fraud investigation connected to Minneapolis money manager Trevor Cook is thought to have widened; Andrew B. Silva is sentenced in Virginia for tax fraud; and the delay in disclosing the names of some UBS AG bank customers:

• "FBI now is investigating Trevor Cook's associates" reports that governmental authorities have broadened their financial fraud investigation of Trevor Cook's Ponzi scheme.  I earlier wrote about Mr. Cook's 33 minute plea hearing at the April 14, 2010 "Asset Search News Roundup".
   
• Bloomberg.com's article "Surgeon Avoids Prison for Plotting to Hide HSBC Cash" supplied the details of the June 11th sentencing of Andrew B. Silva in Virginia federal court.  As I wrote at A Doctor, A Lawyer & Bricks Of Cash In Switzerland, Andrew B. Silva had smuggled cash in packages containing less than $10,000 during his abusive offshore tax avoidance scheme.
   
• The August 23, 2009 Asset Search News Roundup referred to the settlement of the UBS "John Doe" summons case pursuant to U.S.-Swiss tax treaties.  "Swiss Parliament Passes UBS Bill, But the IRS Doesn’t Yet Have Names" too mentioned that settlement.  It explained that there has been a delay implementing the settlement, in disclosing the UBS AG bank customers who are suspected U.S. tax cheats.

Copyright 2010 Fred L. Abrams

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A financial investigator did "trash pulls" at an attorney's home to elicit financial intelligence about the attorney's client.  During one of these trash pulls an envelope bearing the name of a climate-controlled art storage facility was discovered. 

This discovery then led to the interdiction of a valuable painting hidden by the attorney's client at the art storage facility.  A second financial investigator was able to detect an adversary's foreign bank account by acquiring financial intelligence from an offshore check printing company. 

A third investigator gathered financial intelligence by searching for leads provided by an adversary's: passport, airline frequent flyer statements, country club membership, credit cards, phone bills and other records.  In addition to the foregoing, garnering financial intelligence may involve a wide variety of human intelligence and / or discovery devices.

"An Asset Search, Tax Fraud & Divorce" described an effort to access financial information via human intelligence.  It outlined how "Brian", (a former high-ranking official at the Financial Crimes Enforcement Network, who had earlier been an IRS special agent), and I sought human intelligence by interviewing a business associate of a divorcing husband.  Furthermore, some sophisticated asset concealment schemes like the one described at "Bearer Shares & An Asset Search", are ultimately only uncovered because of human intelligence.

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This "Asset Search News Roundup" highlights an updated tax protocol, a $40 million dollar asset recovery and the sentencing of New York securities fraudster Matthew D. Weitzman:

1. On May 27, 2010 the Organisation For Economic Co-Operation And Development announced that the United States and ten other countries agreed to an updated tax protocol which provides for increased cooperation in the fight against tax fraud with cross-border elements.
   
    
2. A U.S. Department of Justice press release explained that over $40 million dollars was recovered by asset forfeiture for injured investors in Japan who supplied funds to suspected Ponzi schemer Isamu Kuroiwa.  Mr. Kuroiwa is thought to have defrauded 30,000 plus victims out of about $1 billion dollars.
   
    
3. As more fully set forth here, securities fraudster Matthew D. Weitzman of Armonk, N.Y. was sentenced last week to 97 months in prison.  A June 10, 2009 SEC civil complaint  had alleged that an injured investor in late March 2009 discovered part of the fraud and apparently confronted Mr. Weitzman about it.  Page 13 of the sentencing memorandum in Mr. Weitzman's criminal case meanwhile, emphasized that Mr. Weitzman voluntarily reported his fraud to governmental authorities in late March 2009.
   
    

Copyright 2010 Fred L. Abrams

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An alleged Guatemalan drug lord and Peter Madoff are the subjects of the May 26th "Asset Search News Roundup":

"Suing Peter Madoff For Bernard Madoff's Securities Fraud" described plaintiffs' summary judgment motion pending against Peter Madoff in The Lautenberg Foundation v. Madoff, 09-Civ-00816.  Pages 8-10 of a May 20th reply memorandum shows that the Madoff plaintiffs are relying heavily on their claim that Peter Madoff was liable as a "control person".   
 

U.S. Treasury's Office of Foreign Assets Control recently added Waldemar Lorenzana Lima to its list of Specially Designated Narcotics Traffickers under the Foreign Narcotics Kingpin Designation Act.  A press release characterizes Mr. Lorenzana as a Guatemalan drug lord with ties to Mexico's Sinaloa narco-traffickers.  The instant Treasury designation freezes any of Mr. Lorenzana's assets subject to U.S. jurisdiction.  The image which follows, depicts Mr. Lorenzana's alleged trafficking organization.

Image: U.S. Treasury's Office of Foreign Assets Control

Copyright Fred L. Abrams 2010

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My article "Wachovia Bank & Its Bank Secrecy Act Issues" said that Ponzi scheme victims do not possess a cognizable claim against financial institutions under the Bank Secrecy Act.  Concurring and quoting me was Moneylaundering.com's "Florida Court Unlikely to Find Wachovia, Mastercard Civilly Liable for Missing Ponzi Scheme":

*"Florida Court Unlikely to Find Wachovia, Mastercard Civilly Liable for Missing Ponzi Scheme", Copyright 2010 Alert Global Media, reprinted with permission.

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Holocaust-era assets and securities fraudster Trevor Cook are the focus of this week's "Asset Search News Roundup":
 

1. An April 21, 2010 Bloomberg.com article explained that Berlin's Free University went live with its website about Holocaust-era assets / "degenerate" art confiscated by the Nazis.  "During A War Everybody Loots A Little Bit", earlier mentioned that as much as 20 percent of Europe's art is thought to have been looted by the Nazis.
   
    
2. At "Hopes of cash stash dashed in Minneapolis money manager Trevor Cook case", the Minneapolis Star Tribune reported about a failed meeting between securities fraudster Trevor Cook and Cook Receiver R.J. Zayed.  As explained by "Interdicting A Ponzi Schemer's Assets", Receiver Zayed is trying to recover Cook Receivership assets.  The Receiver's comments about his meeting with Mr. Cook, can be read below.

 

 

Copyright 2010 Fred L. Abrams

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U.S. Sen. Frank Lautenberg's family foundation is one of three plaintiffs in The Lautenberg Foundation v. Madoff, 09-Civ-00816.  The Lautenberg Plaintiffs had reportedly invested approximately $8.9 million in Bernard Madoff's Ponzi scheme.  They seek to recover losses through their February 24, 2009 complaint against Bernard Madoff's younger brother, Peter.  Although part of the complaint was dismissed by the Court's September 9, 2009 Order and Opinion, four causes of action remain against Peter Madoff.   

These remaining causes of action are for Peter Madoff's alleged: breach of a fiduciary duty; aiding and abetting a breach of fiduciary duty; negligence; and a supposed violation of Section 20(a) of the Securities Exchange Act of 1934.  Via their March 12, 2010 notice of motion, memorandum of law, statement of facts, etc., the Plaintiff's moved under Fed. R. Civ. P. 56 for summary judgment on their Securities Exchange Act cause of action.  In the above-mentioned statement of facts, Plaintiffs asserted they sustained nearly $6.5 million in actual losses.

According to the Plaintiffs, a "Uniform Application For Investment Adviser Registration" filed with the SEC shows that both Peter and Bernard Madoff had been "control persons" at Bernard L. Madoff Investment Securities LLC ("BMIS").  As the highlighted excerpt from page twenty of this registration form could indicate, Peter Madoff might have been such a "control person" since 1969:

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My most recent "Asset Search News Roundup" reported about the April 13, 2010 plea agreement executed by securities fraudster and Ponzi schemer Trevor Cook.  In this plea deal, Mr. Cook pleaded guilty to tax and mail fraud charges, agreed to make restitution and is supposed to fully disclose his assets to prosecutors. 

Mr. Cook must also cooperate with Receiver R.J. Zayed, who seeks to recover Receivership assets for the benefit of Mr. Cook's Ponzi scheme victims.  Before the plea agreement happened, the Receiver made his March 29th statement.  It expressed "shared concern & frustration" over the asset recovery effort launched against Mr. Cook.  In this statement, the Receiver acknowledged that his efforts targeting Mr. Cook, have been criticized:

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The guilty plea of Minneapolis money manager Trevor Cook and the Court's dismissal of a Wisconsin lawsuit against Associated Bank, are mentioned by today's "Asset Search News Roundup":

* At a plea hearing that took 33 minutes yesterday, Trevor Cook pleaded guilty to counts one and two of his of his criminal information.  At that time, Mr. Cook was convicted of violating 18 U.S.C. §1341 (mail fraud) and 26 U.S.C. §7201 (tax fraud.).  A press release described Mr. Cook's plea agreement and the securities fraud / Ponzi scheme he had caused.

* "Associated Bank Sued For Supposedly Ignoring Red Flags" examined a Wisconsin lawsuit claiming anti-money laundering regulations had been violated.  That same lawsuit was dismissed one week ago, as reported by "Judge dismisses lawsuit against Associated Bank".  My April 10, 2010 post was about a similar lawsuit brought against Wachovia.   

 Copyright 2010 Fred L. Abrams

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Wachovia, one of the world's largest international banks, is still defending itself against the Florida civil complaint described at my post "Lawsuit Claims Wachovia Bank Facilitated Alleged Ponzi Scheme".  The complaint essentially claims that Wachovia's anti-money laundering program under the Bank Secrecy Act had failed to detect money laundering.  It was brought by the apparent victims of a Ponzi-like securities fraud.

Although the complaint could conceivably be the subject of a trial, the Court might soon dismiss at least part of it.  This might happen since there is no private right of action under the Bank Secrecy Act for alleged anti-money laundering program violations.  Only governmental authorities can seek monetary damages for Bank Secrecy Act violations, as suggested by pages 77-78 of the August 26, 2009 opinion in Armstrong v. American Pallet Leasing, Inc.: 

 

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The March 14, 2010 "Asset Search News Roundup" first highlights ex-Detroit councilwoman Monica Conyers and then mentions Madoff Trustee Irving Picard:

*As The Wall Street Journal described at "House Judiciary Chairman’s Wife Sentenced to Prison" and "Lawmaker's Wife Sentenced to Jail", ex-councilwoman Monica Conyers was sentenced to 37 months of prison for her public corruption scheme.  "Public Corruption Charges Against Two Politically Exposed Persons", was the last time I discussed Ms. Conyers.  

*Yesterday's post "Mr. Cook Continues His Incarceration For Civil Contempt", recounted that Madoff Trustee Irving Picard had pursued forced collection proceedings in multiple jurisdictions.  "U.S. judge backs Madoff trustee's claims method", recently reported on a separate issue involving Trustee Picard-- a controversy stemming from his valuation of investor's claims.  Trustee Picard's efforts to recover assets through clawback claims in the Madoff case has also been debated by some. 

Copyright 2010 Fred L. Abrams

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After I wrote my November 28th, 2009 "Asset Search News Roundup" about Minneapolis money manager Trevor Cook, he was incarcerated on January 25, 2010 for civil contempt of court.  As the Court stated in its January 25, 2010 Opinion, the Securities and Exchange Commission and the Commodity Futures Trading Commission previously filed for injunctive relief against Mr. Cook. 

They sought injunctive relief because Mr. Cook had allegedly participated in a Ponzi-like securities fraud which might have involved at least $190 million taken from 1000 or more victims.  Also according to the January 25th Opinion, Mr. Cook violated a November 23, 2009 asset freeze by dissipating assets.  The Court therefore remanded Mr. Cook to jail until "he purges himself of the contempt" by turning over:

• $27,061,728.35 in foreign accounts;
• $670,000 in cash;
• $62,000 transferred to Mr. Cook's brother;
• $6,141,470 paid to preferred persons;
• $2,005,857.88 in domestic accounts;
• $53,000 from the sale of a Maserati & Hummer;
• a computer and documents formerly possessed by Mr. Cook's assistant;
• a houseboat & a submarine;
• his BMW, Lexus 430 & Lexus SUV;
• his Bon Jovi tickets purchased in 2009;
• and his collections of Faberge eggs and watches;

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This "Asset Search News Roundup" contains a copy of the indictment filed against Minneapolis auto magnate Dennis Hecker.  It also discusses the securities fraud complaints pending in New York against Bank of America.
 

1. A press release from the U.S. Department of Justice announced that Mr. Hecker was indicted last Wednesday for allegedly hiding his assets.  "Has Auto Magnate Dennis Hecker Hidden His Assets?"  had described a few of Mr. Hecker's supposed fraudulent financial transfers and explained that Mr. Hecker had reportedly been under criminal investigation.
   
   Mr. Hecker's seven-count indictment accused him of concealing assets through money laundering in violation of 18 U.S.C. §1957.  The indictment additionally charged Mr. Hecker with allegedly violating 18 U.S.C. §1343 (wire fraud) and 18 U.S.C. §1349 (conspiracy to commit wire fraud).
   
    
2. As an October 19, 2009 Amended Complaint and a January 12, 2010 Complaint demonstrate, the SEC had filed securities fraud complaints in New York against Bank of America.  These complaints were over alleged non-disclosure about Bank of America's merger with Merrill Lynch and / or year-end bonuses paid to Merrill Lynch employees.
   
   The February 12th article "Fork It Over: Rakoff Wants the Scoop on Why Bank of America Fired Its GC " reported that the Court is contemplating a settlement of these SEC complaints.  Said article explained that Bank of America was also just sued in connection with its Merrill Lynch merger, by New York Attorney General Andrew Cuomo.  The New York Attorney General's securities fraud suit can be viewed here. 

Copyright 2010 Fred L. Abrams

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The January 29th "Asset Search News Roundup" talks about HealthSouth's ex-chief Richard Scrushy and includes the most recent remarks of Assistant Secretary For Terrorist Financing David Cohen:

• "HealthSouth Founder Scrushy Is Acquitted of Fraud" explained  that Mr. Scrushy was acquitted in June of securities fraud and other criminal law violations.  Mr. Scrushy  was however, sentenced to prison in his separate bribery case.  HealthSouth shareholders were also awarded a $2.8 billion dollar judgment against Mr. Scrushy.  Some of the litigation by these shareholders / post-judgment creditors, is outlined at: "The Richard Scrushy asset search resumes".
  
   
• My post "Transnationally Tracking The Assets Of Terrorists", briefly referred to the funding of Al Qaeda terrorists.  Assistant Secretary For Terrorist Financing David Cohen just shared his thoughts about Al Qaeda, with the Council on Foreign Relations. To read the Assistant Secretary's remarks, click on the following image:
                 
  
  
  
  
    

Remarks Courtesy of U.S. Department of the Treasury.

 Copyright 2010 Fred L. Abrams

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The securities fraud complaint in Nesbeth v. USMIO, Docket No: 09−cv−62042−WJZ, alleges that Wachovia Bank caused damage to the supposed victims of a Ponzi scheme. This complaint, (referred to hereinafter as "the Florida Complaint"), also asserts claims against: MasterCard Worldwide, Mr. David Smith of Jamaica, Overseas Locket Corporation formed in Jamaica, Former Premier Michael Misick of the Turks and Caicos Islands, etc.

The Florida Complaint alleges that Mr. David Smith had operated a Ponzi scheme which reportedly involved six thousand victims from the Jamaican community and might have caused $220 million in losses. Florida Complaint at  ¶¶31, 37 & 38.  The suspected illicit proceeds of the scheme may have been used to invest in businesses and possibly pay for: real property, a lavish cruise, valuable watches (i.e. portable valuable commodities), ornamental furniture and exotic automobiles.  Florida Complaint at ¶52. 

According to the Florida Complaint at ¶49, proceeds from the scheme had additionally been laundered through bank accounts, including one maintained at Wachovia.  Like the Wisconsin Complaint earlier provided at "Associated Bank Sued For Supposedly Ignoring Red Flags", the Florida Complaint essentially claims that a bank's anti-money laundering program / Customer Identification Program pursuant to 31 CFR 103.121 ¶ (b) (2) (i), failed.

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Former Turks and Caicos premier Michael Misick is the subject of today's "Asset Search News Roundup".  The Former Premier is the ex-husband of U.S. actress and model LisaRaye McCoy and his pending New Jersey litigation is discussed at "Target Of Corruption Probe Sues Hip-Hoppers For Supposed Fraud" & "Could Former Premier Misick Face U.S. Forced Collection Proceedings?". 

The Former Premier is also a co-defendant in two civil complaints that are related to each other and have been removed from state court to Florida federal court.  Paragraphs 50-60 of the first complaint, accuses the Former Premier of possible involvement in a civil RICO scheme.  Paragraph 58 of the second complaint, alleges that the Former Premier might not have "implement[ed] appropriate supervisory methodologies" in connection with a supposed securities fraud / Ponzi scheme.  To access the two complaints, click on each of the images below:

   

 
Copyright 2010 Fred L. Abrams

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The January 9th "Asset Search News Roundup" provides an update on a couple of matters from Minnesota:

1. Both "Money Laundering By Minneapolis Managers?" and "Associated Bank Sued For Supposedly Ignoring Red Flags" described pending civil complaints against suspected securities fraudsters Trevor Cook, Patrick Kiley and their companies.  Another complaint filed against them was commenced on November 23, 2009, in Minnesota by the U.S. Commodity Futures Trading Commission.  Click here, to view the November 23rd complaint.
   
    
2. My October 20, 2009, article "Has Auto Magnate Dennis Hecker Hidden His Assets?" discussed Mr. Hecker's bankruptcy and divorce proceedings in Minnesota.  On January 6, 2010 "Judge's patience with Hecker runs out", reported that Mr. Hecker had delayed discovery sought by bankruptcy creditor Chrysler Financial.
   
   The delay was apparently caused by Mr. Hecker's claim that he was somehow entitled to Fifth Amendment protection against self-incrimination, in his civil bankruptcy case.  As "Judge to Hecker: Repay or go to jail" stated, Mr. Hecker also reportedly "looted" $125,000 which was the subject of his now finalized Hennepin County divorce proceeding.

Copyright 2010 Fred L. Abrams

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The Polish power and telecommunications company Elektrim SA has been in bankruptcy proceedings since 2007.  It still controls, (and owns an estimated 47% of),  Zespol Elektrowni Patnow-Adamow-Konin SA ("ZE PAK").  ZE PAK generates about 8.5% of all of Poland's electricity, as was just mentioned by "Enea, ‘Several’ Others Bid for Polish Power Group PAK (Update2)". 

Elektrim is also the subject of a criminal investigation by Warsaw prosecutors who have uncovered alleged irregularities believed to have occurred between 1999 and 2002.  They claim that Elektrim may have failed to perform trade agreements and conceivably caused property loss in violation of Article 296 paragraphs 1 & 3 of Poland's Criminal Code.  

These same prosecutors additionally appear to be focused on U.S. businesswoman Barbara J. Lundberg, who had been Elektrim's president from 1999 until she was fired in 2001.  Time Magazine's "Mrs. Big's Big Deals" published in 2000, had characterized Ms. Lundberg as "one of Warsaw's most influential executives".  The Warsaw prosecutors meanwhile claimed via their March 21, 2006 letter rogatory pictured below, that there were "changes in the existing profile of the company's business" after Ms. Lundberg became Elektrim's president:

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My article "Money Laundering By Minneapolis Money Managers?" reports that a lawsuit against Patrick Kiley, Trevor Cook and other money managers, had raised the question of whether Associated Bank breached a duty to prevent suspected money laundering.  As I mentioned in that article, Associated Bank could have conceivably failed to follow a written Customer Identification Program under 31 CFR 103.121 ¶ (b) (2) (i).

After I wrote "Money Laundering By Minneapolis Money Managers?", two lawsuits were filed against Associated Bank raising these same issues.  The gravamen of said lawsuits, was that Associated Bank had supposedly been negligent in allowing suspected securities fraudsters to open and maintain a nominee bank account in the name of Crown Forex LLC.  Crown Forex LLC was reportedly a sham business entity and its Associated Bank account was possibly used as a laundering link to wash some of the proceeds of a suspected securities fraud.

The first of these lawsuits was briefly filed in Minneapolis federal court via a November 4, 2009, third amended complaint.  That Minneapolis lawsuit against Associated Bank, was soon voluntarily dismissed pursuant to a December 9, 2009 filing and the Court's December 10, 2009, Order.  The second lawsuit against Associated Bank, (Herman Grad vs. Associated Bank NA, Brown County Case #2009-CV-002949), is however, still pending in Wisconsin. 

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On November 23rd the U.S. SEC commenced its enforcement action by filing the following civil complaint for suspected securities fraud against Minneapolis money managers Trevor Cook and Patrick Kiley:

As I last wrote in my  October 29th "Asset Search News Roundup", Mr. Cook and Mr. Kiley could conceivably also face money laundering charges.  If this happens, they would be following in the footsteps of other suspected Ponzi schemers who were named in SEC civil complaints and then criminally prosecuted for alleged money laundering or other suspected financial frauds.

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On the radar this week is: former Police Commissioner Bernard Kerik's guilty plea and following the money trail to Canada.

• After I wrote "Bernard Kerik Is Jailed While His Trial Is Delayed", the former police commissioner pleaded guilty to hiding assets in a tax fraud and public corruption charges.  The details of Mr. Kerik's November 5, 2009 guilty plea are described by Reuters in "Ex-head of NY police pleads guilty to corruption".  His sentencing before U.S. District Court Judge Stephen Robinson, is set for February 18, 2010.

• My October 29th "Asset Search News Roundup" named Switzerland, Panama, Costa Rica and the United Kingdom as jurisdictions which could have been used by some Minneapolis money managers to launder the proceeds of a suspected securities fraud. 

Following the money trail of this suspected securities fraud appears to have also led to Canada, as explained by the article "$300 million Oxford trail leads into Canada". 

Perhaps most notable, is that each one of the above-mentioned locations is generally considered by financial investigators to be a high-risk geographical location.  This means that a nexus to any one of them, can be a red flag for money laundering. 

 Copyright 2009 Fred L. Abrams

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This "Asset Search News Roundup" is about the clawback claim filed against the late billionaire Jeffrey Picower and hiding assets by laundering them through multiple jurisdictions:

• "Madoff friend drowned due to heart attack" reported that on October 25, 2009 billionaire Jeffrey Picower died because of a heart attack and accidental drowning in a swimming pool at his Palm Beach home.  The late Mr. Picower was sued for at least $5 billion by Madoff trustee Irving Picard in the adversary proceeding available here.  The Madoff trustee sought "clawback" of the $5 billion because it was alleged to be an investor's profit from the Madoff Ponzi scheme.  Reuters meanwhile explained in "Madoff trustee ups claim against investor Picower", that this claim against Mr. Picower could have been raised to $7.2 billion.

• In "Feds had early clues in currency case" the Star Tribune mentioned Minneapolis money managers Pat Kiley and Trevor Cook.  They are among those being sued for the suspected securities fraud I described at "Money Laundering By Minneapolis Money Managers?". 

I discussed this possible fraud again in my October 11th "Asset Search News Roundup".  As my October 11th Roundup explained, proceeds from the alleged fraud might possibly have been laundered in Switzerland, Panama, Costa Rica and the United Kingdom.   

If any criminal proceeds were actually transferred through these countries, then laundering through multiple jurisdictions may have occurred.  I refer to laundering through multiple jurisdictions and other asset concealment methods at my article: "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy".

Copyright 2009 Fred L. Abrams

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The October 11th Asset Search News Roundup describes what could have been the use of cross-border elements to launder the proceeds of a securities fraud.  The interdiction of $41 million from bulk cash smuggling in Mexico and Colombia, is also discussed.

• The "Money Laundering FAQ" webpage belonging to the Financial Action Task Force states that: "Large-scale money laundering schemes invariably contain cross-border elements".  Cross-border elements may have existed in the suspected securities fraud case mentioned at "Money Laundering By Minneapolis Money Managers?".

In that case, (known as Philips v. Cook, 09-cv-01732), proceeds from an alleged securities fraud might have been laundered across international borders and transferred into Switzerland, Panama, Costa Rica and the United Kingdom.  "Investors fear money went south -- to Panama", mentioned these particular cross-border elements in connection with the Phillips case.

• Bulk cash and other smuggling continues even though cargo containers can be screened by X-ray and gamma ray machines and radiation detection devices at ports like the one in Cartagena, depicted below. This past September, $41 million in U.S. currency was interdicted from bulk cash smugglers who had used cargo containers. 

A press release states that the $41 million was hidden in the cargo containers at Colombian and Mexican ports.   Other articles herein about smuggling cash include: "Concealing Assets By Smuggling Cash", "Smuggling Cash Across Iraq's Border" and "A Yola, A Police Sergeant & A Restauranteur".

Picture: U.S. Customs and Border Protection

Copyright 2009 Fred L. Abrams

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In this "Asset Search News Roundup", I mention that 90 tax information exchange agreements have been executed since April and talk about the $198 million dollar lawsuit filed last Friday:

• Due to the existence of tax information exchange agreements executed by different countries, a national tax authority could conceivably learn that a taxpayer has concealed assets in an abusive offshore tax avoidance scheme.  A September 25, 2009 OECD press release stated that since April, there have been ninety new tax information exchange agreements along with 60 new or renewed tax treaties.  Examples of these kinds of agreements are "the Avoidance of Double Taxation Treaty" and "the January 23, 2003 Mutual Agreement", between the U.S. and Switzerland.

• The $198 million dollar lawsuit referred to at my last "Asset Search News Roundup", (against Bernard Madoff's brother, two sons and a niece), is reproduced below.  This lawsuit was commenced by Madoff trustee Irving Picard to recover assets which may have been dissipated during Bernard Madoff's Ponzi scheme.  It was filed last Friday pursuant to  the Securities Investors Protection Act and other statutes, including those listed in my September 4, 2009 article about "clawback" claims in bankruptcy court.  

Copyright 2009 Fred L. Abrams

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As a countermeasure against those bank customers who would use their bank accounts to fraudulently conceal assets, government regulators commonly require that banks apply customer identification or "know your customer" rules.  These rules are often geared toward identifying the true beneficial owner of a bank account and are analyzed at my articles "Beneficial Owners Concealing Their Foreign Bank Accounts" and "Fighting Financial Fraud At UK Banks".

Despite the use of customer identification / "know your customer" rules at banks, some bank customers still try to conceal their beneficial ownership of assets parked in bank accounts.  As outlined by "Nominees & Hidden Assets", beneficial owners sometimes misuse existing business entities like shell companies, to open financial accounts and circumvent a bank's customer identification procedures.

The Egmont Group of financial intelligence units, describes this very situation at one of its money laundering typologies, labeled as reference no. 08014.  It explains how "Mr. B" essentially used existing businesses in the form of shell companies, to "wash" assets through North American and European bank accounts used in a money laundering circuit.  My September 20, 2009 article "Money Laundering By Minneapolis Money Managers?" also discussed what might have been the use of a fictitious business entity to circumvent the U.S. customer identification rules codified at 31 CFR 103.121 ¶ (b) (2) (i). 

As more fully set forth in that article, a civil complaint in Minneapolis alleges among other things, that a bank account maintained by the "non-existent, non-registered [business] entity" called Crown Forex LLC, could have transferred the proceeds of a securities fraud.  Some of the allegations in that complaint are also believed to be the subject of a federal grand jury proceeding, according to the Minneapolis Star Tribune at: "Twin Cities investment advisers focus of probe".

Copyright 2009 Fred L. Abrams

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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

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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:   

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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

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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

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Attempts to recover assets connected to securities fraud are the subject of this "Asset Search News Roundup": 

• Pages 27-30 of trustee Irving Picard's July 9, 2009 report, outline some of the efforts to recover offshore assets related to Mr. Bernard Madoff's Ponzi scheme / securities fraud.  So far, Mr. Madoff's offshore assets have been identified in: Bermuda, England, France, Gibraltar, Ireland, Luxembourg, Spain, Switzerland, the Bahamas, the British Virgin Islands and the Cayman Islands.  The July 9th report was also mentioned at "Madoff Trustee Tells Judge of $1.08 Billion Found for Victims" and in  "Bad News for Madoff Victims: Too Many Claims, Not Enough Money". 

• Requiring investors to return monies, (i.e. applying clawback), may be another way to recover assets arising from securities fraud, as mentioned by the article "Clawback Caused By A Ponzi Scheme".  As more fully set forth in that article, In re: Bayou Group LLC, et. al., 396 B.R. 810 (Bkrtcy S.D.N.Y. 2008), deems monies paid-out to some investors to be presumptively fraudulent and possibly subject to clawback. 

Copyright 2009 Fred L. Abrams

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Suspected Ponzi schemer Allen Stanford may have facilitated one of the largest financial frauds known to date.  Any receivers, investors or other stakeholders with claims against Mr. Stanford under bankruptcy or other laws, are of course trying to interdict Stanford's assets.  As I mentioned in my "March 25, 2009 Asset Search News Roundup", these competing interests of numerous stakeholders / plaintiffs can be a significant problem. 

Some of these problems are highlighted by S.E.C. receiver Ralph Janvey's April 23, 2009 Report in S.E.C. v. Stanford International Bank Ltd et. al., Index No.: 3-09-CV-0298.  The April 23rd Report explains that receiver Janvey lacked standing to intervene in proceedings related to Mr. Stanford's assets in Antigua, according to the Antiguan Court.  (Report of the Receiver, dated April 23, 2009, at page 19).  The report also stated that despite an April 1, 2009 meeting, there was no "concrete cooperation agreement" between receiver Janvey and Antiguan liquidators searching for Stanford's assets. 

As was also reported, Mr. Stanford seeks to disqualify opposing counsel Baker Botts L.L.P. -- which is one of the law firms working for receiver Janvey.  Through his motion and / or accompanying brief, Mr. Stanford claimed that Baker Botts was his attorney and that it set up the very business entities / bank involved in Stanford's alleged fraud. (Accompanying Brief, at pp. 2-4).  Mr. Stanford additionally argued that Baker Botts: "turn[ed] on its former client to dismantle and disembowel the very corporate structures and product lines the law firm created, likely using privileged information in the process.  (Id. at p. 4).

Adding to the above-mentioned complexities, is the fact that about 400 individuals or entities, (possibly defrauded out of more than $100 million by Mr. Stanford), had earlier filed their own intervenor motion and supporting paper, in S.E.C. v. Stanford International Bank Ltd. et. al.  Difficulties caused by competing interests in a different fraud case, are described by my local Swiss counsel in: "Forced Collections Against A Fraudster Like Madoff".

Copyright 2009 Fred L. Abrams

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California financier Danny Pang, former small-town Florida Sheriff Morris and a 29-year-old Mexican national, all share in common the fact that they are accused of hiding assets.  As this "Asset Search News Roundup" explains, these individuals are suspected of hiding assets by either smurfing, money laundering, or smuggling cash.

• California financier Danny Pang was just arrested for supposed "smurfing" (a.k.a. structuring--depositing cash just below a bank's reporting threshold).  Smurfing is a violation of federal law, as described by 31 U.S.C. § 5324.  My post "A Diplomat & His Offshore Bank Account" similarly mentions concealing assets by smurfing, as does Case 37, at pages 72-73 of "100 Cases from the Egmont Group".  

Mr. Pang meanwhile, has separately had his assets frozen and is the subject of the civil complaint described by a Securities and Exchange Commission press release.  As a Reuters' article and Wall Street Journal blog post both report, Mr. Pang is accused of  defrauding investors out of hundreds of millions during a Ponzi-like scheme.

• Former Sheriff Charles “Charlie” W. Morris of the Okaloosa County Sheriff's Office, is suspected of stealing government funds and then concealing them via money laundering.  According to a Department of Justice press release, this allegedly occurred as part of a fictitious bonus scheme while Mr. Morris was sheriff.  The details of the alleged crime are also mentioned by ABC News at: "Kickback Scheme: Florida Sheriff Indicted For Allegedly Doling Out Bonuses Then Stealing the Money".

• An April 28, 2009 press release describes how U.S. Customs and Border Protection agents interdicted the nearly $400,000 dollars depicted below.  Said monies were discovered close to the U.S.-Mexican border at the San Clemente checkpoint in the rear panels of a Volkswagen Gulf.  The Volkswagen had been driven by a 29-year-old Mexican national suspected of bulk cash smuggling in violation of 31 U.S.C. §5332.  The issue of bulk cash smuggling is also raised by my post: "Smuggling Cash Across Iraq's Border". 

  Copyright 2009 Fred L. Abrams

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Image: Steve Hillebrand / U.S. Fish and Wildlife Service

Investors who profited because of Allen B. Stanford's suspected securities fraud / Ponzi scheme may face clawback lawsuits under the Bankruptcy Code, according to Bloomberg.Com's "Stanford Receiver May Need a Decade to Pay Victims".  Investors who collected profits from Bernard Madoff's Ponzi scheme could too face clawback because of litigation by Madoff trustee Irving Picard.

The articles "Madoff Victims May Have to Return Profits, Principal" and "Lessons For Madoff Investors From The Bayou Fund Ponzi Scheme" both mention the idea that Madoff investors could be subject to clawback under In re: Bayou Group LLC, et. al. 396 B.R. 810 (Bkrtcy S.D.N.Y. 2008) via its October 16, 2008 Decision.  Among other things, the October 16 Decision permitted clawback from some investors in a securities fraud, by applying 11 U.S.C. § 548 (a) (1) (A) and local N.Y. law regarding fraudulent transfers. 

The October 16 Decision viewed funds paid-out to investors before a Ponzi scheme was discovered, as presumptively fraudulent transfers. The Decision placed the burden on these particular investors to show that their funds were received in good faith and for value, as more fully set forth in the K & L Gates article: "The Madoff Dissolution: A Consideration of the Bayou Precedent and Possible Next Steps". 

Furthermore, "Madoff's Investors Redemptions: Subject to Clawback", more recently asserted that Mr. Madoff's guilty plea might especially expose investors to clawback litigation as Mr. Madoff's plea demonstrates his actual intent to commit fraud.  This means that a clawback claim against an investor could be strengthened, as actual intent is one of the factors addressed by the Bayou Court's October 16 Decision.

Finally, (as I mentioned at my September 4, 2009 "Asset Search News" Roundup"), the clawback complaints reproduced below have been filed by Madoff trustee Irving Picard against some former Madoff investors:

Copyright 2009 Fred L. Abrams

(Edited October 11, 2009)

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The victims of a securities fraud, divorcing spouses, post-judgment creditors, etc. can have several remedies available to them if they need to recover assets hidden offshore.  One might even pursue an asset search or debt collection proceeding in the various offshore tax havens.  This is particularly true when a bank is used as a laundering “link” to hide funds in a money laundering circuit or assets have otherwise been hidden during a financial fraud. 

To cite just one example, I have previously filed letters rogatory / legal assistance requests with the Court in Geneva, (“the “Parquet du Procureuer général), because of suspected money laundering at two Swiss banks.  As mentioned at "An Asset Search With Letters Rogatory", these kinds of legal remedies can sometimes be used to elicit financial information from bank witnesses. 

Other forms of relief for those seeking to recover funds hidden offshore, can range from attaching a bank account to alerting a financial intelligence unit.  Local counsel in Geneva has explained these legal remedies which are available in Switzerland:

"As you probably know, Switzerland does not follow the common law doctrine. We do not adhere to the institution of discovery. The usual tools available to a claimant are therefore the filing of a criminal complaint, which is actually the most efficient way to get past the banking secrecy. Access to the information will be granted only if someone can be indicted. In exceptional circumstances a broader access to the information collected within the frame of the criminal investigation can be granted on a discretionary basis. 

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