New York Asset Search : Lawyer & Attorney : Fred Abrams Law Firm : Financial Fraud, Debt Collection : New York, NY

Mr. Reinaldo Cestero is a private investigator and a retired Chief Deputy United States Marshal, who works in Puerto Rico.  I asked Mr. Cestero about the superseding indictment filed in U.S.A. v. Acevedo-Vila, et. al., which charged Puerto Rico's Governor Anibal Acevedo Vila, (and /or twelve co-defendants), with: conspiracy; false statements; wire fraud; federal program fraud; and filing false tax returns. 

When I inquired whether there was a prevailing view in San Juan about the Governor's indictment, Mr. Cestero answered: "The trial is supposed to start in February.  The public is split down the middle.  About half think that the Governor has been falsely accused as a result of a conspiracy between the Blue Party [Partido Nuevo Progresista] and the United States.  The other half are disgusted, and  think that the Governor is guilty of public corruption." 

The Governor's above-mentioned indictment arises from allegations that he had several businessman pay off large unreported campaign debt, in violation of 2 U.S.C. §431 et. seq., the Federal Election Campaign Act.  The first count of the superseding indictment specifically charged violations of 18 U.S.C. §371 (conspiracy);  2 U.S.C. §441a et. seq. (limitations on contributions /  expenditures); and 18 U.S.C. §§1001 (a) (1) & (a) (2) (false statements).  According to the first count, about sixteen collaborators had made illegal off-the-book campaign contributions to the Governor's political campaign committee.  The collaborators had allegedly paid false invoices issued by a media / public relations company.  The indictment further alleged that said company ultimately applied the paid invoices as credit against debt owed by the Governor's political campaign committee. 

The first count also essentially alleged that the Governor had used his family, staff and others as nominees or "conduits", to illegally make campaign contributions.  These "conduit contributions" were even sometimes allegedly made with funds from the Governor.  Count one additionally claimed that the Governor, (and/ or one of his associates), had contacted the Office of Management and Budget, the Puerto Rico Housing Department and the Puerto Rico Pension Fund, to promote the business interests of some of the conduit contributors.  Perhaps most interesting however, is that an April 28, 2008 Daily News' article indicates that the Governor is still running for re-election in Puerto Rico's November gubernatorial race-- despite the fact of his indictment.

Copyright 2008 Fred L. Abrams

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The following occurred over a four month period during 2002, and has been supplied by an investigator I have worked with.  Some of it has been changed / sanitized for privacy reasons: 
 
The Tax Fraud
As part of his tax fraud, Mr. Wallace contacted a Cayman Island bank by mail in order to open a personal account with it.  He mailed account opening documents to it which included a copy of his U.S. passport and also supplied the names of references. According to these documents, Mr. Wallace lived in Miami and was a real estate developer.  Based upon all of the foregoing, the Cayman Island bank opened Mr. Wallace's personal account with a "O" balance.  Just six days later however, bank "X" in Panama wired $6.3 million to Mr. Wallace's Cayman account without any mention of the remitter. 

Mr. Wallace then went on a business trip to Central America for several months; so he rented his Miami home to "Chuck".  Although Mr. Wallace hadn't known at the time, Chuck was a small-time crook.  In fact, soon after Chuck took possession of Mr. Wallace's home, Chuck started stealing Mr. Wallace's mail.  One of the letters Chuck had stolen was written by "Bob", a personal banker from the Cayman Island Bank where Mr. Wallace maintained his account.  Bob had written to Mr. Wallace about a lucrative investment opportunity.

The Identity Theft
Surmising from Bob's letter that Mr. Wallace had a sizable bank account, Chuck wrote to Bob pretending to be Mr. Wallace.  As the sanitized copy of Chuck's First Letter can only partly demonstrate, Chuck had assumed Mr. Wallace's identity in that particular letter by forging Mr. Wallace's signature.  To comfort Bob, Chuck's First Letter had also asked Bob for the minimum balance required to keep Mr. Wallace's account open. Chuck's "softening up" letter further suggested to Bob that Mr. Wallace's funds might soon be needed "at very short notice" for an alleged real estate deal in Mexico.  In the sanitized copy of Chuck's Second Letter, Chuck again pretended to be Mr. Wallace as he wrote to Bob at the Cayman Island Bank.  In his Second Letter, Chuck directed the wire transfer of Mr. Wallace's funds from the Cayman Island Bank to Chuck's own bank account in Mexico.

When Mr. Wallace next unexpectedly arrived at the Cayman Island Bank to make a cash withdrawal, he was shocked to learn that his account had been drained.  The Bank then showed Mr. Wallace "his" letters and explained that it had remitted his funds to Mexico just two days earlier because of "his" instructions.  Concluding that his identity had been taken over by Chuck, Mr. Wallace apologized for his error and immediately booked a flight bound for Miami.  Shortly thereafter, Mr. Wallace was arrested while fleeing from his Miami home after having killed Chuck there.

The Investigation
Investigators from the U.S. next paid a visit to the Cayman Island Bank.  Although they had first thought that Chuck had been the true beneficial owner of the Cayman Island account, they discovered that Mr. Wallace was.  Investigators also learned that Mr. Wallace was not just simply a real estate developer involved in a tax fraud / abusive offshore tax avoidance scheme.  Instead, Mr. Wallace was actually a major illegal narcotics trafficker hiding the proceeds of his drug crimes through money laundering.  Investigators finally concluded that much of the foregoing had happened because the Cayman Island Bank had among many other things:

1. Inadequate customer identification procedures / know your customer rules;
2. Permitted Mr. Wallace's account to be opened by mail & also with a  "0" balance;
   
3. Neglected to contact a single reference mentioned in Mr. Wallace's account opening documents;
4. Failed to recognize suspicious activities like the wire transfer of the $6.3 million from Panama or Chuck's "softening up" letter.

Copyright 2008 Fred  L. Abrams

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A licensed private investigator from Arizona advised that he had a good track record in finding  hidden assets and / or locating bank accounts.  He however, contacted me wanting to know the best way to learn more about money laundering (18 U.S.C. §§1956 & 1957) and structuring / smurfing (31 U.S.C. § 5324).  One good way to learn about money laundering and other white-collar crimes, is to read money laundering typologies.  

As explained at the end of my post Terrorist Financing, Money Laundering & Financial Intelligence Units, money laundering typologies are sometimes used by law enforcement and regulators to develop countermeasures against emerging criminal trends.  Although"100 Cases from the Egmont Group" arises from data collected by the Egmont Group from the 1990's, it is still relevant today.  In "100 Cases from the Egmont Group" there are for example, descriptions of the following laundering methods:

• Concealment within existing business structures
• Misuse of legitimate businesses
• Use of false identities, documents or straw men
• Exploiting international jurisdictional issues
• Use of anonymous asset types

Copyright 2008 Fred L. Abrams

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Mr. Vladimir Kuznetsov 's October 19, 2007 criminal judgment mentions his $73,671 fine and prison sentence of 51 months for violating 18 U.S.C. § 1956 (h), conspiracy to commit money laundering.  According to a press release, Mr. Kuznetsov had conspired with Mr. Alexander Yakovlev-- a United Nations' procurement officer who was taking bribes.  The press release further explains that Mr. Kuznetsov had laundered money while he was the highest ranking Russian diplomat at the United Nations.  According to his superseding indictment, Mr. Kuznetsov had been a member of the Advisory Committee on Administrative and Budgetary Questions, which advises the United Nations' General Assembly. 

As part of Mr. Kuznetsov's laundering scheme, he had received $32,000 from Antigua via two New York financial accounts.  Most significant however, was his use of an offshore bank account at Antigua Overseas Bank Ltd. as the repository of hundreds of thousands of dollars in bribery proceeds.  Mr. Kuznetsov had opened this account in the name of his offshore company Nikal Ltd.,  which he had formed in or about 2000.  Although Mr. Kuznetsov was not finally convicted of it, his indictment had also alleged that he had structured bank deposits in violation of  31 U.S.C. § 5324.

Structuring bank deposits, (a.k.a "smurfing"), indicates an attempt  to avoid bank reporting requirements and can be a red flag of money laundering.  Other red flags of money laundering in Mr. Kuznetsov's case included his use of the offshore corporation Nikal Ltd. to open his Antigua Overseas Bank Ltd. account.  The transfer of the $32,000 from Antigua to Mr. Kuznetsov in New York was also a red flag, especially because Antigua is a tax haven / high-risk location vulnerable to money laundering.  Structuring bank deposits, forming offshore corporations, and using offshore bank accounts, are however just some of the methods used to hide assets / hinder an asset search.

Copyright 2008 Fred L. Abrams

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Parking assets offshore in one jurisdiction and then exercising control over them through another, sometimes indicates money laundering.  One example of how multiple jurisdictions were used to facilitate money laundering, is the case of  U.S.A. v. Proceeds of Crime Transferred to Certain Domestic Financial Accounts, Index # 07-CV-21791, U.S. District Court for the Southern District of Florida.  As mentioned by a July 16, 2007 press release, the Government commenced  the U.S.A. case in order to forfeit $110 million which had been part of a tainted $400 million court award in Italy.  According to both the foregoing press release and Reuters, the $400 million was tainted because the Italian Court awarded it after an interested party, (Mr. Angelo "Nino" Rovelli), had bribed its judges.

As an amended complaint in U.S.A alleged, Mr. Rovelli's wife Primarosa Battistella, had used Swiss bank accounts and three prominent lawyers, (Attilio Pacifico, Giovanni Acampora and Cesare Previti), to pay the bribes.  After Mr. Rovelli died in 1990, Ms. Battistella finally inherited the tainted $400 million in January 1994.  According to the amended complaint, she then had her accountant Mr. Pierfrancesco Munari, launder a substantial amount of it.  Mr. Munari had allegedly placed the tainted money in financial institutions and /or business entities which acted as laundering links in: the United States; the British Virgin Islands; the Cayman Islands; Guernsey; Jersey; Switzerland; Luxembourg; Liechtenstein; Singapore; the Cook Islands and Costa Rica. 

Some of the money laundered by Mr. Munari had allegedly been hidden in Florida via nineteen financial accounts. The government therefore asserted in U.S.A., that forfeiture was appropriate pursuant to the following:

• 18 U.S.C. §981 (a) (1) (A), (B) & (C)-- Asset forfeiture because of money laundering;

• 18 U.S.C. §984-- Asset forfeiture of identical property within one year of a laundering offense, etc;

• 18 U.S.C. §1956-- Money Laundering;
  

• 18 U.S.C. §1957-- Money Laundering of property from specified unlawful activity;
  

• 18 U.S.C. §2314-- Interstate or foreign transfer of property obtained by fraud;

• 28 U.S.C. §1345-- U.S. District Court jurisdiction where the Government is plaintiff;

• 28 U.S.C. §1355 (a)-- U.S. District Court jurisdiction over forfeiture proceedings;   
  

• Italian Criminal Code Articles 319ter and 321, Bribery in judicial acts.

Copyright 2007-2008 Fred L. Abrams

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As my post  "Divorce, Child Support & Reporting Tax Fraud" mentioned, divorcing spouses sometimes tip the IRS about a suspected tax fraud.  Mrs. Benjamin for example, tipped the IRS because she thought that her divorcing husband had underreported revenue from his commercial maintenance and landscaping business.  She specifically provided the IRS with the business documents Mr. Benjamin had produced during the pre-trial discovery phase of their divorce case.  These documents included payment summary records from Mr. Benjamin's customers like Wal-Mart.  As part of her tip to the IRS, Mrs. Benjamin also turned over joint tax returns which Mr. Benjamin had supposedly filed for the years 1998 and 1999. 

A records check at the IRS however demonstrated that the 1998 and 1999 joint tax returns had never actually been filed by Mr. Benjamin.  The IRS also learned that from 1997 through 2001, Mr. Benjamin had neither paid income tax nor filed state or federal income tax returns.  IRS Special Agents then received false information from Mr. Benjamin when they interviewed him at his home on June 26, 2002.  The IRS also reviewed Mr. Benjamin's bank accounts and conferred with Wal-Mart along with Mr. Benjamin's other customers.  As a consequence of its asset search and tax fraud investigation, the IRS finally determined that Mr. Benjamin's total gross receipts or sales between 1998 and 2001 had actually been about $1,139,470.18; and that Mr. Benjamin had a $129,396.91 tax liability.
 

The IRS further recognized that Mr. Benjamin had hidden assets and income by: pocketing cash payments from customers; paying personal expenses from a business bank account; and cashing customers' checks instead of depositing them into his bank account.  During its investigation, the IRS additionally discovered that Mr. Benjamin had defrauded Wal-Mart through a false invoicing scheme.  By seeking payment for services he had never performed, (and faxing Wal-Mart twenty-two phony invoices between February 2001 and January 2002), Mr. Benjamin had duped Wal-Mart out of $417,583.

The IRS criminal investigation started by Mrs. Benjamin's tax fraud tip eventually led to Mr. Benjamin's fifty eight count indictment on July 27, 2005 in U.S.A. v. Benjamin, Index # 05-Cr-00348, U.S. District Court, District of Colorado.  Pursuant to his January 5, 2006 plea agreement, Mr. Benjamin pleaded guilty to violating 26 U.S.C. § 7201 (tax evasion) and 18 U.S.C. § 1343 (wire fraud).  Because of his white-collar crimes, Mr. Benjamin was sentenced on June 16, 2006 to serve two years in prison followed by three years of supervised release.  As Mr. Benjamin's sentence and criminal judgment both mentioned, he was also directed to pay a $200 special assessment and to start making restitution payments to Wal-Mart after his release from prison.

Copyright 2007 Fred L. Abrams

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With more than 90 national chapters / chapters-in-formation since its founding in 1993, Transparency International is a lead group in the fight against the global white-collar crime of public corruption.  Transparency International publishes an annual "Corruption Perception Index" which ranks countries on a scale of "1" to "10" based on the perceptions of businessman and analysts.   A country ranked as a "10" would be considered to be "highly clean"; while a rank of  "1" would indicate a "highly corrupt" country.   For example, Transparency International's 2007 Corruption Perception Index ranked Myanmar and Somalia at the very bottom of its list with a score of only "1.4".  Denmark, Finland, and New Zealand however had the highest score of "9.4".  Meanwhile, the United States was assigned a score of "7.2".

 
The Transparency International website additionally explains that corruption is "the abuse of entrusted power for private gain. It hurts everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority."  Its website also describes the two distinct kinds of corruption, "according to rule" and "against the rule".   When a bribe is paid for services the bribe recipient is required by law to provide, then "according to rule" corruption has occurred.  "Against the rule" corruption has occurred when a bribe is paid for services the bribe recipient is prohibited from providing.

As has been widely reported, a corruption case was recently brought against Bernard Kerik, who formerly led the largest police department in America as New York City's 40th Police Commissioner.  According to both the U.S. Attorney and Mr. Kerik's sixteen count indictment, Mr. Kerik was the secret beneficiary of $250,000 in apartment renovations paid for by the principals of construction and waste management companies who sought contracts from New York City.  In consideration of said renovation payments, Kerik allegedly lobbied officials to award the sought after contracts.  Some of these payments are claimed to have been made even after Kerik had been sworn in as the Police Commissioner.  According to a government tax fraud chart, the U.S. Attorney has further alleged that Mr. Kerik also committed tax frauds involving at least $667,222.

As a review of Mr. Kerik's indictment reveals, Mr. Kerik is essentially charged with committing the following white-collar crimes:

• 18 U.S.C. §1014, False statements on a loan application.
• 18 U.S.C. §1001, False statements to the federal government.
• 18 U.S.C. §1341, Mail fraud.
  
• 18 U.S.C. §1343, Wire fraud.
• 18 U.S.C. §1349, Conspiracy.
  
• 26 U.S.C. § 7212 (a), Attempts to interfere with administration of internal revenue laws.
• 26 U.S.C. §7206 (1), Perjury / false statements in a tax return.
• 26 U.S.C. §7206 (2), Aiding the making of false statements in a tax return.

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A beneficial owner will sometimes use a nominee (i.e. representative) to hide money with complete anonymity in a bank account.  As the website of www.offshoresimple.com explains, a beneficial owner may hire a nominee incorporation service to supply a bank signatory.   This suggests that a beneficial owner can use a nominee to circumvent the know your customer / customer identification procedures at a bank.  For example, through the bank signatory service offered by www.offshoresimple.com, a beneficial owner can use a nominee to:      

• Open / manage an offshore bank account.
• Act as an account's bank signatory.
• Supply a bank with the necessary customer identification documents.
• Execute the incorporation documents needed to form an offshore corporation.

The above-described use of nominee incorporation services is widespread.  As page 64 of the 2007 National Money Laundering Strategy mentions, nominee incorporation services that arrange U.S. bank accounts and shell companies are believed to annually launder as much as $36 billion just from the former Soviet Union.

Instead of retaining a nominee incorporation service, some beneficial owners hide assets by using friends or relatives as nominees.  According to his twenty-one count forty-four page July 26, 2005 indictment, Mr. Edwards for example, had stolen insurance premiums and then concealed them in nominee financial accounts in the names of his wife and two shell companies.  Mr. Edwards had also used his wife as the nominee purchaser of his mountain chalet and a  "palatial" home-- both of which were bought with stolen insurance premiums.

All of the foregoing had been part of Mr. Edward's insurance and tax fraud scheme which lasted from about January, 1999 through April 30, 2001.  Via his indictment, Mr. Edwards was charged with: mail fraud (18 U.S.C. § 1341 & 18 U.S.C. § 1342); wire fraud ( 18 U.S.C. § 1343); making false statements to a  financial institution (18 U.S.C. § 1014);  theft from a health care benefit program (18 U.S.C. § 669); money laundering (18 U.S.C.§ 1957 [a] & [b]); and tax evasion (26 U.S.C. § 7201). 

 
Mr. Edwards was specifically accused of collecting insurance premiums from various employers while unlicensed to do so.  Instead of providing thousands of employees with workers' compensation insurance, he converted their insurance premiums for his own use.  Between January 1, 2000 and April 30, 2001 Mr. Edwards also allegedly stole $2.5 million from his company Fidelity Group, Inc., which was a health care benefit group as mentioned by 18 U.S.C. § 24 (b).  Furthermore, when Mr. Edwards actually did apply for some workers' compensation insurance coverage, he allegedly understated payroll and the type / number of employees to fraudulently secure lower insurance premiums.

When Mr. Edwards administered an employer's self-insured health insurance plan, he also had  allegedly delayed or denied medical benefits the employees were entitled to.  Mr. Edwards indictment also alleged that he had filed a false joint Income tax return for 1999, by underreporting taxable income.  In 2000, Mr. Edwards also supposedly filed a false joint tax return by underreporting taxable income and paying just $724 in taxes.  He was additionally accused of failing to file any tax return for 2001, as was required. 

As the Court's June 26, 2006 Judgment demonstrates, Mr. Edwards ultimately pleaded guilty to four of the twenty-one counts mentioned by his indictment: two counts of mail fraud; one count of theft from a health care benefit program; and one count of tax fraud.  Pursuant  to his plea agreement, Mr. Edwards was sentenced to serve 150 months in prison and ordered to pay fines, make restitution, etc.  As Mr. Edwards' motion executed on August 13, 2007 however indicates, he seeks to vacate his guilty plea / sentence pursuant to 28 U.S.C. § 2255 by alleging ineffective assistance of counsel among other things.

Copyright 2007 Fred L. Abrams

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A former Criminal Intelligence Specialist at Scotland Yard confirmed that the divorcing husband was hiding millions from his wife by using nominee bank accounts in Switzerland, among other things.  The husband's true beneficial ownership of these funds had been concealed by a nominee who had used shell corporations.  The evidence suggested that the nominee had engaged in money laundering for the husband.  The nominee might have also laundered organized crime monies.
 

The above information could possibly be used during a divorce to impeach the husband at a deposition about his alleged net worth and assets.  The Swiss bank information could also be used to frame a line of questions at a subpoenaed deposition of the nominee.  As partly demonstrated by the example of a changed / sanitized letter rogatory to Obergericht des Kantons Zürich, evidence might too be elicited from bank witnesses in Switzerland.  Such letters rogatory / legal assistance requests can sometimes play an important role in an asset search, as mentioned at "Asset Search Tips For Divorce & Child Support Cases".

As my local Swiss counsel advises, making a business of parking assets in Switzerland and concealing their beneficial ownership could violate Art. 305bis Swiss Criminal Code: Money Laundering (English Translation).  The nominee might therefore also be prone to a Swiss prosecution under Art. 305bis as a security risk, assuming ties to organized crime could be shown.  In addition to 305bis, some of the Swiss laws relevant  to money laundering and / or hiding assets include:

• the Federal Act on Combating Money Laundering in the Financial Sector: Anti-Money Laundering Act, AMLA (English Translation).
  

• Art. 305ter Swiss Criminal Code: Insufficient Diligence In Financial Transactions and Right to Report (English Translation).
  

• Art. 260ter Swiss Criminal Code: Criminal Organizations (English Translation).

• Art. 260quinquies Swiss Criminal Code: Financing Terrorism (English Translation).

• Art. 69 to 72 Swiss Criminal Code: Confiscation (English Translation).
  

• Art. 102 and 102a Swiss Criminal Code: Corporate Criminal Responsibility (English Translation).  
  

As the foregoing suggests, a number of different legal strategies could be used in connection with the divorcing husband's assets hidden in Switzerland.  Enlisting the help of foreign investigators like the above-mentioned former Criminal Intelligence Specialist; retaining local counsel in Switzerland; and prosecuting letters rogatory / legal assistance requests; are however just some of the tools which may be part of an effective asset search in Switzerland.

Copyright 2007-2008 Fred L. Abrams

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