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

American and Swiss officials are ramping up their efforts to recover assets hidden by corrupt foreign politically exposed persons commonly referred to as kleptocrats.  A few of my thoughts about this are included at MoneyLaundering.com's August 6th article "U.S., Swiss Initiatives to Recover Looted Assets Likely to Bring Banks More Subpoenas, Regulatory Scrutiny ":  

         

"U.S., Swiss Initiatives to Recover Looted Assets Likely to Bring Banks More Subpoenas, Regulatory Scrutiny", Copyright 2010 Alert Global Media, reprinted with permission.

Copyright 2010 Fred L. Abrams

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"$20 million airline-ticket fraud aided by hotel workers, prosecutors say" mentioned that suspected identity thieves and their supposed co-conspirators were indicted for allegedly using stolen credit card information to purchase airline tickets.  These tickets are believed to have been sold on the U.S. black market at steep discounts to airline passengers. 

A July 9th press release describing the indictments quoted a U.S. prosecutor as saying: 'What began as a local law enforcement investigation ultimately exposed an extensive nationwide black market for airline tickets.'  The U.S. black market is of course not the only way airline passengers might acquire tickets connected to alleged credit card frauds. 

Jamaican authorities for example, are investigating Montego Bay, Jamaica resident Andrew Hemmings, about his possible acquisition of Spirit Airlines' tickets during a suspected credit card fraud.  To obtain evidence about this alleged fraud originating in Jamaica, Jamaican authorities issued the following legal assistance request / letter rogatory:
 

Copyright 2010 Fred L. Abrams

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During his marriage to actress LisaRaye McCoy, ex-Turks and Caicos premier Michael Misick was investigated for public corruption by the Turks and Caicos Islands Commission of Inquiry.  The ex-premier's suspicious activities were believed to be so harmful, they contributed to the UK Government decision to suspend parts of the 2006 Turks Caicos Island Constitution.++

With this August 14, 2009 constitutional suspension, the right to a jury trial was revoked, the Cabinet abolished and the House of Assembly dissolved.  As my article "The Former Premier's Nexus To Hip Hop Weekly Magazine" reported, the ex-premier's suspicious activities had included his possible transfer of funds through the My Way Productions 2 company to the U.S. based Hip Hop Weekly Magazine.  

Not covered by my article, was how Ms. McCoy might possess probative evidence regarding the ex-premier's relationship to Hip Hop Weekly and My Way Productions 2.  Perhaps as a director of My Way Productions 2, Ms. McCoy may even have executed a March 30, 2007 "Unanimous Written Consent" agreement about Hip Hop Weekly: 

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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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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" focuses on "politically exposed persons", some of whom would launder corruption monies.

1. "Stolen Asset Recovery: Politically Exposed Persons, A Policy Paper On Strengthening Preventative Measures" was published in 2009 and it is available at the Stolen Asset Recovery Initiative's website.  The 2009 policy paper stated at page 17: "[I]f, as the World bank suggests, $1 trillion of corruption money is moving around the world each year, where is it? ....the money must be moving undetected through the banks and intermediaries and the current systems are failing to detect it". 
   
    
2. The Senate's permanent subcommittee on investigations held a hearing on February 4, 2010 about politically exposed persons from abroad hiding corruption monies in the United States.  At this hearing, the investigations subcommittee released its 330-page report "Keeping Foreign Corruption Out Of The United States: Four Case Studies".  A news release mentioning the hearing explained: "...that politically powerful foreign officials, and those close to them, have found ways to use the U.S. financial system to protect and enhance their ill-gotten gains".  

Copyright 2010 Fred L. Abrams

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At "Target Of Corruption Probe Sues Hip-Hoppers For Supposed Fraud", I first mentioned the nexus between former Turks & Caicos premier Michael Misick and Hip Hop Weekly Magazine.  The Forbes article "The Premier And The Hip-Hop Magazine" discussed the same thing and also quoted me. 

This article specifically examined the Former Premier's alleged investment in Hip Hop Weekly Magazine through My Way Productions 2.  The Forbes article additionally described Sir Robin Auld's public corruption investigation of the Former Premier and asked at page 1:

 "How did My Way Productions 2 get its funding? According to the investigation carried out by Sir Robin Auld, Misick supplied a document that showed $300,000 was transferred to My Way Productions 2 in 2007 from a company called Windsor Investment Group. Misick claimed the money was a dividend from that company, which he and his brother partially owned."

The supposed transfer of $300,000 dollars into My Way Productions 2 had been expressly mentioned at page 146 ¶¶4.75 & 4.76 of Sir Robin's "Final Report to the Governor of the Turks and Caicos Islands".*  The $300,000 dollars was also apparently discussed at pages 51, 53, & 54 of a transcript from the Former Premier 's January 14, 2009 public corruption hearing.  Besides all of the foregoing, assertions made by New Jersey lawyer David J. Finkler might too shed light on the Former Premier's connection to Hip Hop Weekly Magazine.

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"Smuggling Cash Across Iraq's Borders" mentioned Donnie the former DEA agent who had trained Iraqi border personnel to interdict bulk-cash smugglers.  To help detect these smugglers, governmental authorities also use declaration forms to track the cross-border movement of cash and monetary instruments. 

As mentioned by my April 13, 2009 "Asset Search News Roundup", one such declaration form is the "FinCen 105".  It generally requires disclosure to the Bureau of Customs and Border Protection, when individuals physically transport, mail or ship more than $10,000 in cash or monetary instruments into the U.S.:

To avoid triggering the mandatory filing of a FinCen 105, Virginia medical doctor Andrew Silva had illegally structured cash by smuggling it in packages containing less than $10,000.  During an abusive offshore tax avoidance scheme, Dr. Silva mailed these packages of cash from Switzerland into the U.S., as outlined by his "statement of facts" filed in U.S.A. v. Andrew B. Silva.

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Today's "Asset Search News Roundup" is about the New York case against the ex-president of Guatemala, Alfonso Portillo and it also mentions the sentencing of New York former top cop Bernard Kerik:

• The one-count indictment unsealed on January 26, 2010 in the case against ex-president Portillo is available here.  Mr. Portillo's indictment alleges that he embezzled monies in a public corruption scheme during his Guatemalan presidency.  According to his indictment, Mr. Portillo supposedly laundered illicit proceeds through multiple jurisdictions including: New York, Miami, Paris, Luxembourg and Switzerland.  He is specifically accused of violating 18 U.S.C. §1956 and the federal government is seeking asset forfeiture pursuant to 18 U.S.C. §982.
  
   
• As reported by Bloomberg.com on February 18, 2010, former NYPD Police Commissioner Bernard Kerik was sentenced to four years of prison for tax fraud and some of the other crimes described at "White-Collar Crime & A Former Top Cop".  The letter Mr. Kerik sent to the Court just prior to his sentencing is available here: 

 Copyright 2010 Fred L. Abrams

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The Wall Street Journal's February 4, 2010 article "Switzerland Freezes Freed Duvalier Assets", is about alleged illicit assets blocked in Switzerland.  The blocked assets have been maintained in Swiss bank accounts and are believed to originate from Haiti's public coffers.  These public coffers were reportedly looted by former politically exposed person Jean-Claude "Baby Doc" Duvalier, who fled Haiti in 1986. 

The Wall Street Journal article claims that foreign dictators no longer favor hiding assets at Swiss banks because of "tough" Swiss laws requiring banks to know the source of funds.  The Swiss laws the article seems to refer to are commonly called "customer identification" or "know your customer" rules.  Rules requiring banks to identify their customers have been adopted across the globe and are in effect in the United States, the United Kingdom, etc. 

Swiss banks specifically follow customer identification rules by requiring their customers to execute a "declaration of beneficial ownership" which is also known as a "Form A".  Swiss banks also routinely monitor customer accounts, consistent with international anti-money laundering standards.  A former Yale Law School visiting scholar discusses the use of "Form A's" and shares some of his views on Swiss banking, at "Customer Identification At UBS AG And Some Other Banks". 

 Copyright 2010 Fred L. Abrams

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The Court announced yesterday that there had been a settlement in the New Jersey case involving Former Premier Michael Misick of the Turks and Caicos Islands.  The settlement is mentioned at the Court's Order of Dismissal and by the current docket report. 

According to various court filings, the Former Premier could have been a beneficial owner of Hip Hop Weekly Magazine through his alleged interests in: My Way Productions 2 LTD. ("My Way"), Z & M Media LLC ("Z & M"), and the holding company for Hip Hop Weekly Magazine, Hip Hop Global  Media, LLC ("HHG"). (Cf. Defendants' Answer, Counterclaim and Third-Party Complaint at p. 26 ¶ 7) (claim that the Former Premier and his ex-wife LisaRaye McCoy were "real parties in interest").

The Verified Amended Complaint in the New Jersey case meanwhile, indicated at ¶¶7, 57, 75, 78, 80 and Exhibit "H",  that My Way or Z & M or HHG, might have been involved in making substantial capital contributions:

1. $798, 647. 57 capital contribution from My Way into Z & M;
2. $10,000.00 capital contribution from My Way into HHG;
3. $833,334.00 capital contribution from My Way into HHG and Z & M;
4. $260,000.00 capital contribution from Z & M to fund Hip Hop Weekly Magazine.
    

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At first glance, there was nothing unusual about the lawsuit filed in New Jersey involving Former Premier Michael Misick of the Turks and Caicos Islands. The complaint in the lawsuit executed by the Former Premier, claimed that Hip Hop Weekly Magazine founders David Mays and Raymond Scott had misappropriated the magazine's cash.  

Mr. Mays and Mr. Scott separately alleged in their answer, counterclaim and third-party complaint, that the Former Premier had been an investor in the magazine and was basically one of its owners.  On March 23, 2010, there was a status and settlement conference scheduled in the lawsuit, as mentioned by the Court's docket entry:  

"Target Of Corruption Probe Sues Hip-Hoppers For Supposed Fraud" meanwhile, explained that the Former Premier had been the subject of a public corruption probe by the Turks and Caicos Islands Commission of Inquiry.  The Inquiry issued its Redacted Final Report, which had once been available here.   This Final Report asserted that the Former Premier was known to have enjoyed a "Hollywood lifestyle" beyond his salary and allowances as a politician.  It also raised the critical questions: Had the Former Premier been a party to public corruption and could he have taken illicit monies?

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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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Attorney Arienne Irving's December 4, 2009 Judgment of Acquittal pursuant to Fed. R. Crim. P. 29, raises the general issue of lawyers or clients who might use illegal eavesdropping equipment to "research" an adversary.  I previously wrote about violating privacy laws via eavesdropping at "Attorney Christensen's Wiretap Conviction".  That article explained how former attorney Terry Christensen had, (while representing billionaire husband Kirk Kerkorian), conspired to eavesdrop on a wife's telephone conversations.

In Ms. Irving's case, she and Attorney Robert Simels were indicted for suspected witness tampering and for allegedly possessing and shipping illegal eavesdropping equipment in derogation of 18 U.S.C. §§2512 (1) (a) & (b).  According to a DEA press release, a client of Mr. Simels and Ms. Irving had earlier used this eavesdropping equipment in Guyana to research or "target" apparent adversaries, some of whom were later murdered. 

As set forth in my "Asset Search News Roundup" for September 10, 2009, a jury returned a guilty verdict against Mr. Simels and he was sentenced to 168 months of prison.  Despite the same trial jury reaching the guilty verdict below regarding Ms. Irving, the Court acquitted her as previously mentioned.

 Copyright 2009 Fred L. Abrams

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The humanitarian non-profit Slovenian Red Cross operates in 12 regions with 916 local Red Cross organizations.  Its former Secretary-General Mirko Jelenic however, is suspected of involvement  in a criminal "breach of trust", as mentioned by Slovenian law.  He might have used Slovenian Red Cross monies in a phony real estate sale agreed to in the year 2000. 

GNN Inc., of 2316 Baynard Blvd.,Wilmington, could possibly also have been used as a nominee corporation to facilitate the supposed phony sale.  The Delaware U.S. Attorney on behalf of prosecutors in Slovenia, therefore filed a motion on October 14, 2009 seeking the issuance of a letter rogatory about GNN Inc. The Court then issued its October 22, 2009 Order which permitted discovery via a letter rogatory about GNN Inc. in Delaware: 

  

On October 14, 2009 the Delaware U.S. Attorney had additionally sought the issuance of a different letter rogatory for prosecutors in Poland.  As discussed at "Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street", the prosecutors in Poland too needed information from witnesses residing in Delaware, for a criminal investigation.

Letters rogatory are sometimes also an available legal remedy for: divorcing spouses, judgment creditors, etc. This is especially true if a divorcing spouse, judgment creditor, etc. is searching for assets that have been laundered through multiple jurisdictions and / or are hidden by cross-border elements.  

(Edited December 10, 2009)

Copyright 2009 Fred L. Abrams

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This "Asset Search News Roundup" is about "politically exposed persons" who are accused of hiding cash during alleged bribe-taking.  One such person is Governor José Roberto Arruda of Brasilia.  "Brazil in shock as secret video catches 'corrupt' governor red-handed", reports that Brazilian Federal Police in "Operation Pandora" possess surveillance video of  the Governor supposedly pocketing bribe money.  Others related to the Governor are also under suspicion for hiding cash bribes because of "Operation Pandora". 

The Governor's press secretary and former Cabinet chief were both videotaped suspiciously counting cash into a bag.  The leader of the Governor's regional government was filmed possibly hiding a bribe in her handbag.  A video clip reveals that "Tribuna do Brasil" newspaper owner Alcyr Collaço, might too have concealed a bribe in his underpants.  "Corruption Allegations Against Federal District Governor" reveals that a different video, could show Brazilian lawmakers Rubens Júnior César Brunelli and Leonardo Prudente praying after the supposed secret transfer of a bribe. 

One U.S. lawmaker similarly accused of hiding bribes is former Massachusetts state senator Dianne Wilkerson.  The surveillance video / still photos at "Public Corruption Charges Against Two Politically Exposed Persons" allegedly show her concealing a bribe by stuffing it into her bra.  A pretrial conference in her public corruption case is currently scheduled for December 15, 2009, according to the relevant docket report:

Copyright 2009 Fred L. Abrams

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A complaint verified by Former Premier Michael Misick of the Turks and Caicos Islands, claims hip- hop pioneers David Mays and Raymond Scott breached the Z & M Media LLC operating agreement, at Exhibit "A".  The Former Premier, Mr. Mays, Mr. Scott and others, are believed to hold ownership interests in Z & M Media, which is the operating company for the biweekly  "Hip Hop Weekly Magazine". 

The complaint additionally seeks damages for more than a million dollars from Mr. Mays and Mr. Scott because of an alleged fraud / embezzlement scheme. Amended Complaint at ¶¶ 161-164.  It asserts that Mr. Mays and Mr. Scott might have misappropriated cash from Z & M Media. Id. at ¶¶ 33-44. 

In responding to the complaint, Mr. Mays denied any wrongdoing via his opposing affidavit.  He also stated that Hip Hop Weekly was "the bible of the hip hop industry" with an estimated readership of one million. Opposing Affidavit ¶4.  Since February 2009, the magazine has been sold by the "CVS" chain and at many other retailers throughout the U.S., according to a letter from its distributor:

On April 20, 2009 the Court issued a temporary restraining order against Mr. Mays and Mr. Scott, which prohibited any violation of the above-mentioned operating agreement.  This restraint was continued by the Court's Order dated May 19, 2009.  Via their July 14, 2009 answer, counterclaim and third-party complaint, Mr. Mays and Mr. Scott however, alleged that the Former Premier had unjustifiably brought the complaint to gain complete control of Z & M Media.  The Former Premier would then supposedly sell Z & M Media and its assets to fund his defense against a "likely criminal prosecution by the British government". (Answer, Counterclaim & Third-Party Complaint, at pp. 23-24, ¶3).

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As I previously mentioned at the December 5, 2008 "Asset Search News Roundup", former NYPD Police Commissioner Bernard Kerik is alleged to have been involved in a public corruption scheme and tax fraud.  Mr. Kerik's superseding indictment in U.S.A. v. Bernard B. Kerik, 07-cr-1027, accuses him of trying to secure city contracts for a New Jersey company which had supposedly paid him illegally through apartment renovations.

Mr. Kerik could have accepted some of this alleged illegal payment after being sworn in as New York City's 40th police commissioner.  He is also accused of concealing the same by failing to report it as taxable income and may have taken false deductions in a tax fraud.  Sup. Indict. ¶¶ 20 (c) & 28-31.  

Although Mr. Kerik had been freed because of the $500,000 bail package mentioned at "Former NYC police chief Kerik jailed before trial", he was remanded by an October 20, 2009 Order revoking the conditions of his supervised release.  Before issuing this Order, the Court presumably considered the Government's October 14, 2009 letter:

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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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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.

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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

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

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

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

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

Copyright 2009 Fred L. Abrams

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

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

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

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

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Politically exposed persons who are involved in public corruption schemes, sometimes use money laundering to hide bribes or other illicit proceeds.  Although not accused of money laundering, former Detroit city councilwoman Monica Conyers, was a politically exposed person suspected of accepting bribes.  Monica Conyers is also the wife of House Judiciary Committee Chairman John Conyers. 

The Detroit News and others reported earlier that Monica Conyers was under investigation for supposedly accepting jewelry and cash.  As was also widely reported, she recently pleaded guilty to a charge of conspiracy to commit bribery.  This bribery conspiracy was outlined in a second superseding information filed June 26, 2009.  According to Monica Conyers' plea agreement, her bribe-taking involved a wastewater treatment contract between Synagro Technologies Inc. and the City of Detroit. 

Unlike Monica Conyers, former Massachusetts state senator Dianne Wilkerson has pleaded not guilty to public corruption charges.  I first wrote about Diane Wilkerson in my November  5, 2008 "Asset Search  News Roundup".  As a second superseding indictment in U.S.A. v. Wilkerson, 1:08-cr-10345 mentions, Dianne Wilkerson is accused of violating 18 U.S.C. §1951 ("the Hobbs Act") and other federal laws.  The government is also seeking the forfeiture of Ms. Wilkerson's assets, pursuant to 18 U.S.C. §981 (a) (1) (C) and 28 U.S.C. §2461 (c).      

Furthermore, an FBI Special Agent's Affidavit relies on surveillance video / still photos to support the government's contention that Diane Wilkerson had taken bribes related to a state liquor license.  The government's still photos were highly publicized and one of them supposedly showed Diane Wilkerson on June 18, 2007 hiding a $1000 bribe in her bra.  The Special Agent's Affidavit at pp. 6-7, ¶ 15,  referred to some of these still photos as Exhibits "C" and "D":

 

 

 

 Photos: U.S. District Court File, U.S.A. v. Wilkerson

Copyright 2009 Fred L. Abrams

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Ernst & Ernst Collector's Gallery owner Donald Dean Seybold, might forfeit 2000 pieces of fine art which include: paintings, prints, sculptures, plates and books.  Mr. Seybold could also end up forfeiting: a Las Vegas time share, a jeep, a sports utility vehicle and $3.2 million dollars. 

Federal prosecutors are seeking asset forfeiture of these items pursuant to 18 U.S.C. §§981 & 982; 21 U.S.C.  §853(p) and 28 U.S.C. §2461(c). This is happening because Mr. Seybold is accused of defrauding art investors in a Ponzi scheme.  Mr. Seybold's indictment claims that he made false representations to investors, that they could profit from the purchase and resale of certain art and art packages. 

The relevant art, art packages and art buyers are however, believed to have all been fictitious. (Indictment, at ¶3).  Mr. Seybold is suspected of violating 18 U.S.C. §1343, (wire fraud), by: "fraudulently us[ing] money obtained from later investors to pay off earlier investors."  (Id., at ¶¶6).  The docket report in U.S.A. v. Seybold, additionally reveals that Mr. Seybold made a June 1, 2009 pretrial discovery request to elicit information from prosecutors, about their case against him.

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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Identity theft can play a role in white-collar crimes ranging from money laundering to tax fraud.  Perhaps most interesting are the schemes which share identity theft and money laundering as common elements, like the one mentioned at "A Tax Fraud & Identity Theft From Miami".  Identity theft and money laundering are similarly alleged to have occurred in the case of U.S.A. v. Renee Gill Pratt, et. al. Criminal No. 2:08-cr-00140. 

The May 22, 2009 superseding indictment in Pratt, alleges that former Louisiana state representative and New Orleans city councilwoman Renee Gill Pratt participated in a RICO criminal enterprise which misappropriated government funds and concealed assets.  Said superceding indictment contains a total of thirty-four counts alleging money laundering, aggravated identity theft and other crimes, as mentioned by an FBI press release.

Identity theft is of course, not just limited to cases involving money laundering.  In U.S.A. vs. Torrella et. al. 3:07-cr-05775 for example, data brokers Emilio and Brandy Torrella pleaded guilty on May 20, 2008 to violating 18 U.S.C. §1028A (aggravated identity theft), among other things.  As my post "Pretexting During An Asset Search" explained, the Torrellas were accused with private detectives, of illegally obtaining confidential information from the I.R.S., Social Security Administration, pharmacies, medical offices and various state labor departments. 

The Torrellas had violated people's privacy rights and committed aggravated identity theft by making pretext calls, (i.e. eliciting information by using false identities / false pretenses in telephone calls).  They are now scheduled for sentencing before the Court on July 10, 2009. 

Copyright 2009 Fred L. Abrams  

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The Wall Street Journal article "Madoff Used U.K. Office in Cash Ploy, Filing Says", states that Bernard Madoff is expected to plead guilty today to 11 felony counts arising out of his alleged Ponzi scheme.  That article also mentions that Mr. Madoff is accused of concealing assets by money laundering in the U.K.  Other recent reports about Bernard Madoff have been about whether he or his wife tried to hide / dissipate assets by transferring them.  Mr. Madoff for instance, may have tried to conceal some assets by mailing $1 million dollars in jewelry from New York to Florida, as mentioned by "Hiding Assets Through Portable Valuable Commodities". 

Meanwhile, Mr. Madoff's wife Ruth, might have also tried to conceal Mr. Madoff's assets by transferring some of them to herself.  According to a New York Times piece, Mrs. Madoff withdrew $15.5 million from a company partly owned by Mr. Madoff.  The withdrawal was actually in the form of two wire transfers to Mrs. Madoff, on November 25 & December 10, 2008.  The December 10 wire transfer had even occurred just one day before Mr. Madoff was arrested for his alleged Ponzi scheme.  These same wire transfers are specifically memorialized by the two documents below:

 

The N.Y. Times piece also mentions Mr. Madoff''s claim, that a N.Y.C. penthouse and another $62 million supposedly belong to Mrs. Madoff and are arguably not subject to governmental seizure.  "In Madoff asset search, wife's worth adds intrigue", similarly raises the question of whether Mr. Madoff is actually the true beneficial owner of these same assets allegedly belonging to Mrs. Madoff.  A beneficial owner anticipating seizure / forced collection proceedings may of course, make a fraudulent transfer to a spouse or ex-spouse, as described by Concealing Assets By Conveying Them and "Using Divorce To Dissipate Assets & Delay Creditors".

Depending on the circumstances, the Court could end up analyzing whether Mrs. Madoff was a wrongful transferee / involved in fraudulent transfers with Mr. Madoff.  In doing so, the Court might consider whether the November and December wire transfers to Mrs. Madoff were marked by "the badges of fraud".  As more fully set forth in "Badges Of Fraud In Debt Collection, Divorce & Bankruptcy", the badges include: knowledge of a creditor's claim; whether there was inadequate consideration; etc.  

Copyright 2009 Fred L. Abrams

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My post "Domestic Shell Companies & An Asset Search" explained that assets are sometimes concealed by shell companies used in a variety of financial frauds.  In fact, states like Nevada and Delaware are especially prone to the formation of shell companies lacking transparency.  Once such shell companies are established in Nevada, Delaware or elsewhere, they can be a means to open nominee bank accounts for a beneficial owner to hide his / her assets in.

Two federal cases pending in the he U.S. District Court for the Northern District of California, perhaps highlight how domestic shell companies might possibly be misused.  In the first of these cases, a December 18, 2008 criminal complaint was filed against Mr. AUSAF UMAR SIDDIQUI, alleging money laundering (18 U.S.C. §1957) from January 2005 to November 2008. 

Although Mr. SIDDIQUI had reportedly earned an annual salary of about $225,000 as Vice President of Merchandising and Operations at Fry's Electronics, Inc., he still supposedly defrauded Fry's out of tens of millions of dollars.  As a review of the criminal complaint against Mr. SIDDIQUI reveals, Mr. SIDDIQUI was accused of laundering kickbacks he received from Fry's Electronics' vendors.  Paragraphs "8" & "23" of the complaint, claimed that Mr. SIDDIQUI concealed his kickbacks through the shell company PCI INTERNATIONAL, LLC-- which Mr. SIDDIQUI allegedly operated from his residence. 

A San Francisco Chronicle article and Yahoo.Com news story from December 2008, both reported that Mr. SIDDIQUI had hidden about $65 million through a shell company.  The docket report in Mr. SIDDIQUI's case additionally reveals that Mr. SIDDIQUI was indicted on January 6, 2009 and charged with five counts of wire fraud (18 U.S.C. §1343) along with four counts of money laundering (18 U.S.C. § 1957 {a}).  The government is also seeking asset forfeiture under 18 U.S.C. §981(Civil Forfeiture), 18 U.S.C. §982 (Criminal Forfeiture), & 28 U.S.C. §2461(Mode of Recovery), as is fully set forth in Mr. SIDDIQUI's indictment.

According to the unproven allegations in a second Northern District of California case, (i.e. Eclectic Properties East, LLC et. al. v. The Marcus & Millichap Company), real estate giant Marcus & Millichap Compay may too have misused domestic shell companies. Plaintiffs' civil RICO complaint in that case alleges a fraudulent scheme involving 22 commercial properties in 4 states, which could have caused the loss of tens of millions of dollars.  According to that RICO complaint, the Defendants had sold properties after "artificially inflat[ing]" their value by using among other things, shell companies formed in Nevada and Delaware. (Plaintiffs' Complaint, at ¶¶ 2, 5, 56-64, 69, 83, 85 & 86) (allegation of fraud via "dummy" or shell companies).

Plaintiffs' RICO Complaint filed February 4, 2009, can be viewed below:

• Pages "1" - "51"

• Pages "52" - "112"

• Pages "113" - "176" (with supporting exhibits)

 Copyright 2009 Fred L. Abrams

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My September 26, 2008 Asset Search News Roundup mentioned that public corruption crimes can involve concealing bribe payments or other illicit assets.  This is perhaps why financial institutions sometimes check lists of "Politically Exposed Persons", (i.e. individuals holding high foreign public office, a.k.a. "PEPs"), in an anti-money laundering program.  These lists of "Politically Exposed Persons" are commercially available from World-Check's PEP Database, WorldCompliance's Global PEP List, etc.

The Wolfsberg Group and the Financial Action Task Force's "6th Recommendation" consider Politically Exposed Persons to be money laundering risks.  Page 10 of the Basel Committee's October 2001 publication "Customer due diligence for banks", similarly describes the problem of Politically Exposed Persons hiding assets through money laundering. 

Furthermore, according to an Associated Press article, ("Davos: Don't let crisis breed more corruption"), the Annual Meeting of the World Economic Forum just warned that the global financial crisis could lead to even more public corruption.  We may therefore experience an increased risk of Politically Exposed Persons using money laundering to hide bribe payments and / or other criminal proceeds.  

(Edited January 5, 2010)

Copyright 2009 Fred L. Abrams

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A "Misappropriated Public Assets" civil petition in France claims that the presidents of Gabon, Congo Brazzaville and Equatorial Guinea are likely hiding assets.  The "Misappropriated Public Assets" petition against the three heads of state was filed December 2, 2008 by both Transparency International (France) and the Sherpa Association. 

The assets at issue in France might possibly originate from public funds stolen by President Bongo, President Denis Sassou-Nguesso and President Obiang Nguema.  As a December 2, 2008 press release partly mentions, all three presidents may be using their relatives as nominees to hide valuable real estate and automobiles in France.  President Bongo and President Denis Sassou-Nguesso could also be hiding assets in France through offshore bank accounts opened there.

President Bongo is suspected of hiding 39 Apartments, 70 bank accounts and 9 automobiles.  President Denis Sassou-Nguesso might similarly be concealing 18 apartments, 112 bank accounts and 1 vehicle.  Meanwhile, President Obiang Nguema may be hiding 1 apartment and 8 automobiles.  These particular assets were uncovered during a 2007 police investigation and had been the subject of earlier legal proceedings. 

Copyright 2009 Fred L. Abrams

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My post "Pretexting During An Asset Search" explained that using false pretenses may violate privacy laws during an asset search.  "Attorney Christensen's Wiretap Conviction" additionally mentioned the case of a California attorney who violated privacy laws by conspiring to wiretap a divorcing spouse's phone. 

Privacy laws however, don't just criminalize certain types of pretexting or wiretapping.  They also prohibit the computer intrusions mentioned at 18 U.S.C. §1030 (Fraud and related activity in connection with computers).  Indicted under 18 U.S.C. §1030 in U.S.A. v. David C. Kernell, was the alleged hacker of Governor Palin's e-mail account.  The hacker(s) of 33 celebrity Twitter accounts described in "Following The Twitter Hack Trail To DigitalGangster" might similarly be indicted for a suspected violation of 18 U.S.C. §1030.  

Minneapolis Police Officer Michael David Roberts was also indicted pursuant to 18 U.S.C. §1030 for allegedly accessing a police computer system to sell nonpublic information related to a Minnesota license plate.  Meanwhile, former State Department Intelligence Analyst Lawrence C. Yontz entered a plea agreement this past September after he was accused of violating 18 U.S.C. §1030.  Page 4 of Mr. Yontz's "Factual Basis For Plea" explained that he had accessed a State Department computer out of "idle curiosity" and:

"...viewed the passport applications of nearly 200 celebrities, athletes, actors, politicians and their immediate families, musicians, game show contestants,members of the media corps, prominent business professionals, colleagues, associates, neighbors,and individuals identified in the press." (Id. at page 4).

Copyright 2009 Fred L. Abrams

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My father attended Far Rockaway High School at the same time as Mr. Bernard Madoff and in fact, they were in the same graduating class.  He remembers from his high school yearbook "The Dolphin", that Mr. Madoff had lived in the Rockaways and was an ardent swimmer.  My father even showed me "The Dolphin", which contains a picture of Mr. Madoff in his youth.  The Far Rockaway of Mr. Madoff's youth however, has little in common with the offshore high-risk geographical locations Mr. Madoff might have concealed assets in.

As I briefly indicated in the most recent New York Times article "Madoff Spotlight Turns To Role  Of Offshore Funds", enormous sums of money may be hidden by using multiple jurisdictions and nominees.  This same conclusion is partly reached by the Financial Action Task Force, whose "Money Laundering FAQ" webpage states that: "Large-scale money laundering schemes invariably contain cross-border elements."   According to "Madoff Spotlight Turns To Role Of Offshore Funds", cross-border elements in Mr. Madoff's case might include offshore locations such as: the Cayman Islands, Bermuda, Ireland, Singapore and banks in Switzerland.

To interdict illicit assets possibly hidden by Mr. Madoff in these offshore locations, governmental authorities could be turning to U.S. Treasury Department's FinCen and other Financial Intelligence Units.  These Financial Intelligence Units may be using red flags to follow a money trail left by Mr. Madoff or his suspected nominees.  By recognizing red flags, Financial Intelligence Units or other governmental authorities might ultimately locate and forfeit assets beneficially owned by Mr. Madoff, which arise from his alleged $50 billion dollar Ponzi scheme.

(Edited January 15, 2009) 

Copyright 2008 Fred L. Abrams

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While Byron Murphy was serving a 15 year sentence for robbing a Mesa, Arizona Radio Shack, he filed a pro se prisoner's civil rights complaint against the F.B.I. and Special Agent Joe Gordwin, Jr.  Although the trial court issued its August 15, 2006 Order dismissing Mr. Murphy's civil rights complaint, it permitted him to file a first amended complaint.

Mr. Murphy's first amended complaint alleged that his wife had an extramarital affair with Special Agent Gordwin and that Special Agent Gordwin had taken her to meetings to scare her into continuing the affair.  Mr. Murphy further alleged that his life and those of his family members had been threatened by Special Agent Gordwin and that Special Agent Gordwin had tampered with a criminal case against Mr. Murphy.

In its September 11, 2006 Decision, the trial court finally dismissed Mr. Murphy's first amended complaint on the ground of legal insufficiency.  Mr Murphy appealed this dismissal by filing a Notice of Appeal to the Ninth Circuit Court of Appeals.  The Ninth Circuit then affirmed the dismissal of Mr. Murphy's complaint in its December 28, 2007 Judgment.  Five months later, Special Agent Gordwin however, was indicted in U.S.A. v. Gordwin, United States District Court for the District of Arizona, Index No. 2:08-cr-00535. 

As more fully set forth in said indictment, an East Valley Tribune article and a press release, Special Agent Gordwin is suspected of committing six counts of “honest services” wire fraud, five counts of making false statements and seven counts of witness tampering.  Among other things, the indictment alleges a cover-up and that Special Agent Gordwin even misused an FBI vehicle for an "improper intimate relationship".  The indictment's most notable allegations may however, be what Mr. Murphy's First Amended Complaint had also alleged: that Special Agent Gordwin made threats; tampered with Mr. Murphy's criminal prosecution; and had carried on an affair with Mr. Murphy's wife.

Copyright 2008 Fred L. Abrams

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Ndubuisi Joseph Okafor, M.D., had practiced primary care medicine through the Okafor Group in the Washington D.C. metropolitan area.  He was however, sentenced in U.S.A. v. Okafor, to 65 months in prison followed by three years of supervised release for health insurance fraud and tax evasion.  He was also ordered to pay restitution in the amount of $769,192 to tax authorities and $33,060 to Medicare.


As partly described by his July 18, 2008 criminal judgment, Dr. Okafor had entered a plea agreement for violating 18 U.S.C. §1347 (Healthcare Fraud) along with 26 U.S.C. §§7201 (Tax Evasion) & 7206 {2} (False Income Tax Returns).  According to a press release about Dr. Okafor's plea agreement, Dr. Okafor had: submitted phony bills to Medicare and other health care providers; filed false tax returns; and diverted business revenue by using a corporate checking account to pay for personal expenses. 


Based on that same press release, Dr. Okafor had also engaged in an abusive offshore tax avoidance scheme.  This was true because Dr. Okafor had used his two offshore shell companies formed in the Bahamas to transfer undeclared revenue from his Washington D.C. Okafor Group.  As suggested by "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy", the use of shell companies and a high-risk geographical location like the Bahamas, is a red flag that assets may have been hidden.


Copyright 2008 Fred L. Abrams

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In "Army Major Arrested For Money Laundering", I described how Major John Cockerham and his wife Melissa Cockerham were prosecuted for a bribery / money laundering scheme.  According to their indictment, Major Cockerham had taken bribes as an Army Contracting Officer in Kuwait while awarding contracts for bottled water, etc.  Since their indictment, Major Cockerham pleaded guilty to conspiracy, bribery and money laundering conspiracy, and his wife pleaded guilty to money laundering conspiracy.  Although a recent docket report reflects that Major Cockerham and his wife await sentencing on October 22, 2008, Major Cockerham's sister Carolyn Blake, is still scheduled for trial in connection with their case. 

A second Army Major however, also awaits sentencing because of the separate bribery scheme described by the three-count Information filed in U.S.A. v. James Momon, Jr.  Major Momon, (who in 2005 took over Major Cockerham's job as a Contracting Officer in Kuwait), pleaded guilty on August 13 to conspiracy and bribery charges.  A press release about the guilty plea, mentions that Major Momon began taking bribes in 2005, while awarding bottled water and other Army contracts. 

Just as Major Cockerham hid bribe monies by using offshore bank accounts in high-risk locations such as Kuwait and Dubai, Major Momon similarly hid his bribes in bank accounts in the Philippines.  Furthermore, both Major Cockerham and Major Momon had each used shell companies as a means to conceal the bribes they had received.

Copyright 2008 Fred L. Abrams

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Privacy and other federal laws generally prohibit pretexting, (the use of false pretenses), when contacting a U.S. bank, phone company or government agency for confidential information.  One example of pretexting would be using a false identity while phoning a bank to elicit a bank customer's personal account information.  If an information broker, private investigator, etc. pretexts during an asset search, some of the following federal statutes might possibly apply:

• 15 U.S.C. § 45 (Unfair methods of competition unlawful; prevention by Commission):  By relying on both 15 U.S.C. §45 and 15 U.SC. § 53 (False advertisements; injunctions and restraining orders), the Federal Trade Commission can sue pretexters for fraudulent, deceptive and unfair business practices.

• 15 U.S.C. § 6801 et. seq. (the Gramm-Leach-Bliley Act): makes it illegal to access private information by making pretext phone calls to a financial institution or its customers.  As my post "The Gramm-Leach-Bliley Act & An Asset Search" further explains, 15 U.S.C. § 6821 also prohibits the use of false documents to obtain private customer information.

• H.R. 4709, 109th Congress (2006) (Telephone Records and Privacy Protection Act of 2006):  This statute generally prohibits telephone record pretexting and the sale of illegally acquired telephone records.

• 18 U.S.C. § 1028 (Fraud and related activity in connection with identification documents, authentication features, and information):  Both this statute & 18 U.S.C. §1028A. (Aggravated identity theft), prohibit a broad range of frauds in connection with identification documents.

• 18 U.S.C. § 1341 (Frauds and swindles): Covers frauds which use U.S. mail.  It and 18 U.S.C. § 1343 (Fraud by wire, radio, or television), are the ubiquitous federal fraud statutes.

• 26 U.S.C. § 7213 (Unauthorized disclosure of information): Prohibits the unauthorized inspection or disclosure of U.S. tax returns or return information.   Subsection (a) (4), entitled "Solicitation", expressly covers the illegal sale and /or illegal receipt of tax return information.

• 42 U.S.C. § 1307 (Penalty for fraud): Among other things, covers misconduct like eliciting social security numbers through pretext calls to the U.S. Social Security Administration.

•  47 U.S.C. § 222 (The Telecommunications Act of 1996):  Section (c) (2) of this Act generally prohibits telephone record disclosure absent  "...affirmative written request by the customer, to any person designated by the customer".

One who pretexts in violation of the foregoing statutes, may face a Federal Trade Commission lawsuit or even criminal indictment.  In Federal Trade Commission v. Action Research Group, Inc. et. al. for example, information brokers ended up stipulating to a final order which permanently enjoined them from telephone record pretexting.  In Federal Trade Commission v. Victor L. Guzzeta d/b/a Smart Data Systems, yet another information broker stipulated to a final judgment, which similarly enjoined him from financial record pretexting.


In the U.S. District Court in Tacoma however, Mr. and Mrs. Torrella are being criminally prosecuted for their pretext calls to the I.R.S., Social Security Administration, pharmacies, medical offices and various state labor departments.  According to their indictment, the Torrellas made the pretext calls while performing asset searches and other services for the private investigators who are their co-defendants. 


The Torrellas and /or their co-defendants are charged with Conspiracy and violating many of the above-cited federal statutes: 18 U.S.C. § 1343 (Wire Fraud); 42 U.S.C. § 1307 (Penalty for Fraud); 26 U.S.C. § 7213 (Unauthorized  Disclosure of Information); and 18 U.S.C. §1028A (Aggravated Identity Theft).  Based on their May 20, 2008 plea agreements, both Mr. and Mrs. Torrella await sentencing.  According to a September 3, 2008 entry in their docket report, said sentencing has been scheduled by U.S. District Court Judge Ronald B. Leighton for February 13, 2009.

(Last Edited 11/3/08)

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

The Financial Action Task Force also publishes money laundering typologies.  Its February 29, 2008 Terrorist Financing Typologies Report, (Copyright © FATF/OECD. All rights reserved), explains some of the methods terrorists use to raise and then transfer illicit funds. In addition to the foregoing, the Egmont Group and the Financial Action Task Force publish many money laundering typologies at their websites.

"100 Cases From The Egmont Group" provided by The Egmont Group's Website.

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.

After the judge in U.S.A. froze / restrained numerous financial accounts in July 2007, Ms. Battistella and other Rovelli family members eventually executed a settlement agreement consenting to the forfeiture of thirteen accounts.  As Mr. Munari's own settlement agreement further demonstrates, he too consented to forfeit an additional four accounts.  Although on November 21, 2007 the Court issued a Final Judgment of Forfeiture regarding the total of seventeen financial accounts, there may still be some unresolved issues.  According to Forbes.Com, a grand jury has been convened in Florida to examine whether Mr. Munari's money laundering scheme criminally involved: Wachovia; Citigroup; Merrill Lynch; Morgan Stanley; Lazard and others. 


Copyright 2007-2008 Fred L. Abrams

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• 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 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 possibly violate Art. 305bis Swiss Criminal Code: Money Laundering (English Translation).  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).  

Given all of the foregoing, there are a number of legal strategies that might be used in connection with the divorcing husband's assets hidden in Switzerland.  Among other things these strategies could include: 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.

(Edited February 1, 2010)

Copyright 2007-2010 Fred L. Abrams

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