Divorce & Child Support

3 HInts About Asset Searches

A divorcing spouse; judgment creditor; bankruptcy creditor; or a beneficiary under a trust or will; may face an adversary hiding assets through nominees (i.e. intermediaries). See cf., Fourth Inv. LP v. United States, 720 F.3d 1058, 1070 (9th Cir. 2013) (six-part test for nominee ownership applied to tax lien case). An adversary can hide real estate, automobiles, jewelry; and offshore bank accounts by titling them in the names of nominees. Nominees are easily accessed through nominee incorporation services like the one at the “Anonymous Panama Corporation” webpage.

The “Anonymous Panama Corporation” webpage can be used to form a Panamanian shell company with “nominee directors.” The initial fee for this service is $1200. The webpage suggests that one can “save taxes or protect…assets” by forming a Panamanian shell company:

[Y]our personal information will not be available in any government records, but [sic] still maintain complete control over your corporation. The Nominee Directors will not have control over your corporation and can be replaced at any time.

This type of corporation is a good choice if your objective is to save taxes or protect your assets. The actual owner of this corporation is not registered in public records.

Shell companies are not the only things that can be utilized as nominees. Lawyers; accountants; bankers; financial advisors; paramours; family members and trusts can be nominees. In the criminal prosecution called USA v. James S. Faller II, Case #: 13−cr−00029, the Court discussed how a nominee trust could be part of a scheme to hide assets from the IRS. Pages 13-14 of the Court’s 4/30/15 Memorandum Opinion and Order highlighted Mr. Faller’s alleged misuse of nominees.

Mr. Faller from Russell Springs, Kentucky, relied on “nominee names” to evade taxes, an IRS Special Agent’s affidavit claimed at ¶68. Prosecutors argued Mr. Faller evaded taxes by titling his home and bank account in the name of a trust believed to be Mr. Faller’s nominee. Mr. Faller was convicted of tax fraud and on 1/29/16 Mr. Faller was sentenced to 36 months’ imprisonment. Although Mr. Faller appealed his conviction, the U.S. Court of Appeals upheld the conviction at a 1/10/17 Opinion.

Image: Robert Kneschke/Shutterstock.com

Copyright 2017 Fred L. Abrams

12 8 16 Post
This 34th post in the “Divorce & Hidden Money” series highlights ways assets may be hidden in a money laundering circuit.

The November 30th New York Times Magazine article “How To Hide $400 Million” described the divorce between Sarah Pursglove & Finnish internet tycoon Robert Oesterlund. A document from Mr. Oesterlund’s lender allegedly indicated Mr. Oesterlund’s net worth was $400 million, “How To Hide $400 Million” said. This article also said Mr. Oesterlund claimed during the divorce that the ‘net family property’ was only worth a few million dollars.

Ms. Pursglove however, did not believe this and tried to search for assets reportedly hidden by Mr. Oesterlund. Based on “How To Hide $400 Million,” Mr. Oesterlund was an ultra-high-net-worth spouse who allegedly hid assets through:

  1. gatekeepers (such as lawyers & bankers);
  2. multiple jurisdictions;
  3. offshore bank accounts;
  4. shell companies;
  5. & trusts.

These can all be used as laundering links which wash assets in a money laundering circuit. A money laundering circuit is shown at a chart on a webpage from FINTRAC, a Canadian financial intelligence unit. An ultra-high-net-worth spouse may place assets into a laundering circuit through: structuring bank deposits; money mules/bulk-cash smuggling; diamonds or other portable valuable commodities; false invoicing schemes (i.e. trade-based laundering); wire transfers; etc. How do you perform an asset search when these methods are used to hide assets? Click here for seven tips.

Image: red mango/Shutterstock.com

Copyright 2016 Fred L. Abrams

The instant post mentions hiding assets through: a lawyer; offshore bank accounts; etc. It is the 34th post at the "Divorce & Hidden Money" series.
The instant post mentions hiding assets through a lawyer; offshore bank accounts; etc. It is the 33rd post at the “Divorce & Hidden Money” series.

Ohio lawyer David Keith Roland was recently disbarred for using a Swiss bank account in a scheme to help a divorcing wife hide marital assets from her divorcing husband. The divorcing wife in this alleged scheme was chiropractor Denise M. Carradine of Boardman, Ohio. Mr. Roland had represented Ms. Carradine in a divorce action commenced by Ms. Carradine’s then husband, Eric Martin.

As part of the alleged scheme to hide marital assets from Mr. Martin, Ms. Carradine reportedly supplied Mr. Roland with $854,261.10. The Ohio Supreme Court Decision disbarring Mr. Roland said Ms. Carradine had “structured” payments of this money to Mr. Roland “to avoid detection under banking laws.” Mr. Roland deposited the $854,261.10 into two client trust accounts. Mr. Roland then wire transferred $814,105.96 of the $854,261.10, into a bank account at Maerki Baumann & Co. in Zürich, Switzerland.

This Swiss bank account may have been a nominee bank account, (i.e. an account titled in the name of an intermediary), beneficially owned by Ms. Carradine. Some of the money from the Swiss bank account was also transferred into a bank account located in the Turks & Caicos Islands. Based upon the foregoing, Mr. Roland’s & Ms. Carradine’s alleged scheme to conceal marital assets might have involved: structuring; a gatekeeper/lawyer; nominee bank accounts; multiple jurisdictions; & offshore banks.

Illustration: ollo/Shutterstock.com

Copyright 2016 Fred L. Abrams

Zinnel Post
This 32nd Asset Search Blog post in my “Divorce & Hidden Money” series, explains how Steven Zinnel is thought to have hidden assets during his divorce & personal bankruptcy.

Plastic surgeon Michael D. Brandner & business owner Goderick Augustus Benjamin were accused of committing federal crimes & hiding assets from their wives. Like Dr. Brandner & Mr. Benjamin, Steven Zinnel was a divorcing husband suspected of concealing assets from his wife. According to prosecutors in USA v. Zinnel, Steven Zinnel had hidden assets from his wife Michelle Zinnel; & Steven Zinnel had fraudulently concealed assets during his personal bankruptcy.

Mr. Zinnel reportedly filed his personal bankruptcy to hamper the Family Court’s distribution of property to Michelle Zinnel, during the couple’s divorce. Mr. Zinnel’s e-mail to Michelle Zinnel dated July 15, 2001, seemed to give a glimpse into Mr. Zinnel’s bankruptcy scheme. The e-mail said that as a consequence of Mr. Zinnel’s bankruptcy, Mr. Zinnel expected “all the money to be gone in less than two months” & that “[t]he property settlement will then be very easy.

During his personal bankruptcy, Mr. Zinnel however, failed to disclose valuable assets which were apparently hidden from Michelle Zinnel & others. Prosecutors ultimately charged Mr. Zinnel with money laundering & bankruptcy fraud. At Mr. Zinnel’s superseding indictment &/or other court filings, prosecutors essentially claimed that Mr. Zinnel concealed assets four ways, through:

  1. lawyers;
  2. shell companies;
  3. a business associate who Mr. Zinnel employed as his nominee/intermediary;
  4. nominee bank account[s] (i.e. accounts maintained in the name of others).

On March 4, 2014 Mr. Zinnel was sentenced to 17 years & 8 months of prison for bankruptcy fraud & money laundering. This case is perhaps best summarized by these two sentences prosecutors wrote at a June 14, 2013 court filing:

The Government’s theory of this case is that Defendant Zinnel wanted to commit bankruptcy fraud and money laundering for reasons of greed and spite. Zinnel loved money and hated his ex-wife [Michelle Zinnel]. USA v. Zinnel, Gov’t Opposition Paper filed 6/14/13, Docket No. 179, at p. 1.

Image:  Nikolai Moiseenko/Shutterstock.com

Copyright 2016 Fred L. Abrams

Your Search For Assets Hidden Offshore

When naming offshore havens for opening secret bank accounts, people usually mention Switzerland, the Cayman Islands, Liechtenstein, etc.  Meanwhile, bank accounts in almost any country can be put to work to hide & place assets out of reach. “Using Multiple Jurisdictions To Launder Money” discussed a suspected scheme to bribe judges in Italy.  According to prosecutors, illicit proceeds from this offshore scheme were hidden in bank accounts located in the U.S. & elsewhere. “Money Laundering, Marital Assets & Divorce” outlines another scheme which relied on cross-border elements to conceal assets. The scheme involved a divorcing spouse in the U.S. who hid undeclared revenue in a Swiss bank & then “washed” it through a bank in Germany.¹

As the above essentially suggests, tracking assets offshore can become a critically important part of your asset search. How do you search for assets hidden offshore? One way is by employing legal tools. The following article discusses the tools federal prosecutors may use to collect evidence from witnesses residing offshore.² Two of the tools the article mentions are compelled consent forms & letters rogatory.  These two tools are not just for use by prosecutors. They are sometimes used by divorcing spouses, judgment creditors & others searching for offshore bank accounts/assets hidden offshore:

Click On The Image To Read The Entire Article

¹The fact pattern supplied at “Money Laundering, Marital Assets & Divorce,” has been changed & sanitized for privacy reasons.

²“Obtaining Foreign Evidence Outside of The Mutual Legal Assistance Treaty Process,” U.S. Attorneys’ Bulletin March 2007, is supplied courtesy of the Executive Office for United States Attorneys.

Image of offshore banking & tax haven concept: ChameleonsEye/Shutterstock.com

Copyright 2016 Fred L. Abrams

Offshore Image 5:30:16
As this 31st post in the “Divorce & Hidden Money” series reveals, you may be able to employ letters rogatory to detect assets hidden offshore.

A letter rogatory is an application to a foreign tribunal. It seeks permission to serve process on or gather evidence from a foreign witness. If you are in a divorce in the United States, letters rogatory can usually help you collect evidence of offshore assets your spouse hid from you. You might use letters rogatory to search for assets which can include: bank accounts; real estate; valuable art; business entities; etc. My February 25, 2015 post mentioned the use of letters rogatory in relation to divorce/child support cases in New York.

The February 25, 2015 post discussed one ex-husband who for 30 years failed to pay spousal maintenance &/or child support to his ex-wife in New York. Since the ex-husband lived in places like Mexico, the Dominican Republic & Barbados, legal proceedings in New York did not get the ex-husband to pay his ex-wife. Had the ex-wife been able to afford it, she might have hired lawyers to seek the issuance of letters rogatory to search for the ex-husband’s offshore assets. You may similarly employ letters rogatory if you are in a divorce outside of the United States & your divorcing spouse hid assets from you in the United States.

These kinds of cases are highlighted at Part 1 & Part 2 of “Asset Searches In The U.S. For Divorces Brought Outside The U.S.”  Below is a translated copy of a letter rogatory arising out of a divorce in the Republic of Colombia at The 8th Family Court, in Barranquilla.¹ In connection with The Family Court’s distribution of community property from a marriage, the letter rogatory requests bank account/bank customer information at Bank of America in the United States.

Letter Rogatory Colomibia

¹The letter rogatory has been partly sanitized for privacy reasons.

Offshore Image With Cash: esfera/Shutterstock.com

Copyright 2016 Fred L. Abrams

This 30th post in the “Divorce & Hidden Money” series highlights a RICO lawsuit Helga Glock commenced in 2014. The lawsuit alleges Glock pistol inventor Gaston Glock initially hid assets via shell companies supplied by Charles Ewert—a resident of Luxembourg known as Panama Charly.

Moneylaundering.com’s Editor-in-Chief Kieran Beer says at his April 11th article, that the Panama Papers represent “an unparalleled look at the…abuse of shell companies, in this case those created by Panama-based law firm Mossack Fonseca.” ¹ Like Mossack Fonseca, Charles Ewert was in the business of forming shell companies. Although based in Luxembourg, Charles Ewert was reportedly called Panama Charly because of the large number of shell companies he had formed in Panama. Charles Ewert is also one of the defendants at Helga Glock’s RICO lawsuit against her ex-husband gunmaker Gaston Glock.

The Court’s docket report shows that last month Helga Glock filed her proposed Second Amended Complaint, (“the Proposed Complaint”), in the RICO lawsuit. The Proposed Complaint asserts that Charles Ewert had supplied Gaston Glock with Panamanian shell company Reofin International S.A. The Proposed Complaint seems to basically allege that Reofin & other shell companies were used as laundering links to conceal assets in a money laundering circuit. It also seems to basically claim that assets belonging to Helga Glock were supposedly hidden from her through: lawyers; sham loans; trade-based money laundering via false invoices &/or leases.

According to allegations at the Proposed Complaint, Charles Ewert, Glock, Inc. & others were members of an alleged RICO enterprise led by Gaston Glock. The Proposed Complaint says that one goal of the alleged RICO enterprise was to deprive Helga Glock of her assets. It claims that Helga Glock detected this alleged scheme in 2011, because of her divorce from Gaston Glock & her ouster from one of Gaston Glock’s companies. Helga Glock apparently filed the Proposed Complaint to search for & recover assets Gaston Glock supposedly hid during the couple’s marriage. Earlier Asset Search Blog posts discussing Helga & Gaston Glock are “Helga Glock’s Search For Gaston Glock’s Assets” & “Helga Glock Claims Gaston Glock Started Concealing His Assets.”

¹Moneylaundring.com’s Webpage, “From The Editor: Will Panama Papers Give Governments New Backbone for Transparency?” Web. Last Viewed May 4, 2016.

Photo: NSC Photography/Shutterstock.com

Copyright 2016 Fred L. Abrams

4 28 16 Post

This post was written by Leila A. Amineddoleh, Esq., of Amineddoleh & Associates LLC. Ms. Amineddoleh has been published extensively on issues related to art, cultural heritage, and intellectual property, and has appeared in major news outlets, including the New York Times, Forbes Magazine, TIME Magazine, and the Wall Street Journal. Ms. Amineddoleh’s post discusses how art assets may be hidden from divorcing spouses, creditors & others. It is also the 29th post at the Asset Search Blog’s “Divorce & Hidden Money” series:

In an entry that was published on this blog, I discussed the ways in which art collectors use undisclosed art holdings and valuation uncertainties to evade legal responsibilities (such as payment of tax bills of alimony to divorced spouses). Just as Audrey Hepburn’s character discovered that her husband hid his wealth in three valuable stamps in the 1963 film “Charade,” art collectors have been using their collections to hide value for years. Difficulties related to valuation arise, particularly when it becomes impossible to locate the artwork or determine the identity of the actual owner. But with breaking news about the “Panama Papers,” suspicion about art’s role in the obstruction of justice and concealment of funds has been confirmed again. Wealthy individuals are using artwork as an investment tool and they are shielding these holdings through shell companies and misleading tools. In light of these facts, the art world is once again coming under scrutiny.

The art market is one of the least regulated markets in the world, as transactions are completed without oversight, due to the nature of the trade. It is particularly shocking as the value of the art market is astronomically high. According to Art Market Report, sales of art exceeded $63.8 billion in 2015.[1]

However, there are valid reasons for anonymity in the art world. First and foremost, secrecy is guarded due to security concerns. Whereas tens of millions of dollars in cash are difficult to walk off with, artworks are usually portable.  A single lightweight canvas may be worth over $100 million, making the object vulnerable to theft. It is important to protect information about the works in private collections to limit the information available to thieves fixated on the objects.

Another reason to hide information is more personal. Collectors may not want to admit to selling works due to poor cash flow. Some owners are forced to sell works when facing financial hardships. Those individuals do not want this information to become public. At the same time, buyers may not want competing buyers to procure an overabundance of information about their purchases. Art is a personal passion, and something that some collectors do not want made public.

However, art is also used to hide assets, evade taxes, and unfairly withhold value from deserving parties (like creditors or divorcing spouses). This regrettable use of art was confirmed after the leak of the “Panama Papers.” In April, a Panamanian law firm, Mossack Fonseca, experienced a security breach and had over 11 million documents from internal files become public. Although illegal to assist someone in tax evasion, Mossack Fonseca specializes in establishing corporate structures to hide assets. The information in the leak confirmed the suspicion that wealthy individuals use shell companies to hide assets in contemplation of impending divorces or litigation. Continue Reading Hiding Art Assets, Anonymity & The Panama Papers

Image For Article About Panama Papers

2008 was the first time I wrote an article mentioning hiding assets via a lawyer in Panama. The article was called “Bearer Shares & An Asset Search.” Although the facts at the article were sanitized & changed for privacy reasons, it described a divorcing husband in the U.S hiding assets from both his wife & the I.R.S. through: a Panamanian lawyer, bearer shares, a shell company & other offshore elements.

Meanwhile, there have been many articles this week discussing the Mossack Fonseca Law Firm headquartered in Panama City, Panama. These articles arise out of the investigation of Mossack Fonseca which is detailed at the “Panama Papers” website published by the International Consortium of Investigative Journalists. Among other things, the website has a page of graphs, with one graph called “The hunt for bearer shares.” This particular graph seems to suggest that Mossack Fonseca employed bearer shares to help clients hide assets offshore.

At its own website, Mossack Fonseca says they are “Offshore Specialists since 1977.”  In this role, Mossack Fonseca is thought to have helped a large number of law-abiding clients transfer assets offshore for legitimate purposes. Mossack Fonseca could however, have also helped a large number of criminals seeking to conceal illicit assets. These criminals might have been tax cheats hiding undeclared revenue; corrupt government officials; & others seeking to conceal money by laundering it offshore.

Any criminals hiding assets through Mossack Fonseca will soon become known, since over 11 million documents at Mossack Fonseca were apparently hacked & leaked to the press. I suspect the hacked documents will show that assets were hidden offshore through elements commonly used to wash vast sums of money. Some of these elements are listed below & they should always be considered by anyone searching for valuable assets hidden from them.

Panama Papers Image: catwalker/Shutterstock.com

Copyright 2016 Fred L. Abrams

Compartments 1

How do you hamper an asset search while hiding vast sums of money across the globe? You may be able to do this by compartmentalizing your actions. Using compartmentalization to fly under the radar is nothing new. For example, terrorists in Paris compartmentalized what they did before their heinous November 13, 2015 attack. This is discussed by former FBI Special Agent Steve Cocco, at “Paris Attackers Displayed Strict OpSec, Planning and Compartmentalization.”

Ponzi schemers; high net worth divorcing spouses; money launderers; tax fraudsters & others can similarly compartmentalize their actions in schemes for hiding assets. The schemes can be as basic as parking money in a secret offshore bank account & directing the offshore bank to mail monthly bank account statements to an offshore post office box. By keeping the money & its monthly bank account statements offshore, they are compartmentalized & out of the spotlight. This makes it harder for domestic tax authorities; a divorcing spouse; a judgment creditor; & anyone else to detect the hidden money.

At earlier Asset Search Blog posts I wrote about the sham loan depicted by the link chart featured below.¹ I mention the loan again because it shows how strict compartmentalization can be employed to hide assets. As set forth at Money Laundering, Marital Assets & Divorce, the loan was used by a divorcing husband to launder both marital assets and undeclared revenue. Prior to the equitable distribution hearing in his divorce proceeding, the husband alleged he had a liability of $29 million owed to a prime bank in Germany because of an arm’s length business loan.

According to the husband, he was indebted to the German bank & had defaulted/failed to repay the loan. The supposed arm’s length loan was however, back-to-back , (i.e. a fully collateralized loan in which the borrower and the lender are one and the same). As a consequence of strict compartmentalization, the divorcing wife would not ordinarily be able to recognize that the divorcing husband was both the borrower and lender of the loan:

(Click On The Link Chart To Enlarge)

 

¹For privacy reasons, some of the facts at the link chart have been changed from the original legal matter.

Copyright 2007-2016 Fred L. Abrams