Laundry List Post:ImageGovernmental authorities follow money trails in order to interdict assets hidden by narco-traffickers; money launderers; Ponzi schemers; tax fraudsters & other determined criminals. During your asset search, you can similarly follow a money trail to track assets which have been hidden from you. You might detect a money trail by scrutinizing data related to the person or business entity suspected of hiding assets.

You can collect this data in some situations, by issuing subpoenas; using compelled consent forms; or through additional legal tools. Below is the “Financial Investigations Checklist” & it includes a laundry list of items which contain data.¹ You may be able to collect some of the items the list mentions: bank account records; telephone records; utility company records; credit card statements & many others. Data at these kinds of items could conceivably help you follow a money trail to assets hidden from you.

(To Read The Financial Investigations Checklist, Click On The Following Image)


Financial Investigations Checklist

 

¹Financial Investigations Checklist, Courtesy of The United States Department of Justice.

First image: Picsfive/Shutterstock.com

Copyright 2016 Fred L. Abrams

Bank Deposit Image

In some situations, the transfer of large sums of cash is a red flag that assets have been hidden by money laundering. Government authorities therefore require banks to report their customers who transfer or exchange large sums of cash. For example, banks in the United States are required to report bank customers who deposit or withdraw more than $10,000 in cash. The banks fulfill this requirement by electronically filing a Currency Transaction Report.

A bank customer trying to evade the filing of a Currency Transaction Report can be prosecuted for structuring, (a.k.a “smurfing”), in violation of 31 U.S.C. § 5324. Opinion blogger Radley Balko talks about some of these prosecutions at “The federal ‘structuring’ laws are smurfin’ ridiculous.” As discussed by “An Asset Search Over Corruption Proceeds,” prosecutors accused former Russian diplomat Vladimir Kuznetsov of violating structuring law(s).

At Count Two pp. 6-9 of Mr. Kuznetsov’s superseding indictment, prosecutors alleged Mr. Kuznetsov had structured deposits he made in New York City at Chase Manhattan Bank & the United Nations Federal Credit Union. The following case study also discusses structuring.¹  It analyzes how a group of criminals hid illicit drug proceeds by structuring deposits, smuggling cash & going offshore:

Image Egmont Case 06082

Image of hand with money: Africa Studio/Shutterstock.com

¹Case Study/Case Ref: 06082 Courtesy Of The Egmont Group of Financial Intelligence Units

Copyright 2016 Fred L. Abrams

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Searching For Assets Laundered Through Real Estate” shows how one divorcing husband washed & hid assets during his divorce.  The following is a sanitized case study from the Egmont Group of Financial Intelligence Units.  It is about “O” & “R” who may have similarly employed real estate in a scheme to hide assets.  O & R might have been narcotraffickers washing their illicit proceeds by purchasing real estate in Europe:

 

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Photo: Gemenacom/Shutterstock.com

Case Ref. 08011: courtesy of the Egmont Group of Financial Intelligence Units

Copyright 2015 Fred L. Abrams

 The TV shanking of fictional lawyer Dan Wachsberger at Breaking Bad’s 54th episode.  In the 53rd episode, Wachsberger hid monies in safety deposit boxes & became a DEA informant.

shutterstock_213220519Say My Name” is the 53rd episode of AMC’s Breaking Bad series & it showed fictional lawyer Dan Wachsberger hiding illicit drug monies in at least nine safety deposit boxes for his clients.  After DEA Special Agents catch Wachsberger hiding monies, he became an informant for the DEA & was held in prison.  In the 54th episode “Gliding Over All”, drug kingpin Walter White then hires a gang of white supremacists to kill Wachsberger along with 9 others held in 3 separate prisons.

How many lawyers in the real world hide their clients’ assets like fictional lawyer Wachsberger had done?  I do not know the answer but speculate it is a relatively small number of lawyers.  Meanwhile, some beneficial owners including divorcing spouses; tax cheats; judgment debtors; narcotraffickers; etc. undoubtedly employ lawyers to hide assets.  These beneficial owners hire their lawyers to act as intermediaries/nominees.  The beneficial owners may then transfer their monies into nominee bank accounts titled in the name of the lawyers or titled in the name of shell companies formed by the lawyers.  When these transfers occur there can be red flags indicating the lawyers were involved.  You can sometimes spot the red flags during: an asset search of a person or business entity; the pretrial discovery phase of a litigation; or other times.

There can also be a variety of red flags indicating that a lawyer might have been employed to wrongfully conceal assets.  For example, one divorcing wife supplied me with copies of letters she found in the marital residence she shared with her husband. The letters were from an offshore lawyer to the husband and they revealed the husband possessed a secret offshore bank account worth millions of dollars.  In yet another ultra-high net worth divorce, the red flags were an informant’s tips.  According to these tips & the corroborating evidence I collected, the divorcing husband and his lawyer laundered assets through offshore bank accounts & other elements located across the globe.

Video: Courtesy of AMC Network Entertainment, LLC

Breaking Bag Image: CarmenKarin/Shutterstock.com

Copyright 2015 Fred L. Abrams

This video¹ discusses ways assets can be concealed via money laundering.  As the video observes, billions are thought to be laundered worldwide & “laundering takes place within our everyday world of routine business transactions.”

Looking for laundered assets can be critical to a successful asset search, my last post says. The video embedded above explains how the laundering works.  As more fully set forth at the video, the 3 laundering stages are known as placement, layering and integration.  The video also mentions that criminals involved in terrorist financing; drug trafficking; weapons smuggling; fraud; theft; Ponzi schemes; etc., hide their illicit proceeds by laundering them.

Criminals are not the only ones hiding assets by washing them.  Others with high-value assets, (including some divorcing spouses; judgment debtors; etc.), may conceal assets in money-laundering-like schemes.  These schemes typically obscure who the true beneficial owners of the assets are.  In other words, the schemes attempt to hide assets through a lack of financial transparency.  Companies on the Internet like Capital Asset Mgmt. Assoc. Inc. seem able to add to this lack of transparency.

Capital Asset Mgmt. Assoc. Inc’s website promotes “bullet proof asset protection” as a countermeasure to “specialized ‘Asset[sic] search’ agencies.”  One of its webpages apparently asserts that beneficial owners can conceal assets by establishing offshore bank accounts with anonymity.  It hints that one can supposedly open a bank account with anonymity in Panama “as no one will be able to find out to whom exactly has the money gone to.”  The webpage also discusses using bearer shares & nominee directors to open an apparent secret Panamanian bank account.  Meanwhile, these are the same elements some money launderers have successfully used to wash their funds.

¹Video courtesy of The Egmont Group Of Financial Intelligence Units

Copyright 2015 Fred L. Abrams

Photo Of A Red Flag

If a divorcing spouse hides marital assets there usually are red flags.  Red flags are also often found when assets have been hidden by tax fraudsters, Ponzi schemers, bankruptcy debtors, money launderers & narco-traffickers.  This 16th post in the “Divorce & Hidden Money ” series examines the red flags.

Red flags indicating assets might have been hidden are listed at my post “Locating Hidden Assets By Spotting The Red Flags.”  The list describes 18 red flags including the use of: multiple jurisdictions, sham trusts, bulk-cash smuggling, etc.  In addition to the 18 on the list, below are 6 more red flags of asset concealment.  The 6 red flags or money laundering indicators were published by the Egmont Group, an international organization which fights money laundering and terrorist financing.¹   Even though some of them discuss criminals or laundering, the 6 red flags might be used to help locate assets hidden by a divorcing spouse:

Laundering Indicators:Red Flags

¹Six Money Laundering Indicators Courtesy Of The Egmont Group, “100 Cases From The Egmont Group”, p. 172, Appendix A: Most Frequently Observed Indicators.

First Image courtesy of Flickr (Licensed https://creativecommons.org/licenses/by-sa/2.0/) by DBduo Photography/Daniel R. Blume

Copyright 2015 Fred L. Abrams

This post describes a case in which illicit drug monies were concealed offshore and laundered via a Cayman Island bank account.  The case is also about tax fraud; identity theft and a murder.   I published the post earlier at the Asset Search Blog and have used the post as a handout at many of my speaking engagements.  It is an example of how financial fraudsters can operate.  Some of the facts below have been changed/sanitized for privacy reasons.  The following occurred over a four month period during 2002:

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 & MURDER

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 partly demonstrates, 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. Continue Reading A Case of Tax Fraud, Identity Theft & Murder

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The Rembrandt Shown Above Can Be Hidden Easily.  It Was Recovered By U.S. Troops During WWII in Munich, Germany.

Divorcing spouses, debtors, determined criminals or others may hide and secretly transfer art assets and cultural heritage property. The article below was written by Leila Amineddoleh of Amineddoleh & Associates LLC, where she specializes in art, cultural heritage, and intellectual property law. Ms. Amineddoleh teaches International Art & Cultural Heritage Law at Fordham University School of Law and St. John’s University School of Law. Her article explains that art and cultural heritage property can be used to conceal assets in a variety of ways.  The article covers these topics:

I.   Forgeries, Illicit Imports & Smuggling
II.  Valuating Art In A Divorce
III. Art Transfers By Terrorists & Other Criminals
IV. Suing Over Art

LEGAL CONSIDERATIONS FOR RECOVERING ART ASSETS & CULTURAL HERITAGE PROPERTY

By Leila Amineddoleh, Esq.

Not only are art and antiquities beautiful, fascinating, and rich in cultural significance, but they can be great investments. The growing interest in the art world has introduced a new wave of investment products; entire companies have developed in the field of art investment consultation, using art as an alternative investment type. Some economists even claim that art is more secure than stocks, citing the fact that art outperforms the stock market.[1] Since the Second World War, groups of wealthy investors purchased artwork during unstable economic periods. And as with other asset classes, art and antiquities can be used as vehicles for hiding assets.

I.  FORGERIES, ILLICIT IMPORTS & SMUGGLING

One of the most frustrating aspects of art and antiquities collecting relates to valuation. There is a vast disparity between values for authentic versus forged objects. For example, where a convincing copy of a Jackson Pollock may sell for a few thousand dollars, an authentic work by the Abstract expressionist painter may sell for up to $50 million. And as the past couple decades have demonstrated, it can be difficult to ascertain which works are by the hand of a purported artist versus a talented art forger. (This difficulty recently became headline news as art investors sued the well-known Knoedler Gallery for selling multi-million dollar forgeries.[2])

These same complications arise with antiquities. It is not only difficult to determine whether an artifact is authentic, but it can be challenging to determine its origin. Smugglers bring antiquities into the US, but lie about the origin of the objects. Illicit importing has been committed in ingenious ways: some smugglers will cover an authentic antiquity in a plastic coating to make the object appear to be a cheap tourist toy; once the object has passed through customs, the plastic coating is removed and the valuable cultural object is revealed.[3] Other smugglers don’t even disguise the works, they simply claim that ancient artifacts are modern-day trinkets bought while abroad. Another way that people misrepresent objects relates to the find spot (the location where an artifact was excavated). By lying about the object’s origin, smugglers conceal valuable information regarding the work’s creation, greatly affecting the value and legality of a work. (For example, objects from Syria have been recently scrutinized for fear that looted artifacts enter the US and fuel the market for illicit objects. So smugglers now claim that these looted works are from other areas of the Middle East, thereby avoiding detection by U.S. Immigration and Customs Enforcement.) Continue Reading Recovering Art Assets & Cultural Heritage Property

In the Breaking Bad television series, Walter White hid profits from his illegal manufacture of methamphetamine.  He hid illicit drug profits in a crawl space under his house, as the video above partly reveals.  Walter and his wife Skyler also laundered money through the A1A Car Wash.  Walter’s partner in crime, (Breaking Bad’s Jesse Pinkman), purchased real property with illicit cash and drug kingpin Gustavo Fring opened 12 secret Swiss bank accounts.  These asset concealment schemes were described by my post “How Walter White Could Take His Money To A Swiss Bank .”  My post also mentioned Walter could have concealed his illicit profits by using diamonds, as set forth at “Secreting Assets Without A Border Trace.”

“Secreting Assets Without A Border Trace” discussed the fact pattern of a Ponzi schemer who might have travelled to Luxembourg and then concealed Ponzi scheme proceeds in a secret bank account there.  Besides the above-mentioned asset concealment schemes, there are countless others.  The following posts also describe what conceivably could have been fact patterns involving asset concealment schemes.

Video: Courtesy of AMC Network Entertainment, LLC

Copyright 2015 Fred L. Abrams

This is the third post in the “Divorce & Hidden Money” series:

One divorcing wife explained to me that she believed her husband had hidden money in offshore bank accounts.  This divorcing wife found a box her husband inadvertently left  in the basement after he moved out of their marital residence.  The box had an account opening application from one offshore bank and brochures from others.

Another divorcing wife found some correspondence at the family’s summer home.  The correspondence  was between her husband and the foreign attorney who helped establish the husband’s secret offshore bank accounts.  A different divorcing wife found a scrap of paper on which her husband had scrawled the name of a Swiss banker and a Swiss financial account number.

The above-described matters raised the same question, how could these husbands secretly transfer funds across international borders into offshore bank accounts?  Like narco-traffickers, tax evaders, terrorist financiers and others, divorcing spouses may use the following methods to secretly transfer assets:

Bulk Cash Smuggling– Determined criminals routinely smuggle cash through porous borders.  Illicit cash couriers for instance, travel through Mexico-U.S. border crossings on behalf of  Mexican drug cartels.  German tax cheats are also known to smuggle undeclared cash into Liechtenstein by stashing the cash in luggage and then driving with it across the German-Liechtenstein border.

Portable Valuable Commodities Like Diamonds & Jewelry– After his arrest, Bernard Madoff seemingly tried to transfer watches, cufflinks and other jewelry worth more than $1 million.  Madoff attempted to mail these items to friends and relatives.  Bradley Birkenfeld the whistleblower, is believed to have similarly smuggled diamonds in a tube of toothpaste while on a jet flying across U.S.-Swiss borders.

Continue Reading Divorce & Hidden Money: Four Ways Assets Can Be Secretly Transfered