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

Detective Looking Through Magnifying Glass

This is the 10th post in my series about what private investigators can and cannot do legally when searching for assets. The post discusses “K.C.” who was defrauded out of at least $500,000.00 by Patricia Walker-Halstead, a private investigator “K.C.” hired to investigate a suspected stalker. The post discusses wire fraud & bribery—which are issues that sometimes arise during an asset search or other private investigation:

“K.C.” a resident of Nebraska, thought she was being stalked. She therefore hired Patricia Walker-Halstead, (“Walker”), to investigate the alleged stalker. Between March 11, 2011 & November 28, 2012 “K.C.” made 59 payments to Walker Investigations, Walker’s private detective agency. Walker represented to “K.C.” that some of the payments would be given to “Scott.” Walker told “K.C.” that “Scott” was a Captain with the Nebraska State Patrol who could help with the investigation.

Walker even supplied “K.C.” with e-mails purportedly sent by “Scott” & represented that “Scott” was a potential romantic suitor for “K.C.” Walker however, never paid anyone at the Nebraska State Patrol named “Scott”, to investigate on behalf of “K.C.” As part of Walker’s scheme to defraud “K.C.”, Walker fabricated “Scott” &  Walker had not performed any investigation. Given all of the foregoing, federal prosecutors in USA v. Walker-Halstead charged Walker with 11 counts of wire fraud. Walker’s indictment alleged the 11 counts were based on false e-mails Walker sent to “K.C.” about “Scott.”

Walker ultimately pleaded guilty to one count of wire fraud. On April 1st, Walker was sentenced to 12 months & 1 day of imprisonment & Walker was ordered to pay restitution to “K.C.” in the amount of $500,000.00. Under a fact pattern different than what is written above, prosecutors might also consider whether someone like “K.C.” intended to have a stalker investigated by bribing the Nebraska State Patrol. Bribing a local law enforcement officer can violate the federal program bribery statute codified at 18 U.S.C. § 666. As a manual for federal prosecutors explains:

[A] charge under 18 U.S.C. § 666 may nonetheless be appropriate if the solicitor or intended recipient of the bribe is a person who acts as an agent of an organization that receives in one year $10,000 or more in Federal grant, loan, contract, or insurance funds. U.S. Attorney’s Manual, 2044 Particular Elements, Web. May 11, 2016.

Imagefile404/Shutterstock.com

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

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During his corruption scheme, former congressman William Jefferson is thought to have hidden bribe monies in his refrigerator. He also apparently hid bribe monies by using shell companies formed in Delaware, Nigeria and other places. U.S. law enforcement officers were able to search for these illicit assets through search warrants and a letter rogatory seeking evidence in the Republic of Nigeria

The jury’s August 5, 2009 verdict in U.S.A. v. Jefferson, found former congressman William Jefferson guilty of hiding bribery proceeds by laundering them, as described by the 12th, 13th and 14th counts of his indictment.  The August 5, 2009 verdict and a U.S. Department of Justice press release also stated that Mr. Jefferson was guilty of soliciting bribes, honest services wire fraud, racketeering and conspiracy.

An August 6, 2009 jury verdict similarly found that about $470,000 dollars in two bank accounts were criminal proceeds subject to asset forfeiture.  Under the August 6 verdict, stock shares in suspected shell companies, (likely used as Mr. Jefferson’s nominees), could be forfeited. These stock shares were for a Nigerian company “W2-IBBS”; a Ghanaian company “International Broad Band Services, LLC”; a Delaware company “Multi-Media Broad Band Services, Inc.”; and a company in Indiana “iGate, Incorporated.”

As was previously reported by the media, investigators in U.S.A. v. Jefferson had interdicted $90,000 in a freezer on August 3, 2005, pursuant to a search warrant executed at Mr. Jefferson’s Washington D.C. home.  A search warrant of Mr. Jefferson’s congressional office had also been executed along with the one below for Mr. Jefferson’s New Orleans home.

To View The Entire Search Warrant, Click On The Above Image

A challenge prosecutors faced in U.S.A. v. Jefferson was that part of Mr. Jefferson’s corruption scheme included cross-border elements in Nigeria, Ghana and other African countries.  To acquire evidence from foreign witnesses, prosecutors sought relief in the form of mutual legal assistance.  Prosecutors also employed letters rogatory like the one available here for gathering evidence in the Republic of Nigeria.  Letters rogatory can be used in a variety of legal matters to search for assets parked offshore.  Under the right conditions, they may even be used to collect evidence from foreign bank witnesses who possess information about secret offshore bank accounts.

Illustration: Svitlana Medvedieva/Shutterstock.com

Copyright 2009-2016 Fred L. Abrams

 

Corruption Proceeds Illustration

Transparency International leads the fight against public corruption which includes bribery & theft by government officials.  It basically says that corruption proceeds are transferred offshore & are one of the sources of illicit financial flows.  How do financial investigators across the globe search for these illicit assets?  One way they search is by looking for money laundering red flags.  The following discusses red flags in the case of Vladimir Kuznetsov, a former Russian diplomat at the United Nations.  These red flags were structuring bank deposits; forming an offshore corporation; & using an offshore bank account to hide assets/hinder an asset search:

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

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

Structuring bank deposits, (a.k.a “smurfing”), indicates an attempt to avoid bank reporting requirements and can be a red flag of money laundering.  Other red flags of money laundering in Mr. Kuznetsov’s case included his use of the offshore corporation Nikal Ltd. to open his Antigua Overseas Bank Ltd. account.  The transfer of the $32,000 from Antigua to Mr. Kuznetsov in New York was also a red flag, especially because Antigua is a tax haven/high-risk location vulnerable to money laundering.

Illustration: marcovarro/Shutterstock.com

Copyright 2008-2015 Fred L. Abrams

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Spotting the red flags/the money laundering indicators is one way to search for hidden assets.  The red flags may help you sniff out money or other assets concealed in matters ranging from a high net worth divorce to a securities fraud.  Financial Intelligence Units part of the Egmont Group employ red flags to search for money hidden across the globe by terrorist financiers; narco-traffickers; kleptocrats & others.  As more fully set forth here, red flags include:¹

  1. Large-scale cash transactions.
  2. Atypical or uneconomical fund transfer to or from foreign jurisdiction.
  3. Unusual business activity or transaction.
  4. Large and/or rapid movements of funds.
  5. Unrealistic wealth compared to client profile.
  6. Defensive stance to questioning.

The case study below, (sanitized for privacy reasons), is also from the Egmont Group.²  It is about a homicide; public corruption; fraud; & the laundering of $9.5 million dollars in “Economy F.”  The money was washed through a corporate bank account; lawyers’ trust accounts; & bank accounts belonging to money mules.  The Financial Intelligence Unit (“FIU”) involved in the case analyzed Suspicious Transaction Reports (“STRs”); issued orders freezing monies; etc.

ECONOMY F: A CASE STUDY

     The Economy F police received a criminal complaint from a government department involving fraud and theft. The facts related to the predicate offenses indicated that staff working in the government department colluded with an external crime syndicate to assist in obtaining copies of legitimate vendor payments, which were subsequently duplicated and processed to the benefit of various accounts indirectly linked to the syndicate. The initial loss exposure amounted to approximately US$573,000. Police requested Economy F’s FIU’s assistance in blocking the accounts that received the proceeds of crime, with an additional request to identify other possible players.
     The FIU interacted with the relevant accountable institutions and subsequently issued several postponement orders, resulting in US$317,000 of the initial proceeds being secured. This enabled the prosecuting authority to obtain a preservation order to secure the proceeds. These interventions were brought immediately after the police provided proof of the nexus between the criminal offense and the funds that were still available in the identified bank accounts.  Upon analysis of the STRs and bank records received of the accounts, the FIU identified various other payments originating from different government departments, which were unknown to the police at that stage, amounting to US$9.5 million.
Continue Reading An Asset Search Seeking Laundered Money Hidden Across The Globe

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As “A Surreptitious Search For Money Hidden In Divorce & Other Cases” explains, law enforcement databases may house confidential information about a person’s assets.  Private investigators & the general public cannot lawfully access these law enforcement databases/computers.  This is the 5th post in my series about what private investigators can and cannot do legally when searching for assets:

NJ.com reporter Vernal Coleman & private investigator Brian Willingham recently tweeted on an alleged scheme to access a confidential law enforcement database:

These tweets link to articles saying that Newark N.J. Police Captain Anthony Buono & Nutley N.J. private detective Dino D’Elia are suspected of conspiring to access a law enforcement computer/database.  According to one article, “Buono and D’Elia allegedly obtained the personal data of approximately 900 individuals, selling each set for $100.”  Mr. D’Elia &/or Mr. Buono are thought to have then possibly sold the data to private investigators &/or to data brokers.  State prosecutors have charged Mr. Buono & Mr. D’Elia with supposed violations of New Jersey’s conspiracy & computer theft laws.

Private investigators like Mr. D’Elia, (who are suspected of computer intrusions), sometimes face a federal prosecution rather than state prosecution.  USA v. Buell et. al., Index No. 1:15-cr-00385 is a matter in which a private investigator faced this type of federal prosecution.  At the criminal complaint in Buell, federal prosecutors alleged that private investigator Joseph P. Dwyer bribed an NYPD officer & conspired to obtain data from a law enforcement database.  Last week federal prosecutors slimmed down the criminal charges at their complaint against Mr. Dwyer.  They did this on June 18th by filing a one-count superseding information against Mr. Dwyer, charging him with a suspected bribery scheme.

First image courtesy of Flickr (Licensed) by elhombredenegro

Second image courtesy of Flickr (Licensed) by Tsahi Levent-Levi

Copyright 2015 Fred L. Abrams

At Carmelite Chambers International Fraud & Assert Recovery Conference, I met Advocate & English Barrister Stephen Baker of Baker & Partners from St. Helier, Jersey.  During the Conference, Mr. Baker presented his slideshow with case studies about recovering suspected corruption proceeds or other assets.

Some of Mr. Baker’s slides reveal how foreign bank accounts; multiple jurisdictions and nominees, (i.e. intermediaries), could be used as elements in suspected laundering schemes:

 

One topic Mr. Baker’s slideshow covers is the investigation of the late Nigerian dictator Sani Abacha.  As Baker & Partners’ webpage explains: “Baker & Partners were central to the successful Jersey investigation into the alleged laundering of the proceeds of the corrupt Nigerian Dictator General Abacha’s crimes through Jersey. This investigation has already resulted in over USD $160,000,000 being returned to Nigeria.”

Continue Reading Searching For Corruption Proceeds & Other Assets On The Island Of Jersey

Leonard Glenn Francis is a Malaysian national who is the CEO and owner of Glenn Defense Marine Asia, a general contractor to the United States Navy.   He is suspected of using Glenn Defense Marine Asia to defraud the Navy out of an estimated $20 million.  At a November 22, 2013 court filing, prosecutors argued that Mr. Francis “ has built a business empire based on defrauding the United States.”

Mr. Francis is accused of  fraudulently billing the Navy while supplying its ships with marine husbanding services (i.e. fuel, tugboats, food etc.).  Mr. Francis supposedly also bribed senior Naval officials with cash, lavish travel and the service of prostitutes.  These Naval officials are thought to have provided Mr. Francis with secret information about criminal investigations into him; and / or they allegedly disclosed confidential defense procurement information.

The Washington Post reported that the possible involvement of two admirals in the alleged public corruption scheme, “makes the crisis the worst to tar the Navy since the 1991 Tailhook scandal, when a convention of naval aviators sexually assaulted scores of women.”  A September 12, 2013 complaint filed in one of three criminal cases pending against Mr. Francis, included purported e-mails.  They were allegedly sent from April 27 to May 21, 2012, between Mr. Francis and a codefendant, Mr. John Bertrand Beliveau, Jr.  Mr. Beliveau has been employed as a Special Agent by the Naval Criminal Investigative Service since about 2002 and his purported e-mails are set forth below.

Continue Reading Mr. Francis Supposedly Built A Business Empire By Defrauding The US