Part 1 of this post discussed the judgment creditors in Havlish v. bin Laden who are are trying to interdict assets owned by Iran. Part 1 explained the judgment creditors sought to attach monies reportedly earmarked for the purchase of Airbus aircraft. Before seeking the attachment of the monies, the judgment creditors subpoenaed confidential information
Prosecuting Offshore Bankers Who Allegedly Help Tax Evaders Hide Assets From The IRS
“UPDATE 1-Two more Swiss banks strike deals with U.S. over tax evasion” reported that the U.S. Department of Justice, (“the DOJ”), reached its 22nd agreement with Swiss banks. A DOJ press release mentions the agreements were pursuant to the Swiss Bank Program. The Swiss Bank Program “provides a path for Swiss
Divorce & Hidden Money: Gathering Swiss Bank Records Via Compelled Consent Forms
This 17th post in the “Divorce & Hidden Money” series details how compelled consent forms are sometimes used to gather confidential foreign bank account records. In Doe v. United States, 487 U.S. 201, 108 S. Ct. 2341, 101 L. Ed. 2d 184 (1988), the Court talked about using these forms in connection
Private Investigators: Detecting Hidden Assets By Following A Money Trail
When vast sums of money are hidden in a bank account there is usually an electronic trace or other kind of money trail. A skilled investigator may help detect the money trail, as suggested by my 2010 post Secreting Assets Without A Border Trace. The post quoted “Roger” a former foreign intelligence officer who was working as a private investigator. At the post, Roger discussed some asset concealment methods and investigative techniques for following a money trail. As these concealment methods and investigative techniques are still being used, the relevant part of Secreting Assets Without A Border Trace is featured below. This is also the 4th post in my series about what private investigators can and cannot do legally when searching for assets.¹
As a consequence of his U.S.-based Ponzi scheme, Bill the investment adviser was indicted for alleged violations of 18 U.S.C. § 1956 (money laundering); 26 U.S.C. § 7201 (tax fraud); 18 U.S.C. §§ 1341 and 2 (mail fraud); 15 U.S.C. §§ 78j(b) and 78ff(a) (securities fraud); and 15 U.S.C. §§ 80b-6 and 80b-17 (investment adviser fraud). The critical question now was: what had happened to the $35 million dollars lost by the damaged investors in Bill’s Ponzi scheme? After Bill insisted he dissipated this $35 million by gambling and on cocaine, prostitutes, etc., federal agents interdicted $1 million U.S. dollars hidden in a bedroom wall at Bill’s California home.
Among the other items the agents seized during their search of Bill’s home, were Bill’s passport, desktop computer, cell phone, bank statements and jewelry store receipts. Some of these items revealed that Bill laundered $7.5 million of the damaged investors’ money through a nominee bank account opened in the name of a Nevada shell company.
Bill had eventually withdrawn this $7.5 million to purchase diamonds and other portable valuable commodities at Nevada jewelry stores He next traveled as an airline passenger to Zurich, Switzerland, according to his passport. To date, the only recovery from Bill’s Ponzi scheme has been the $1 million once hidden in his bedroom wall. Given all of the above, “Roger” explained how investigators could try to determine whether Bill had secreted any of the $35 million in a foreign bank account:
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Swiss Leaks Project & Police Raids Raise The Issue Of Swiss Reform
- Based In Basel & Zürich, Switzerland, UBS is “recognized as the largest and fastest-growing large-scale wealth manager in the world.” Source: UBS Annual Review 2013, p. 12.
The International Consortium of Investigative Journalists’ Swiss Leaks project, (“the Project”), arises out of whistleblower tips from Mr. Hervé Falciani who worked as a software technician at HSBC in Geneva. During 2008, Mr. Falciani reportedly supplied the French government with the Swiss bank account information of more than 100,000 HSBC customers from over 200 countries. The true beneficial owners of these accounts range from foreign dictators to American actors.
The Project is outlined by the article “HSBC Scandal Heightens Calls for Tougher Bank Oversight.” The article mentions “[t]he use of secret accounts and shell corporations to hide cash and its account holders is hardly confined to HSBC. Another banking giant caught engaging in this was Switzerland’s UBS. And there have been others.” According to reports published today by the Guardian, CNN &/or the BBC, Swiss police raided HSBC offices in Geneva, Switzerland. The police raids could be based on suspected violations of Art. 305bis Swiss Criminal Code: Money Laundering (English Translation) & other anti-money laundering laws.
The police raids and the Project bring to the fore the problem of money laundering through Swiss bank accounts. There are however, some Swiss reforms in this area. The reforms are outlined at an e-mail Swiss counsel sent me last week. The e-mail emphasizes there are “fundamental changes affecting the Swiss financial markets” and says “the business model of the banks is changing towards more transparency on tax matters.” Part of the e-mail is reproduced below and its key points are:
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Divorce & Hidden Money: How Does A Divorcing Spouse Recover Assets Concealed In A Swiss Bank Account?
The City of Zürich has a website that says “[a]s the largest city in Switzerland, Zürich is the economic motor of the surrounding region and indeed the whole country.” This 13th post in the “Divorce & Hidden Money” series examines what a divorcing spouse might do if marital assets are concealed in a Zürich bank account or elsewhere in Switzerland. The post was first published at The Asset Search Blog during 2008 and the post still provides up-to-date information. The post analyzes ways one can interdict bank accounts & other assets hidden in Switzerland. It quotes Swiss counsel who describes using criminal law tools; attaching (i.e. freezing) assets; seeking letters rogatory; & tipping the Swiss Money Laundering Reporting Office (“MROS”):
“As you probably know, Switzerland does not follow the common law doctrine. We do not adhere to the institution of discovery. The usual tools available to a claimant are therefore the filing of a criminal complaint, which is actually the most efficient way to get past the banking secrecy. Access to the information will be granted only if someone can be indicted. In exceptional circumstances a broader access to the information collected within the frame of the criminal investigation can be granted on a discretionary basis.
If the claimant does not wish to resort to the criminal law tools, he has the option to file an attachment. In order to obtain an attachment, the claimant must show that his case presents a close enough connection to Switzerland. He must establish that the assets are located in Switzerland and he must make a summary statement of his claim.
It is usually required that a guarantee equivalent to 10% of the claim be filed; in certain circumstances, the payment of a guarantee requirement may be avoided especially where the claimant initially filed a criminal complaint under which the same assets have been attached by the criminal judge. The combination of a criminal and civil attachment is recommended in some instances.
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Looking Back At Breaking Bad & Some Suspected Asset Concealment Schemes
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),
Divorce & Hidden Money: Helga Glock’s Search For Gaston Glock’s Assets
This is the ninth post in the “Divorce & Hidden Money” series. By failing to disclose any offshore assets, one divorcing spouse may cheat the other out of child support, alimony or other court awards. A spouse cheated this way might however, file requests for judicial assistance, (a.k.a. requests for legal assistance, letters of request, or letters rogatory), in a foreign country to collect evidence from witnesses residing there.
Evidence collected from the foreign witnesses may prove a divorcing spouse concealed bank accounts, businesses, real estate or additional assets offshore. The post highlights a request for judicial assistance in the U.S. filed by Helga Glock, (“Ms. Glock”), former wife of billionaire Gaston Glock, (“Mr. Glock”), inventor of the Glock pistol. It features a January 31, 2010 letter Mr. Glock allegedly wrote to his family discussing his plans for them. The post also discusses accessing Swiss bank account information and updates Helga Glock Claims Gaston Glock Started Concealing His Assets, published January 1st.
THE LETTER TO MR. GLOCK’S FAMILY
After her divorce from Mr. Glock in Austria on June 27, 2011, Ms. Glock made a March 18, 2013 request for judicial assistance, (“the Request”), in the case called In Re: Application of H.M.G., Index No. 13-cv-02598. The Request included a January 31, 2010 letter, (“the Letter”), Mr. Glock allegedly wrote to his family. If genuine, the Letter gives a glimpse of Mr. Glock’s dealings with Ms. Glock and their children who worked in the family’s gunmaking business. The Letter mentioned “the Privatstiftung”, a trust/Austrian private foundation Mr. Glock, Ms. Glock and others reportedly set up as co-settlors. Some of the key points Mr. Glock allegedly made at the Letter were:
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“In 1999 I decided to restructure the Glock Group and secure it for all succeeding generations to come through the Privatstiftung (trust).”
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“I guarantee the agreed upon payments to the beneficiaries for a lifetime. I therefore expect appreciation, compliance and acceptance and the respect I deserve as a father.”
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“I am working on a ‘Glock code of conduct’ which will be implemented and will require all employees and family who access the benefits to adhere to.”
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“I will not allow any interference with my life long business endeavors. Therefore, all employed family members will withdraw from the company’s operations.”
(Click On The Image To Read The Letter & Its English Translation)
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Recovering Illicit Assets Via Switzerland’s Mutual Legal Assistance Unit
Mr. Pascal Gossin is the head of Switzerland’s Mutual Legal Assistance Unit, (“the Unit”), which is part of the Federal Office of Justice. Mr. Gossin was a fellow speaker at the Carmelite Chambers International Fraud & Asset Recovery Conference, which I attended last month.
If the Unit suspects a dictator or other Politically
Divorce & Hidden Money: Four Methods Spouses Sometimes Use To Conceal Assets
This is the eighth post in the “Divorce & Hidden Money” series. Like “Four Asset Concealment Tools” and “Four Ways Assets Can Be Secretly Transferred”, the post reveals methods a spouse may use to hide marital assets and keep more than his/her fair share of the marital estate.
Credit/Debit Cards- Using a credit or debit card which draws from a secret foreign bank account is one way divorcing spouses can secrete and/or launder assets. This method is so common that the IRS established its Offshore Credit Card Program to detect tax cheats maintaining undeclared foreign accounts.
A ‘Zebra’ Strategy (a.k.a Commingling)- A divorcing spouse may conceal marital assets by commingling them with business or other assets. This ‘zebra’ strategy of mixing assets, is mentioned by the article Cayman Bank Records Seized. The article discusses Germany’s recent seizure of records and says that some Coutts Trust Company customers “followed a ‘zebra’ strategy of mixing legally declared and taxed accounts containing smaller amounts with undeclared accounts containing larger sums.”
Asset Protection Services- One promotor of these services is Capital Asset, Inc. Its website claims that forming companies in Nevada, or Wyoming, or Delaware is preferable because: “Do you know that partnerships, corporations, LLCs in most states make you completely visible? If a judge can see your assets, he can seize them.” Divorcing spouses may hire a promotor of asset protection services to establish such companies which can then be used to open bank accounts or maintain assets with anonymity.
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