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

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

Photo Of A Money TrailWhen 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: Continue Reading Private Investigators: Detecting Hidden Assets By Following A Money Trail

“Swiss Banks, Smuggling & Other Asset Recovery Issues” will be presented from 6:00 PM to 9:00 PM on April 18, 2013 in New York City, at the New York County Lawyers’ Association.  Jack Blum, Esq., Advocate Robert Fiecther of the Des Gouttes & Partners law firm located in Geneva, Switzerland and Fred L. Abrams, Esq. are speaking at this program.  To attend, please contact the New York County Lawyers’ Association at telephone no. (212) 267-6646.  The program’s description and agenda are as follows:

In its 2007 National Money Laundering Strategy report, the U.S. government estimated that as much as $36 billion annually from just the former Soviet Union, was being secretly transferred through U.S. bank accounts and U.S. shell companies.  Besides using U.S. bank accounts and shell companies, kleptocrats, Ponzi schemers, divorcing spouses, etc., can of course conceal assets by parking them in Swiss or other foreign bank accounts.

This program analyzes how bank secrecy laws, multiple jurisdictions and smuggling are utilized in schemes to conceal vast sums of money. The program discusses mutual legal assistance treaty relief and using letters rogatory as asset recovery tools.  It mentions ways whistleblowers or other tipsters may help sniff out these monies and the difficulty lawyers face in dealing with whistleblowers either as clients or as tipsters.

One of the program’s speakers Jack Blum, Esq., will examine the IRS Whistleblower Program and the ethical concerns gatekeepers such as lawyers and accountants have in reporting illegal behavior in both the civil and criminal contexts.  Mr. Blum served as associate counsel, or assistant counsel, or special counsel to three U.S. Senate committees or subcommittees; and has been quoted by or mentioned in thousands of newspaper and magazine articles around the world.  He was also an expert witness for the U.S. Department of Justice and the Internal Revenue Service.

Mr. Blum’s select clients include Heinrich Kieber, who blew the whistle on customers with offshore accounts at Liechtenstein’s private bank, the LGT Group.  Mr. Kieber sold his whistleblowing tips to the German government, which used them to track suspected tax cheats.  Mr. Blum too represented former Julius Baer Swiss banker Rudolf Elmer, who supplied tips about suspected tax evaders to both WikiLeaks and the IRS.

Another one of the program’s speakers is Robert Fiechter, who is a partner at the Des Gouttes & Partners law firm of Geneva Switzerland, founded in 1834.  Advocate Fiechter also serves as a Deputy Judge at the Court of Justice of Geneva, an appellate court.  He too served as a substitute criminal judge and is the Deputy Secretary of the Supervisory Board of the Swiss Bank’s Code of Conduct.  During the program, Advocate Fiechter will describe the ins and outs of Swiss bank secrecy laws.  He will additionally review the legal remedies available for recovering assets hidden in Switzerland and elsewhere across the globe.

Continue Reading Swiss Banks, Smuggling & Other Asset Recovery Issues

The September 2009 Asset Search Blog article “Money Laundering By Minneapolis Money Managers?”, raised the issue of whether Associated Bank had violated federal anti-money laundering regulations.  This article discussed whether an account opened at Associated Bank in the name of Crown Forex, LLC, had been used to launder Ponzi scheme proceeds.  It pointed out that U.S. financial institutions like Associated Bank were obligated to verify a customer’s identity and follow a written Customer Identification Program.

The receiver trying to recover assets lost to Trevor Cook’s Ponzi scheme has now filed a complaint against Associated Bank over this same Crown Forex, LLC account.  The complaint available below alleges “Associated Bank knowingly aided and abetted one of the largest Ponzi schemes in Minnesota’s history.”  Complaint, p. 8¶ 13.  The complaint seeks damages for causes of action sounding in fraud, breach of fiduciary duty, conversion and false representations.

It claims at p. 9 ¶13 & p. 24 ¶48, that Associated Bank ignored “red flags” related to the Crown Forex, LLC account.  The complaint’s exhibits also include the January 15, 2010 affidavit of Lien Edward Sarles, a former Associated Bank employee.  The affidavit basically alleges that Associated Bank failed to follow the required customer verification procedures, at the time the Crown Forex account was opened.

As mentioned at “Using Red Flags To Recover Ponzi Proceeds“, suing financial institutions in the aftermath of a Ponzi scheme is nothing new.  These lawsuits sometimes assert that a financial institution negligently or recklessly permitted Ponzi schemers to launder illicit proceeds through a financial account.

  (Click On The Image To View The Receiver’s Redacted Complaint) 

Copyright 2013 Fred L. Abrams

A StarTribune article says that Trevor Cook’s currency program fraud was the second-largest Ponzi scheme in Minnesota history. The article too mentions that prosecutors have accused one of the scheme’s participants, Gerald Durand, of a murder-for-insurance plot.  The suspected plot surfaced at the “Government’s Motion For An Evidentiary Hearing Regarding Durand“, filed December 26, 2012 in U.S.A. v. Beckman, et al., U.S. District Court, District of Minnesota, Index No. 11-cr-00228.  As more fully set forth by a December 27th court filing, Mr. Durand’s defense counsel calls the murder plot “imagined” and claims “…the government, at the eleventh hour, has its snitch cry bloody murder.

Meanwhile, the court-appointed receiver tasked with recovering Trevor Cook’s Ponzi scheme proceeds, published statistics about the scheme’s 724 damaged investors.   The statistics are accompanied by a graph, adding insight into the demographics of the damaged investors:

Chart Courtesy of: The Cook, Kiley & Beckman Receiverships

Copyright 2013 Fred L. Abrams

The name of a whistleblower is reportedly leaked and concealing assets in Luxembourg:

  • press release and “Ex-IRS examiner charged with naming whistleblower ” refer to the criminal complaint against Dennis Lerner of Edgewater, N.J.  Mr. Lerner is accused of violating 26 U.S.C. § 7213 (Unauthorized disclosure of information), 18 U.S.C. §§ 207 (Restrictions on former officers, employees, etc.) & 208 (Acts affecting a personal financial interest).  The Court’s docket report reveals that Mr. Lerner was arrested and would be released from custody by way of a $300,000 personal recognizance bond.
  • As a haven for concealing assets, Luxembourg has few rivals.  Some of Bernard Madoff’s Ponzi scheme proceeds or other assets were hidden in Luxembourg.  The ex-president of Guatemala, Alfonso Portillo, is thought to have similarly laundered corruption proceeds through offshore accounts in Luxembourg and elsewhere.  Former Manhattan District Attorney Robert M. Morgenthau also mentioned Luxembourg at his  May 5, 2012 op-ed piece.  At the piece, Mr. Morgenthau too stated: “When I was the Manhattan district attorney, we learned of offshore accounts only through whistle-blowers, cooperators and serendipity.”

Copyright 2012 Fred L. Abrams

The Holocaust-era assets of Hungarian Jews and the arrest of CEO Raymond Bitar:

  • A supplemental amicus curiae brief filed in Kiobel v. Royal Dutch Petroleum, U.S. Supreme Court, Docket No. 10-1491, mentions that according to the  Republic of Hungary, 500,000 Jews were killed during the Hungarian Holocaust.  The brief filed on behalf of the Hungarian Jewish victims, mentions how Jewish assets were frozen at banks; and that from April to December 1944, these victims were transported by train to Auschwitz and other concentration camps.  Page 1 of the brief also notes that “[t]o this date, these assets have not been returned nor has any compensation been paid for their taking.”  The brief can be reviewed by clicking here.
  • As Bloomberg.com and Wall Street Journal articles reveal, CEO Raymond Bitar of the Full Tilt Poker Internet gambling business, was arrested on July 2nd.  An indictment was first filed against Mr. Bitar on March 10, 2011, for alleged violations of gambling, bank fraud and money laundering laws.  A press release states that an eleven-count superseding indictment accusing Mr. Bitar of running a Ponzi scheme, was also unsealed on July 2nd.  The press release quotes an FBI official saying: ‘The on-line casino became an Internet Ponzi scheme.

Copyright 2012 Fred L. Abrams

Secreting Ponzi scheme proceeds and the conviction of three former money managers:

  1. Secreting Assets Without A Border Trace” highlights methods determined criminals employ to conceal their assets from domestic authorities and everyone else.  It supplies the fact pattern of a securities fraudster who conceivably could have concealed Ponzi scheme proceeds by utilizing offshore jurisdictions, a foreign bank account and portable valuable commodities like diamonds.
  2. Former money managers Jason Bo-Alan Beckman, Gerald Joseph Durand and Patrick Kiley were recently convicted of money laundering and additional criminal charges connected to Trevor Cook’s Ponzi scheme.  These three were previously mentioned at the September 20, 2009 article “Money Laundering By Minneapolis Money Managers?

Copyright 2012 Fred L. Abrams

The U.S. Senate Permanent Subcommittee on Investigations August 1, 2006 report on offshore tax haven abuses explains that assets can be hidden with the assistance of  “lawyers, brokers, bankers, offshore service providers, and others” offering offshore asset protection.  Seattle lawyer Mary Simon appears to have especially provided offshore asset protection services that featured Belizean trusts.

As revealed by “Red Flags In One of Washington State’s Largest Bankruptcies”, Ms. Simon may have aided bankruptcy debtor Michael Mastro’s effort to protect assets by way of a Belizean trust.  Mr. Mastro had seemingly hidden assets in said Belizean trust and the Court ultimately deemed the Belizean trust assets, (and his assets at two other trusts), to be bankruptcy estate property.

This meant Mr. Mastro’s trust assets were subject to liquidation for the benefit of his unsecured creditors, as discussed by Mr. Mastro’s Bankruptcy Estate & His Self-Settled Trusts.  Besides surfacing at Mr. Mastro’s bankruptcy, Ms. Simon’s name popped up during U.S.A. v. Berg, the largest Ponzi scheme / fraud prosecution in Washington state history.  A November 30, 2010 sworn declaration filed in Berg, averred that Mr. Berg had conferred with Ms. Simon on the subject of an asset protection plan.

Although an August 3, 2010 letter purportedly signed by Ms. Simon, suggests the plan was never fully realized, Ms. Simon might have participated in the plans initial phase by allegedly starting the process for forming the “DB517” Belizean trust and the “DB517” Delaware company.  Documents reportedly linked to this Belizean trust and the Delaware company, were seized by FBI agents executing a search warrant on August 30, 2010 at Mr. Berg’s Seattle business office.  These documents can be viewed by clicking on the following image:

 

Copyright 2012 Fred L. Abrams