Concealing Assets By Conveying Them

Posted on July 2, 2008 by Fred Abrams
According to Kohl v. Kohl, the Manhattan District Attorney had investigated N.Y.C. contractor Ted Kohl in 1995 for alleged money laundering, larceny and tax evasion.  Mr. Kohl had also been the subject of an asset forfeiture claim because of the District Attorney's investigation.  As a countermeasure to the forfeiture claim, Mr. Kohl conveyed assets to his spouse, Mrs. Kohl.  Mr. Kohl then accepted a plea deal consisting of probation and a fine of about $2,750,000, during his 1997 money laundering, larceny and tax evasion trial. 


Since the District Attorney had relinquished its asset forfeiture claim via the plea deal, Mr. Kohl's earlier conveyance to Mrs. Kohl was ultimately a non-issue.  All of the foregoing however, suggested that Mr. Kohl's conveyance may have been fraudulent. This was true because, as mentioned at "Badges Of Fraud In Debt Collection, Divorce & Bankruptcy", fraudulent conveyances typically occur between related parties, in anticipation of a creditor's claim, etc.  Mr. Kohl for example, had conveyed assets to a related party, his spouse Mrs. Kohl.  He had also conveyed assets because of the District Attorney's pending forfeiture claim. 


Since fraudulent conveyances are one way assets can be hidden, I asked former New York State Supreme Court Justice Herbert Posner (Retired) what he thought about Mr. Kohl's conveyance.  During our discussion, former Judge Posner described a particular fraudulent conveyance he had seen.  As he explained: "The divorcing husband had fraudulently induced his wife to transfer her share of their marital residence.  He told his wife to sign some documents, which were supposedly insignificant and just related to operating his business.  The wife eventually learned that by signing those documents, she had actually transferred her interest in the marital residence to the husband's family."


Said wife ended up suing both her husband and his family for fraudulently conveying the marital residence.  In doing so, she likely relied on the Uniform Fraudulent Conveyance Act, codified in New York at N.Y. Debt. Cred. Law. §§ 270 - 281.  As more fully discussed by "Suing When Marital Assets Are Hidden In Divorce", bringing such a suit may be advisable when marital assets are fraudulently hidden / transferred away from a divorcing spouse.


Copyright 2008 Fred L. Abrams  
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Using Multiple Jurisdictions To Launder Money

Posted on December 21, 2007 by Fred Abrams
Parking assets offshore in one jurisdiction and then exercising control over them through another, sometimes indicates money laundering.  One example of how multiple jurisdictions were used to facilitate money laundering, is the case of  U.S.A. v. Proceeds of Crime Transferred to Certain Domestic Financial Accounts, Index # 07-CV-21791, U.S. District Court for the Southern District of Florida.  As mentioned by a July 16, 2007 press release, the Government commenced  the U.S.A. case in order to forfeit $110 million which had been part of a tainted $400 million court award in Italy.  According to both the foregoing press release and Reuters, the $400 million was tainted because the Italian Court awarded it after an interested party, (Mr. Angelo "Nino" Rovelli), had bribed its judges.


As an amended complaint in U.S.A alleged, Mr. Rovelli's wife Primarosa Battistella, had used Swiss bank accounts and three prominent lawyers, (Attilio Pacifico, Giovanni Acampora and Cesare Previti), to pay the bribes.  After Mr. Rovelli died in 1990, Ms. Battistella finally inherited the tainted $400 million in January 1994.  According to the amended complaint, she then had her accountant Mr. Pierfrancesco Munari, launder a substantial amount of it.  Mr. Munari had allegedly placed the tainted money in financial institutions and /or business entities which acted as laundering links in: the United States; the British Virgin Islands; the Cayman Islands; Guernsey; Jersey; Switzerland; Luxembourg; Liechtenstein; Singapore; the Cook Islands and Costa Rica. 


Some of the money laundered by Mr. Munari had allegedly been hidden in Florida via nineteen financial accounts. The government therefore asserted in U.S.A., that forfeiture was appropriate pursuant to the following:

  • 18 U.S.C. §984-- Asset forfeiture of identical property within one year of a laundering offense, etc;
  • 18 U.S.C. §1957-- Money Laundering of property from specified unlawful activity;
  • 18 U.S.C. §2314-- Interstate or foreign transfer of property obtained by fraud;
  • 28 U.S.C. §1345-- U.S. District Court jurisdiction where the Government is plaintiff;

After the judge in U.S.A. froze / restrained numerous financial accounts in July 2007, Ms. Battistella and other Rovelli family members eventually executed a settlement agreement consenting to the forfeiture of thirteen accounts.  As Mr. Munari's own settlement agreement further demonstrates, he too consented to forfeit an additional four accounts.  Although on November 21, 2007 the Court issued a Final Judgment of Forfeiture regarding the total of seventeen financial accounts, there may still be some unresolved issues.  According to Forbes.Com, a grand jury has been convened in Florida to examine whether Mr. Munari's money laundering scheme criminally involved: Wachovia; Citigroup; Merrill Lynch; Morgan Stanley; Lazard and others. 


Copyright 2007-2008 Fred L. Abrams
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Forfeiture & The DEA's Asset Search

Posted on November 1, 2007 by Fred Abrams
"I'm out of the asset forfeiture business and Title-III wiretaps too", Donnie remarked as we discussed the Drug Enforcement Administration's on-going effort to find hidden assets related to drug trafficking and other crime.  Donnie had retired from the DEA after serving twenty-one years as a Special Agent.  Now he was deployed to the Green Zone in Iraq to teach Iraqi police through the International Criminal Investigative Training Assistance Program of the Department of Justice.


Special Agents like Donnie often develop a great deal of expertise in conducting an asset search since asset forfeiture allows them to seize the proceeds of drug trafficking, money laundering, or organized crime.  For example, while Donnie had been stationed in El Paso Texas in 1988, (and also worked in Bolivia), he, another Special Agent, and the Mexican Federal Police seized $6-8 million in drug money.  By following the money trail, Donnie and his co-agent forfeited the $6-8 million because of its relation to their earlier seizure of 21 tons of cocaine in Sylmar, California.


My discussion with Donnie quickly drifted toward Zhenli Ye Gon's arrest in Maryland on July 23, 2007 on methamphetamine drug and money laundering charges. Ye Gon was accused of supplying chemicals used to manufacture methamphetamine through his pharmaceutical wholesale business based in Mexico City, Mexico.  According to a Special Agent's affidavit, the more than $207 million seized from Ye Gon's Mexico City residence was "hidden in various compartments, false walls, suitcases, and closets."  Also seized from Ye Gon's Mexico City corporate headquarters were $111,000 dollars; documents regarding domestic and offshore bank accounts; and wire transfer confirmations from Mexican money exchange houses to various banks.  As Ye Gon's criminal indictment In the U.S. District Court for the District of Columbia further indicated, the government sought to forfeit his money and other assets pursuant to 21 U.S.C. §§ 853 and 970.


Given all of the above, Donnie finally said: "Because of its impact on organized crime, asset forfeiture is one of the things that can stop those who supply pseudophedrine to the meth super labs and Mexican cartels.  Asset forfeiture works so well that it has even become a kind of gold rush".  I then thought about the $ 1,143,341,308 in net deposits for 2006 made into the Department of Justice's Assets Forfeiture Fund-- which is a repository for just some of the federal agencies that forfeit assets.


Copyright 2007 Fred L. Abrams
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