In 2014 the offshore financial services firm Strachans S.A. voluntrarily disclosed to U.S. authorities that Strachans had helped some U.S. taxpayers hide assets and income from the IRS.  Therefore, prosecutors in U.S.A v. Strachans S.A. IN Liquidation accused Strachans of conspiring to defraud the United States as contemplated by 18 U.S.C. § 371.  Based on the prosecutors’ August 19, 2020 criminal information, the conspiracy with the U.S. taxpayers occurred from about 1987 to about November 2014.  This tax fraud conspiracy also seemed to involve about 90 U.S. taxpayers. In August 2020 Strachans signed a plea deal and on October 5, 2020 the Court sentenced Strachans to pay a $500,000 fine.

The plea deal’s Statement of Facts is available below.  It reveals with Strachans’ help, U.S. taxpayers could hide their true beneficial ownership of assets.  Strachans hid beneficial ownership / hid assets by employing common concealment methods. I have discussed the common concealment methods at the Asset Search Blog since I first published it in 2007. The common methods Strachans is thought to have utilized to hide assets included:

  1. Foreign bank accounts in places like the Bailiwick of Jersey; United Kingdom and Switzerland
  2. Nominees / strawpersons
  3. Offshore Trusts
  4. Shell Companies
  5. Back-to-Back or Other Sham Loans
  6. Offshore Post Office Boxes
  7. Bulk-Cash Smuggling
  8. Offshore Credit Cards

USA vs Strachans SA Statement of FactsFirst Image: Pixelbliss / Shutterstock.com

Copyright 2020 Fred L. Abrams

 

A) MS. YOUNG SUES MR. YOUNG

Nicole Young’s lawsuit alleges her husband music mogul Andre Young, (“Dr. Dre”), made fraudulent transfers to hide assets.  Ms. Young’s lawsuit claims during the couple’s divorce, Mr. Young secretly transferred his 5 “DR. DRE” trademarks & 1 for “THE CHRONIC“.  Ms. Young recently filed her lawsuit in the Superior Court of the State of California, in Los Angeles County. According to the lawsuit, the trademarks are community property under California Family Code § 760.  Therefore, Ms. Young has an ownership interest in the trademarks, the lawsuit claims.

B) MR. YOUNG ASSIGNS THE TRADEMARKS

On April 27, 2020 Mr. Young assigned all his rights to his 6 trademarks to ARY Trademarks, LLC (“ARY”). Mr. Young is thought to have formed ARY two weeks before his April 27th assignment. Mr. Young is a manager or member of ARY and ARY is believed to be a shell company. Mr. Young reportedly transferred his 6 trademarks to ARY with the help of lawyers. Page 2 ¶ 1 at Ms. Young’s lawsuit describes Mr. Young’s transfer of the trademarks as a “scheme”:

Andre’s transparent and reprehensible scheme to transfer these assets away, without Nicole’s knowledge or consent, so he could retain more for himself in a divorce from his wife of 24 years, and the mother of his three children, is an epic failure and revels the true nature of his character, or lack thereof.

C) BADGES OF FRAUD & RED FLAGS

The judge deciding whether Mr. Young fraudulently transferred the 6 trademarks will likely consider Cal. Civ. Code § 3439.04. It is the statute which covers fraudulent transfers in California. Section 3439.04 (b) lists what is commonly referred to as the “badges of fraud.”  Courts generally consider these kinds of “badges” when deciding whether a party had actual intent to make a fraudulent transfer. Red flags that Mr. Young might have tried to place his 6 trademarks beyond Ms. Young’s reach are:

Copyright 2020 Fred L. Abrams

How do you perform an offshore asset search at the time of your high-net-worth divorce? If your spouse is a taxpayer in the U.S., your spouse may have to make tax filings about assets parked offshore. Among other things, your offshore asset search should elicit any of your spouse’s tax filings about offshore assets. You can ask your spouse to authorize the IRS to send you the tax filings.  However, you might need a court order compelling your spouse to give you the authorization.

The authorizations you could need from your spouse are: IRS Form 8821 (Tax Information Authorization) &/or IRS Form 4506 (Request For Copy of Tax Return).  Under certain circumstances, an IRS Form 2848 might be needed to facilitate IRS disclosure. You/your divorce attorney would forward the appropriate IRS authorization form[s] signed by your spouse, to the IRS. Then, the IRS could supply you with your spouse’s tax filings about offshore assets (if any).  Some tax filings about offshore assets are:

  1. Form TD F 90-22.1/FinCEN Form 114  (“Report of Foreign Bank and Financial Accounts” a.k.a.”FBAR”);
  2. Form 8865 (Return of U.S. Persons With Respect to Certain Foreign Partnerships);
  3. Form 8938 (“Statement of Specialized Foreign Assets”)
  4. Form 5471 (“Information Return of a U.S. Person With Respect to Certain Foreign Corporations”);
  5. Form 3520 (“Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts”);
  6. Form 3520-A (“Annual Information Return of Foreign Trust With a U.S. Owner”).

Image: Leon Rafael/Shutterstock.com

Copyright 2020 Fred L. Abrams

If you claim in court that someone is hiding assets from you, you may need to use one or more of the asset search & asset recovery tools. You can use the tools to help you shoulder the burden of proving your claim.  Stated otherwise, you can use the tools to provide the Court with admissible evidence demonstrating the hidden assets exist. For example, a private investigator or tipster may allege your adversary hid assets from you at a secret offshore bank account.

You would want the Court to consider your adversary’s alleged secret bank account.  Therefore, you would have to collect banking documents from the offshore bank witness and then present them to the Court. The banking documents you collect must be authenticated and would consist of the: monthly bank account statements; bank signature cards; account opening documents; etc.

Furthermore, you would likely employ a letter rogatory to gather authenticated copies of these documents from the offshore bank. Besides letters rogatory, there are a wide variety of asset search and asset recovery tools. In your particular case, you may also need to use one or a combination of the following asset search & asset recovery tools:

  • applying for court orders freezing or blocking domestic or foreign bank accounts;
  • attaching real property & restraining other assets;
  • bringing asset turnover proceedings against intermediaries/strawpersons hiding assets;
  • filing lawsuits to recover assets fraudulently transferred to trusts; shell companies; & to others;
  • issuing subpoenas to & deposing witnesses in the U.S.;
  • domesticating out-of-state subpoenas & domesticating foreign judgments;
  • & seeking rewards as a tipster for the IRS or SEC Whistleblower Programs.

Image: Vectors Bang/Shutterstock.com

Copyright 2020 Fred L. Abrams

A Financial Intelligence Unit (“FIU”) tracks hidden assets by “following the money.”  There is always a money trail when assets are hidden and money is laundered. One way FIUs follow a money trail is by collecting suspicious activity reports from banks about bank customers. FIUs can follow a bank customer’s money trail by collaborating with other FIUs across the globe.

During your asset search you might also have to follow your adversary’s money trail. You may be able to follow your adversary’s money trail 3 ways:

Video: Courtesy of The Egmont Group of FIUs

Copyright 2020 Fred L. Abrams

In USA v. Pursley prosecutors alleged Houston attorney Jack Stephen Pursley helped his client Shaun Philip Mooney repatriate money hidden offshore. On August 5, 2020 Attorney Pursley was sentenced to two years of prison on conspiracy and tax evasion charges.

I.  Attorney Pursley’s Alleged $18 Million Transfer To The U.S.

Attorney Pursley was accused of secretly transferring more than $18 million from Mr. Mooney’s Isle of Man bank account.  Mr. Mooney reportedly maintained the account in the name of his Southeastern Shipping shell company. To allegedly hide the $18 million from the IRS, Attorney Pursley transferred the $18 million to the U.S. disguised as corporate investments or corporate purchases.  Meanwhile, Attorney Pursley apparently deposited the $18 million into bank accounts controlled by Mr. Pursley’s &/or Mr. Mooney’s shell companies. Then, Attorney Pursley reportedly used some of this money to make personal investments and buy personal real estate. Attorney Pursley’s purchases included his vacation home in Vail, Colorado and property in Houston, Texas.

II.  Attorney Pursley’s & Mr. Mooney’s Trip To Panama

Person Encounter List records from U.S. Customs and Border Patrol’s TECS information-sharing system showed Mr. Pursley and Mr. Mooney flew to Panama in 1999. During their trip, Attorney Pursley allegedly assisted Mr. Mooney with setting up Southeastern Shipping.  Next, Mr. Mooney is believed to have incorporated Southeastern Shipping in the Isle of Man on or about September 20, 2001.  The September 20, 2001 Nominee Declaration available below, suggests Southeastern Shipping’s director, (i.e. nominee director), could have been a strawperson. The Nominee Declaration says this nominee director was Eduard Francesco Venerabile from Niteroi, Brazil.

III.  Possible Money Laundering Indicators

If all of the foregoing is true, Attorney Pursley may have engaged in money laundering.  The money laundering indicators in USA v. Pursley could be the use of:

  1. a gatekeeper (i.e. Attorney Pursley);
  2. multiple jurisdictions such as Panama; the Isle of Man; Niteroi, Brazil; Houston, Texas; & Vail, Colorado;
  3. offshore bank accounts in Panama & the Isle of Man;
  4. shell companies;
  5. a nominee director;
  6. & the nominee bank accounts maintained in the name of shell companies.

Nominee Declaration Eduard Francisco VenerabileCopyright 2020 Fred L. Abrams

Harvard Professor Charles Lieber allegedly had: an 1) offshore credit/debit card; 2) an offshore bank account; 3) and supposedly made false statements to investigators.  Professor Lieber apparently used the three to hide money he earned from the Chinese Government. Therefore, in USA v. Lieber federal prosecutors filed Mr. Lieber’s 1/27/20 criminal complaint.  On 1/28/20 the FBI arrested Professor Lieber as part of its investigation of Chinese spies.

Professor Lieber is the former Chair of the Chemistry and Chemical Biology Department at Harvard University. He was also the Chief Investigator of the Lieber Research Group at Harvard. The U.S. Government paid over $15 million to the Lieber Research Group from 2008 to 2019. The $15 million was grant money for the Group’s research on behalf of the U.S. Department of Defense and the National Institute of Health.

i) Professor Lieber’s Alleged Work For China

However, from about 2012 to 2015 Professor Lieber apparently worked for the Chinese Government. During that time Professor Lieber is thought to have first secretly worked as a scientist at Wuhan University of Technology in China.  Then, Professor Lieber allegedly worked at China’s Thousand Talents Plan and agreed to set up a research lab.

The Thousand Talents Plan is believed to recruit individuals in the U.S. and elsewhere, to supply research and intellectual property to China. China reportedly paid Professor Lieber for years 2012 to 2015 up to $50,000 per month and up to $150,000 for living expenses.  China additionally, seemingly awarded $1.5 million to Professor Lieber so he could establish the research lab.

ii) How Professor Lieber Reportedly Hid Money

Professor Lieber allegedly hid these monies at an offshore account he maintained at a bank in China. The Chinese Government reportedly paid Professor Lieber by depositing money into the offshore account. Next, when Professor Lieber visited China he allegedly withdrew money from the offshore account by using an offshore credit/debit card.  Since this offshore bank in China had branches in NYC, Professor Lieber might have also withdrawn cash in NYC with the credit/debit card.

Furthermore, Professor Lieber is suspected of making false statements to investigators on 4/24/2018.  At that time, Professor Lieber allegedly lied about participating in China’s Thousand Talents Plan.  On 1/10/2019 Professor Lieber also allegedly told Harvard University he had not worked for the Thousand Talents Plan. This supposedly caused Harvard to make false statements to the National Institute of Health about Professor Lieber’s work for the Thousand Talents Plan.  Besides false statements, the 7/28/20 superseding indictment available below accuses Professor Lieber of tax fraud and failing to report his alleged offshore bank account:

Your adversary may be placing assets offshore to hide them from you. Meanwhile, you could be trying to locate these assets through an asset search.  One thing you might be able to do is spot the common methods for placing assets offshore. If you find your adversary used these methods, it might help you sniff out your adversary’s money trail. Common methods for placing assets offshore include:

  • Wire transfers are the most common way people/businesses transfer hidden money offshore. My post “Searching For Assets Hidden By Hawaladars” featured a suspected terrorist financing scheme (Egmont Group Case Ref. No.06060).  That scheme was facilitated by wire transfers to offshore bank accounts.
  • Bulk-cash smuggling: “Concealing Assets By Smuggling Cash.” has links to my posts about cash smuggling into: Liechtenstein, Iraq and Puerto Rico. It also mentioned 2 attempts to smuggle cash in boxes of laundry detergent at Texas border entries.
  • Portable valuable commodities: “Once Jailed Banker Gets $104 Million Whistleblower Payout” talks about ex-UBS banker Bradley Birkenfeld. Mr. Birkenfeld reportedly smuggled diamonds (i.e. portable valuable commodities) in a toothpaste tube across the U.S. border.  A 2008 press release similarly describes how governmental authorities interdicted $1.2 million in jewelry from a passenger arriving at NY’s JFK Airport.
  • Trade-based money laundering:  If your adversary uses a business to hide assets, your adversary could conceivably engage in trade-based money laundering. Trade-based launderig can involve transferring goods offshore. As The Financial Action Task Force (“FATF”) has said, trade-based money laundering consists of: over or under-invoicing of goods or services; the over or under-shipping of goods; falsely describing goods or services; or multiple invoicing.  To learn more about it, read the FATF’s 6/23/2006 publication.

Copyright 2020 Fred L. Abrams

Prosecutors in U.S.A. v. Kozel accuse Mr. Todd Kozel former CEO of Gulf Keystone Petroleum Ltd., of hiding assets by using lawyers, shell companies & trusts. The prosecutors claim Mr. Kozel fraudulently concealed assets from his ex-wife Ashley Kozel during the former couple’s Sarasota County Florida divorce. Mr. Kozel’s alleged scheme is believed to have occurred from about February 2012 to about December 2018.  Among other things, Mr. Kozel allegedly tried to evade a July 2015 $34 million judgment entered in favor of Ashley Kozel.

A) Lawyers, Shell Companies & Trusts

Mr. Kozel’s alleged scheme for hiding assets reportedly involved:

Mr. Hugelshofer’s law firm is thought to have established the Gokana Trust and believed to be its trustee. However, Mr. Kozel seemingly controlled the Gokana Trust through his Emeralp Trust Ltd. &/or shell companies. Mr. Kozel is suspected of secretly transferring 29 million oil company stock share certificates to the Gokana Trust. Additionally, Mr. Kozel reportedly purchased a New York City condominium by using the Gokana Trust & his alleged 212 West 18 LLC shell company.  Meanwhile, Mr. Hugelshofer is thought to have hired Mr. Freeman to manage the 212 West 18 LLC shell company.

B) Mr. Kozel’s Criminal Complaint & Indictment

As a result of Mr. Kozel’s suspected scheme to conceal assets, prosecutors filed Mr. Kozel’s 12/14/18 criminal complaint & his 6/19/19 indictment.  The criminal complaint & indictment in USA v. Kozel, alleged Mr. Kozel: conspired to commit wire fraud (18 U.S.C. § 1349); committed wire fraud (18 U.S.C. §§ 1343, 2); & conspired to commit money laundering (18 U.S.C. § 1956(h)). Page 3 ¶ 8 at Mr. Kozel’s criminal complaint also claimed Mr. Kozel failed to file tax returns for years 2011 through 2014. This was supposedly true even though Mr. Kozel is believed to have earned an average of about $10 million each of those years.

C) Mr. Freeman’s State Bar Complaint

Given Mr. Freeman’s alleged role in helping Mr. Kozel hide assets, The Florida Bar filed its 11/19/19 ethics complaint against Mr. Freeman.  The complaint in Florida Bar v. Michael J. Freeman, Case No. SC19-1946, alleges Mr. Freeman committed a fraud on the Court.  It basically accuses Mr. Freeman of creating and using backdated documents which hid Mr. Kozel’s true beneficial ownership of the New York City condo. As of this writing, Florida Bar v. Michael J. Freeman has been stayed pending the outcome of other recent litigation in Florida state court.

Copyright 2020 Fred L. Abrams

How does a divorcing spouse hide assets at trusts? The spouse hiding assets first forms a trust. Next, this spouse fraudulently transfers assets part of the marital estate, to the trust. The spouse hiding assets can also take money from the marital estate & use it to make purchases in the name of the trust.  Finally, the spouse hiding assets claims assets at the trust can not be distributed during the divorce because the trust assets are not part of the marital estate. Therefore, the spouse hiding assets at a trust makes an asset search or asset recovery more difficult.

I) Trusts In High-Profile Divorces

During high-profile divorces, one spouse sometimes alleges the other hid assets at trusts. Examples of this include Helga Glock’s divorce from billionaire gun maker Gaston Glock and Tatiana Akhmedova’s divorce from Russian energy billionaire Farkhad Akhmedov. The high-profile Texas divorce of billionaire Ed Bosarge Jr. from Marie Bosarge, similarly involves trusts. In their divorce, Marie Bosarge claims Ed Bosarge Jr. is hiding marital assets at trusts formed in South Dakota.

The video below about the Bosarge divorce, is from private investigator Wayne Dolcefino &/or Dolcefino Consulting. Mr. Dolcefino apparently investigated Ed Bosarge Jr. on behalf of Marie Bosarge. The video says Ed Bosarge Jr. is “now accused of secretly moving more than $2 billion worth of stuff…into a secretive South Dakota trust to leave Marie Bosarge penniless.”  Meanwhile, Ed Bosarge Jr. is worth an estimated $3.2 billion as reported at Houston Billionaire’s Bitter Divorce Draws International Attention With a Russian Mistress and Coronavirus Part of the Tangled Web.

II) Recovering Assets Concealed At Trusts

Whether a spouse has a right to recover assets at a trust ordinarily depends on the law where the assets are located. In some cases, a spouse might be able to recover assets at a trust by proving in court:

  1. assets were fraudulently transferred from the marital estate;
  2. the trust is void because it was self-settled (i.e. the grantor and beneficiary are the same);
  3. and the “trust veil” should be pierced because marital property was fraudulently transferred to the trust or the trust wrongfully concealed assets. See e.g. Babitt v. Vebeliunas (In re Vebeliunas), 332 F.3d 85, 91 (2d Cir. 2003) (discussing New York cases where right to pierce trust veil was preserved).

Video: Courtesy of Dolcefino Consulitng

Copyright 2020 Fred L. Abrams