Structuring cash, (a.k.a. smurfing), is one thing to look for when spouses hide money during their divorces in community property states. US Treasury Department’s FinCEN explains structuring occurs if you “break up…currency transactions [at banks] into multiple, smaller amounts to avoid being reported to the government.”1 This means organizing cash transactions beneath the $10,000 threshold banks have to file a Currency Transaction Report with FinCEN. Furthermore, structuring can involve: cash deposits, cash withdrawals, exchanges of currency, currency from a foreign country, etc. Structuring is also a federal crime as set forth at 31 U.S.C. Section 5324.

USA v. White involved the prosecution of a divorcing husband who hid money from his wife in a scheme involving structuring. In USA v. White, Paul A. White apparently hid $99,900 in cash from his wife at the time of their 2017 Nebraska divorce. Mr. White accumulated this cash in 2016 by selling firearms, military memorabilia and other goods. Mr. White who was an Alcohol, Tobacco, Firearms & Explosives Bureau Special Agent, hid the cash in a safe at his Omaha, NE office. Meanwhile, Mr. White was obligated to disclose the $99,900 to his wife during the couple’s divorce. This was true, even though Nebraska is not one of the community property states.

After Mr. White’s divorce was finalized in 2018, Mr. White structured the $99,900 by making deposits in smaller amounts at UMB and another bank. From October 29, 2018 to February 26, 2019, Mr. White divided the $99,900 into 14 cash deposits, each below $10,000. Since the deposits were below $10,000, the banks did not report Mr. White to FinCEN by filing Currency Transaction Reports. Mr. White admitted to the foregoing at his September 14, 2021 plea agreement. During Mr White’s allocution at his September 14, 2021 Change of Plea Hearing, the Court and the federal prosecutor asked Mr. White about his above-mentioned structuring scheme. To listen to Mr. White’s September 14th allocution, click the play button on the player available here.

1FinCEN’s Educational Pamphlet on the Currency Transaction Reporting Requirement

Video: AndreyPopov / iStock.com

Copyright 2023 Fred L. Abrams

If you are in a high net worth divorce, your spouse might hide community property from you by misusing:

These are just three of the common money laundering methods. Although not a high net worth divorce case, filings in Brooklyn Federal Court in USA v. Ahmad reveal how one might use the three methods to hide assets. As set forth at an April 18, 2019 press release, the U.S. Government had placed Mr. Ahmad on a sanctions list for reportedly funding Hezbollah terrorists. Once Mr. Ahmad was on the list, trade with Mr. Ahmad was blocked and he was subject to economic sanctions.

Meanwhile, Mr. Ahmad’s March 29, 2023 indictment in USA v. Ahmad, claims Mr. Ahmad and eight co-defendants had evaded the sanctions. They allegedly did this by smuggling art and diamonds in a money laundering circuit. Moreover, Mr. Ahmad reportedly carried out the money laundering scheme through the multiple jurisdictions shown by this chart:1

Mr. Ahmad’s alleged use of multiple jurisdictions would have made it harder to detect Mr. Ahmad’s suspected laundering scheme. Additionally, prosecutors in USA v. Ahmad seek to forfeit more than 482 diamonds which are described here. As part of their asset recovery strategy, prosecutors are also trying to forfeit over 100 pieces of artwork. One of the 100 includes the painting by Nigerian artist Luke Agada, shown at the top of this blog post.2

1Chart courtesy of U.S. Department of Treasury Office of Foreign Assets Control.

2Luke Agada painting reproduced from p. 30 of Mr. Ahmad’s indictment and mentioned at the April 19, 2023 ARTnews article “US Prosecutors Say Art Collector Financed Hezbollah and Violated Sanctions, Dealing Art and Diamonds Totaling $440 M.“

 

Hunter Biden allegedly used shell companies & the diamond at this chart, in a supposed corruption scheme.*

As was widely reported, The U.S. House Committee on Oversight and Accountability, (“the Committee”), published its August 9th memo about Hunter Biden and some other Biden family members. On the one hand, House Republicans on the Committee allege President Biden, Hunter Biden and some other Biden family members participated in an influence peddling scheme. On the other hand, House Democrats allege President Biden has never done anything wrong. However, as set forth below, there could be money laundering indicators in this case, especially with respect to Hunter Biden.

A) WHAT HOUSE REPUBLICANS ALLEGE

At the Committee’s August 9th & / or its earlier materials, House Republicans essentially allege the following. First, years ago foreign actors from China, Russia, Ukraine, Romania and Kazakhstan supposedly paid tens of millions of dollars in bribes to some Biden family members. Second, foreign actors may have made the supposed bribe payments because they thought Joe Biden would do them favors during his vice presidency. Third, Hunter Biden and some of his business associates might have concealed these payments by transferring them into shell companies. Fourth, page 28 of the Committee’s May 10th memo suggests one alleged bribe payment could have been a 2.8 carat diamond worth about $80,000, which a foreign actor gave to Hunter Biden.

B) COUNTERARGUMENTS BY HOUSE DEMOCRATS

House Democrats basically claim Congressional Republicans have not supplied evidence showing President Joe Biden participated in a corruption scheme. ‘Instead, they rehash the same Hunter Biden business dealings that Congressional Republicans identified at least three years ago,’ the ranking Democrat on the Committee Maryland Rep. Jamie Raskin said. Rep. Raskin’s quote is mentioned by the August 9, 2023 ABC News article House GOP releases new memo on Hunter Biden’s foreign business dealings, reviving old claims. Additionally, this article points out that President Joe Biden has denied he was involved in Hunter Biden’s business dealings.

C) COULD HUNTER BIDEN HAVE ENGAGED IN MONEY LAUNDERING?

Assuming, arguendo, some of President Biden’s family members participated in a corruption scheme, then money laundering must be considered. People facilitate laundering schemes to hide their true beneficial ownership of money. Furthermore, when people launder money, there are usually red flags. Speaking hypothetically, the money laundering red flags concerning Hunter Biden and possibly other Biden family members could be:

  • Politically Exposed Person(s)— are individuals more susceptible to bribery because of their position or influence. Close business associates and relatives of these individuals are also considered politically exposed persons. Under this definition, President Biden’s son Hunter and other close relatives are politically exposed persons.
  • Shell Companies—in some places, a money launderer can form a shell company without disclosing who its shareholders, officers and directors are. The launderer might use the shell company to open bank accounts and then hide money there. Meanwhile, some Biden family members and / or their associates allegedly formed to 20 shell companies.
  • Multiple jurisdictions—you can launder money by transferring it through multiple jurisdictions / across international borders. This makes the money harder to track. In this case, Hunter Biden and others could have received payments transferred to the U.S. from China, Russia, Ukraine, Romania and Kazakhstan.
  • Portable Valuable Commodities—to obscure beneficial ownership, a money launderer can convert cash into diamonds, jewelry, precious metals, etc. These portable valuable commodities are relatively easy to smuggle across international borders. As mentioned above, a foreign actor my have given Hunter Biden a 2.8 carat diamond, possibly as a bribe payment.

*Chart courtesy of U.S. House of Representatives Committee on Oversight & Accountability, May 10th Memorandum, at pp. 35.

Copyright 2023 Fred L. Abrams

During your divorce you may need to search for community property your spouse hid in secret bank accounts.1 If your asset searches & / or bank searches show your spouse hid community property, you may need to prove this in Court. If so, there are pitfalls you can avoid which are discussed below. I have seen these pitfalls as a lawyer with over 33 years of experience and hope you benefit from this post about them.

I. AVOID HEARSAY & CONCLUSORY CLAIMS ABOUT COMMUNITY PROPERTY

If your spouse transferred money into a secret bank account, you should supply the Court with legally sufficient evidence about the secret account. Although there can be exceptions, this means you can not use hearsay to prove a secret bank account exists. Nor should any private investigator you hire make conclusory allegations to prove your spouse has a secret bank account. Instead of these examples of insufficient evidence, you must give the Court competent evidence regarding the secret bank account.

II. SERVE SUBPOENAS ON BANKS BUT NOT FOREIGN ONES

Competent evidence about your spouse’s secret bank account includes records from the bank that houses the secret bank account. You may be able to use a subpoena to compel this bank to supply you with the records. These records include: monthly bank account statements, bank signature cards, account opening documents, etc. Moreover, you would supply the court with a certification from the bank’s custodian of records to show the subpoenaed records you received from the bank are competent evidence. Additionally, a subpoena is usually unenforceable with regard to out-of-state witnesses. Therefore, if you need records from a bank headquartered out-of-state, you should probably serve your subpoena under the Uniform Interstate Deposition and Discovery Act. Meanwhile, if your spouse’s secret bank account is at a foreign bank, do not make the mistake of employing a subpoena to seek the offshore records. In other words, you can not use a subpoena across international borders.

III. USE LETTERS ROGATORY TO GET RECORDS FROM FOREIGN BANKS

However, you might be able to use a Letter Rogatory, (a.k.a. Letter Of Request or Request For Legal Assistance), to collect the evidence you need from a foreign bank. A Letter Rogatory may allow you to gather your spouse’s secret bank account records from a foreign bank. Letters rogatory may be available to you because of the international treaty, The Hague Convention,Taking Of Evidence Abroad In Civil Or Commercial Matters, 1970. You could initially seek the Letter Rogatory from the domestic court handling your divorce. If this domestic court issues your Letter Rogatory, it will be in the form of a court order. Your Letter Rogatory would request help from the foreign court with legal authority over the foreign bank. The Letter Rogatory would ask the foreign court to direct the foreign bank to supply you with your spouse’s secret bank account records & / or other evidence.

1Although this post gives tips to spouses divorcing in community property states, the tips also apply to spouses dividing marital property in equitable distribution states.
Copyright 2023 Fred L. Abrams

You may wonder if Infowars host Alex Jones, (“Jones”) has hidden his money or other assets. An expert in a lawsuit against Jones apparently claimed Jones and his Free Speech Systems company were worth as much as $270 million. Meanwhile, Jones reportedly said on his Infowars show he is worth less than $2 million. He also supposedly laughed at the nearly $150 billion in judgments he faces.1 The Court awarded the judgments to relatives of the children massacred at Sandy Hook Elementary School (hereinafter “the Sandy Hook plaintiffs”). The Court did this because Jones had spread reprehensible conspiracy theories about the massacred children. Besides discussing the Sandy Hook plaintiffs, this post also briefly mentions Jones’ 2013 divorce from Kelly Jones.

I. Did Alex Jones Hide Money Via Shell Companies?

Although shell companies have legitimate uses, they sometimes raise a red flag that a business or individual is concealing assets. This is true because the true beneficial owner of an asset can form a shell company and misuse the shell company to hide assets. For instance in some jurisdictions, the true beneficial owner can establish a shell company without supplying information as basic as who its directors, officers and / or shareholders are. Even if this information is disclosed, the identity of the shell company’s true beneficial owner may be concealed. Then, the true beneficial owner can employ the shell company with anonymity— to open bank accounts, purchase fine art, real estate &/or other assets.

Therefore, the Sandy Hook plaintiffs would want to determine if Jones was the true beneficial owner of any shell companies. My search at Corporationwiki.com reveals Jones may be related to 13 business entities. These business entities are listed below and some of them could be shell companies:

  1. Free Speech Systems, LLC
  2. Pqpr Holdings Limited, LLC
  3. Jones Productions, LLC
  4. Infowars, LLC
  5. Pljr Holdings, LLC
  6. Planet infowars, LLC
  7. Jones Report, LLC
  8. Austin Shiprock Publishing, LLC
  9. Infowars Health, LLC
  10. Aej Austin Holdings, LLC
  11. End Hate Now LLC
  12. Prison Planet TV, LLC
  13. A. Emric Productions, LLC

II. Did Jones Use Fraudulent Transfers To Hide Assets?

When someone transfers assets beyond the reach of a creditor, it can be a fraudulent transfer (a.k.a fraudulent conveyance). Creditors injured by a fraudulent transfer may be a wide variety of persons and / or entities, ranging from divorcing spouses to the IRS. In court, creditors prove a fraudulent transfer occurred by showing badges of fraud were present at the time of the transfer. Just some of these badges are: the transfer was between related parties; the transfer was made in anticipation of litigation; the transferee gave inadequate consideration for the transfer; etc. According to a November 21st Washington Post article, Jones transferred millions of dollars, “potentially… out of reach of the Sandy Hook plaintiffs”:

As the potential for damages mounted, Jones began moving millions of dollars out of his company, Free Speech Systems, and into companies controlled by himself, friends or relatives, according to a Washington Post review of financial statements, depositions and other court records. The transfers potentially put those funds out of reach of the Sandy Hook plaintiffs [emphasis added].

The Washington Post, November 21, 2022 article “Sandy Hook families sued Alex Jones. Then he started moving money around.”

If the Washington Post’s above-quoted factual allegations are true, then the Washington Post basically raised the question: Had Jones engaged in fraudulent transfers to hinder the Sandy Hook plaintiffs from collecting on their $150 billion judgment? The November 21st Washington Post article also seemed to raise the question of whether Jones placed money out of reach of his ex-wife Kelly Jones, during the couple’s divorce in 2013. The November 21st Washington Post article alleged “the flows of money around Free Speech Systems…echoed financial moves Jones made almost a decade earlier, when divorce proceedings [with Kelly Jones] jeopardized his fortune (emphasis added).”

III. Did Jones Conceal Assets By Using Nominees?

“A nominee is one who holds bare legal title to property for the benefit of another.”  In re Callahan, 442 B.R. 1, 7 (D. Mass. 2010) (citing Black’s Law Dictionary 1076 (8th ed. 2004)). Stated otherwise a nominee is an intermediary. Shell companies, family members, trusts, gatekeepers such as lawyers, etc. can all be nominees. A true beneficial owner of assets may hide assets by secretly purchasing assets through a nominee. When this happens, the nominee is referred to as a nominee purchaser. Additionally, a true beneficial owner may hide assets by secretly titling assets in the name of a nominee. Given these concealment methods, I suspect the Sandy Hook plaintiffs are trying to determine whether Jones could be hiding assets through nominees.

1 See AP News, December 2, 2022 article, “Infowars host Alex Jones files for personal bankruptcy.”

Copyright 2023 Fred L. Abrams

Learning about concealment schemes can help you spot concealed assets your spouse places beyond your reach during your divorce. Therefore, a divorcing spouse trying to identify hidden marital assets / community property could learn a lesson from Dr. Krishnaswami Sriram.  Dr. Sriram is thought to have concealed assets from the IRS in two suspected concealment schemes. The two suspected schemes involved alleged tax fraud. The suspected schemes are thought to have employed these common concealment methods:

DR. SRIRAM’s FIRST SUSPECTED ASSET CONCEALMENT SCHEME

Dr. Sriram first concealed assets from the IRS by making false statements at his joint Individual Tax Returns (Form 1040) for years 1997 & 1998.  Additionally, Dr. Sriram made false statements at his Partnership Return Of Income (Form 1065) for year 1999. At these tax returns, Dr. Sriram concealed assets by understating his business profits & / or by overstating business expenses. Consequently, at his September 19, 2002 plea agreement, Dr. Sriram pleaded guilty to violating 26 U.S.C. § 7206(1) (Fraud and false statements).  Furthermore, the plea agreement indicates Dr. Sriram schemed to defraud Medicare, Medicaid and private insurers from about September 1996 until about March 2001. The plea agreement says Dr. Sriram had submitted bogus claims for medical services he never rendered to his patients. Therefore, at his plea agreement Dr. Sriram pleaded guilty to mail fraud & health care fraud besides tax fraud.

DR. SRIRAM’S SECOND SUSPECTED ASSET CONCEALMENT SCHEME

As recently as August 25, 2022, Dr. Sriram was again accused of hiding assets from the IRS. Dr. Sriram’s August 25, 2022 indictment alleges Dr. Sriram violated 26 U.S.C.§ 7201 (Attempt to evade or defeat tax) & 26 U.S.C. §§ 7206(1), & 7206(2) (Fraud & false statements)  The August 25th indictment alleges in relevant part that in 2014 Dr. Sriram entered into a stipulation with the IRS.  Based on the stipulation, the U.S. Tax Court affirmed assessments against Dr. Sriram in the amount of about $1.6 million for years 1997, 1998, 1999 & 2001. Between about June 6, 2014 to about April 2017, Dr. Sriram allegedly tried to reduce the $1.6 million he owed by reportedly making false statements to the IRS.  Moreover, Dr. Sriram’s indictment suggests Dr. Sriram may have hidden his true beneficial ownership of assets by allegedly:

  1. Using his children as the nominal owners of rental properties in Arlington Heights, Illinois & Peekskill, NY.  Meanwhile, Dr. Sriram is thought to have secretly controlled these properties and supposedly collected the rental income from these properties.
  2. Parking assets in offshore investment accounts in India, at Calibre Consultants Wealth Management and Calibre Financial Financial Services Limited.
  3. Transferring about $600,000 from a domestic Bank of America account into a foreign bank account at Federal Bank Limited in India;
  4. Titling bank accounts in the names of suspected shell companies which Dr. Sriram secretly controlled.

Copyright 2022 Fred L. Abrams

We can learn how to search for assets by studying tax frauds. I say this because tax fraud cases show us the methods people use to conceal their assets. When we study tax fraud cases, we learn to recognize these asset concealment methods. Once we can recognize the methods, we know to look for them each time we perform an search. This is why studying tax fraud cases can help us learn how to search for assets. The suspected tax fraud cases discussed below highlight these methods for hiding assets: cryptocurrency, going offshore and nominees.

I. CRYPTOCURRENCY

The federal court in U.S.A. v. John Does, Index No. 2:22-cv-05715 issued its August 15, 2022 Order allowing the IRS to serve its John Doe summons upon SFOX a.k.a. “OxLabs Inc.” SFOX is a cryptocurrency dealer headquartered in Los Angeles. Although prosecutors do not accuse SFOX of any misconduct, the John Doe summons may help the IRS identify any taxpayers hiding assets through cryptocurrency transactions at SFOX.  One court filing in U.S.A v. John Doe, is the July 20, 2022 declaration of IRS Senior Revenue Agent Seng Tchong Lee. Pages 35-44, ¶¶ 93-102 at the July 20th declaration, describe 10 taxpayers with SFOX accounts, who may have used cryptocurrency / virtual currency to commit tax fraud.

II. GOING OFFSHORE

Billionaire Robert F. Smith allegedly used offshore bank accounts & / or offshore trusts to conceal assets from the IRS.  This is mentioned at the August 17, 2022 NY Post article “Tax cheat Robert F. Smith bought ranch, ski condos, nightclub with hidden money: report.” Moreover, the article mentions that Mr. Smith reportedly hid his money offshore with the help of Mr. Carlos E. Kepke.  Mr. Kepke was a Houston-based tax attorney. Mr. Kepke and Mr. Smith allegedly hid about $225 million from the IRS.  In furtherance of this suspected tax fraud scheme, Mr. Kepke supposedly formed a business entity in Nevis and a Belizean trust.  Foreign bank accounts in Switzerland and the British Virgin Islands were also reportedly used in the alleged scheme.  On April 15, 2021 Mr. Kepke was indicted for his suspected role in this scheme. Mr. Kepke’s trial is currently set down for November 28, 2022, according to Mr. Kepke’s docket report at entry no. 34.

III. NOMINEES (a.k.a. “INTERMEDIARIES)

In U.S.A. v. Baiense, Index No. 22-cr-10148, prosecutors essentially allege between April 2013 through December 2017, Mr. Mauricio Barobosa Baiense committed tax fraud by using subcontractors as his nominees. Mr. Baiense who owned Contract Framing Builders, Inc. (“CFB”), allegedly issued CFB checks worth $11 million to the subcontractors. After the subcontractors reportedly cashed the checks at a check-cashing business, Mr. Baiense may have secretly collected this cash. Then, Mr. Baiense allegedly used the cash as an off-the-books cash payroll to pay wages owed to CFB employees.  Consequently, Mr. Baiense’s July 28, 2022 superseding indictment accuses Mr. Baiense of: conspiracy to defraud the United States (18 U.S.C. § 371); failure to collect and pay over taxes (26 U.S.C. § 7202); aiding and assisting the preparation of a false tax return (26 U.S.C. § 7206(2)); and false statements (18 U.S.C. § 1001(a)(2)).

Copyright 2022 Fred L. Abrams

If you are in a high net worth divorce, you might hire a forensic computer expert to access your divorcing spouse’s computer. You might hire this expert to try to detect community property your divorcing spouse hid from you. Meanwhile, if you are going to access your divorcing spouse’s computer, make sure your access does not violate the federal anti-hacking statute and / or other laws. Additionally, before your forensic computer expert examines your spouse’s computer, use interrogatories during your divorce to collect background information about the computer.

I. ACCESS YOUR SPOUSE’S COMPUTER LEGALLY

You, your matrimonial lawyer and your forensic computer expert must use legal methods to access your spouse’s computer. This means you may need to apply for a court order authorizing you to forensically examine / access your spouse’s computer. Even if you share a computer with your spouse in your marital residence, you still might need a court order to legally access your spouse’s information at the shared computer.  This is especially true if you need to access your spouse’s password protected information at this computer. If you illegally access your spouse’s information at a computer, you could be civilly & / or criminally liable under the federal anti-hacking statute, the Computer Fraud and Abuse Act (18 U.S.C. § 1030). Illegally accessing your spouse’s computer could also be a violation of your state’s law.  

II. USE INTERROGATORIES TO COLLECT INFORMATION ABOUT YOUR SPOUSE’S COMPUTER

Furthermore, before your forensic computer expert examines your spouse’s computer, learn background information about this computer or other computers your spouse uses.  You might elicit this background information from your spouse by using interrogatories during the pretrial discovery phase of your divorce.  At your interrogatories, here are just some of the things you can ask your spouse about: 

  • Does your spouse use multiple computers and if so, where are they located?
  • Has your spouse’s computer been “wiped clean” / has a data destruction application been used at the computer?
  • What backup sets exist of your spouse’s computer and what is the current location of these backups?

Using interrogatories to collect this kind of information from your spouse, increases the odds your forensic computer examination will detect any community property your spouse hid from you.  For more interrogatories related to a prospective forensic computer examination, visit the webpage available here.

 

If your spouse is a highly paid key employee, your spouse may participate in a nonqualified deferred compensation plan offered by an employer. By using this kind of plan, your high net worth spouse might reduce taxes by deferring an employer’s payment of salary, stock share certificates, cash or other assets. The YouTube video above explains why some employers offer key employees a nonqualified deferred compensation plan.  An Investopedia webpage also talks about what a NQDCA is.

I. IS YOUR SPOUSE HIDING COMMUNITY PROPERTY AT A NONQUALIFIED DEFERRED COMPENSATION PLAN?

If you are in a high net worth divorce and your spouse is a highly paid key employee, your spouse might use a nonqualified deferred compensation plan, (hereinafter “NQDC”), to hide community property from you.  Your spouse can do this during your divorce by failing to disclose a NQDC to you. Then, after your divorce is over, your spouse might be able to collect the compensation / assets due under the NQDC from an employer.  Meanwhile, assets distributed to your spouse under a NQDC, can be community property / can be part of your marital estate. This means when your spouse hides a NQDC, your spouse could be cheating you out of community property the Court would have distributed to you because of your divorce.

II. COLLECTING EVIDENCE ABOUT A NQDC

Accordingly, you should elicit evidence during your high net worth divorce about any NQDC your spouse might have as a highly paid key employee. You should be able to collect this evidence by using legal tools available to you during the pretrial discovery phase of your divorce. These tools may include a subpoenaed deposition of your spouse’s employer, & / or an oral deposition of your spouse, & /or requests for the production of documents, etc. You would use these legal tools to ask detailed questions about whether your high net worth spouse had a NQDC. Here is an example of just four of the kinds of questions you can ask:

1.    Did the Employer directly or indirectly maintain any nonqualified deferred compensation, (hereinafter “NQDC”), arrangements for “Mr. XYZ,” including but not limited to any trusts, escrows, or separate accounts? If so, provide the details.  For instance, regarding “Mr. XYZ,” did the Employer maintain any of the following:

a.    Salary Reduction Arrangements (i.e. which defer the receipt of otherwise currently includible compensation by allowing the participant to defer receipt of a portion of his or her salary).

b.    Bonus Deferral Plans (i.e. resemble salary reduction arrangements; except they enable participants to defer receipt of bonuses).

c.     Top-Hat Plans also known as Supplemental Executive Retirement Plans or SERPs (i.e. NQDC plans maintained primarily for a select group of management or highly compensated employees).

d.    Excess Benefit Plans (i.e. NQDC plans that provide benefits solely to employees whose benefits under the employer’s qualified plan are limited by IRC§ 415).

2.    To the extent not already disclosed by the Employer herein, did the Employer provide a compensation plan for “Mr. XYZ” which used any of the agreements / plans /trusts listed below at (a)-(d)? If so, provide the details.

a.    Salary or bonus deferral agreements

b.    Phantom Stock Plans

c.     Restricted Stock Plan

d.    Offshore Rabbi Trusts, Springing Rabbi Trusts, and/or Rabbi Trusts funded for the benefit of company executives.

3.    Were there any written communications between the Employer and “Mr. XYZ” that set forth “benefits,” “perks,” “savings,” “severance plans,” or “retirement arrangements”? If so, please identify each of these written communications.

4.     If the Employer directly or indirectly maintained NQDC plans, (or any NQDC arrangement involving trusts, escrows, or separate accounts), for or on behalf of “Mr. XYZ”, identify all documents the Employer possesses regarding the same. This includes but is not limited to the following:

  • Copies of each NQDC plan/arrangement “Mr. XYZ” participated in, including all attachments, amendments, restatements, etc.
  • “Mr. XYZ’s” deferral election forms and any amended or changed election forms.
  • Ledger accounts/account statements concerning “Mr. XYZ”, noting deferrals, distributions, and loans.
  • All other documents created by the administrator of each NQDC plan/arrangement “Mr. XYZ” participated in.

Copyright 2022 Fred L. Abrams

This chart shows how dentist Glenn E. Lockwood allegedly hid assets by structuring cash withdrawals.¹

The First Scheme To Hide Assets

Prosecutors in U.S.A. v. Lockwood, allege Alaska dentist Glenn Lockwood hid assets twice from the IRS.  During Mr. Lockwood’s first scheme, Mr. Lockwood supposedly hid $575,000 in federal income taxes for years 2000-2003.  Mr. Lockwood is thought to have hidden the $575,000 through these common concealment tools:

As a consequence of his first scheme, Mr. Lockwood was convicted of tax evasion in violation of 26 U.S.C. § 7201.  He was sentenced to 60 months in prison followed by 3 years of supervised release.

The Second Suspected Scheme

Mr. Lockwood’s second scheme to hide assets allegedly spans from 2013 to the present.  It supposedly involves Mr. Lockwood’s effort to evade more than $3.5 million in taxes. Within weeks of Mr. Lockwood’s release from imprisonment for his first scheme, Mr. Lockwood allegedly started his second scheme to hide assets.  First, Mr. Lockwood is thought to have used LegalZoom to form a shell company in Wyoming called Strategic Innovations LLC. Next, Mr. Lockwood allegedly hid a bank account and other assets by titling them in the name of Strategic Innovations LLC. When bank accounts are hidden this way they are referred to as “nominee bank accounts”.

As part of his alleged second scheme, Mr. Lockwood also reportedly engaged in structuring. Structuring occurs when a bank customer structures cash deposits or cash withdraws so they are less than the $10,000 threshold for the bank to create a Currency Transaction Report.  Prosecutors say over a five-week period, Mr. Lockwood and his wife deposited $164,000 into the Strategic Innovations LLC. Then, Mr. Lockwood and his wife are thought to have “structured nearly all of the money out of the Strategic Innovations account [emphasis added]”.  Prosecutor’s May 2, 2022 Motion for Detention Hearing, at p.18.

Additionally, Mr. Lockwood and his wife are suspected of filing for bankruptcy and then concealing assets belonging to their bankruptcy estate. As a result of the alleged second scheme, Prosecutors have charged Mr. Lockwood and his wife with: tax evasion, conspiring to defraud the United States, bankruptcy fraud, wire fraud, money laundering and other federal crimes. To learn more about Mr. & Mrs. Lockwood’s suspected crimes, read their  April 20, 2022 indictment available here.

Copyright 2022 Fred L. Abrams