As your adversary may hide money in multiple bank accounts, you may need to perform bank searches. For example, my December 21, 2020 post mentioned a scheme in which 150 checks worth $2 million were seemingly hidden at 12 bank accounts. At your bank searches you would seek your adversary’s customer information from banks. Therefore, you would try to collect: account opening documents; signatory cards; monthly account statements; debit/credit card information; & loan instruments. My 3 tips for performing bank searches are:

A) Identify The Bank’s Document Retention Policies

Banks have different document retention polices. Two cite just 2 examples, banks in the U.S. maintain bank account records for 7 years while banks in Switzerland keep their records for 10 years. Although a bank may retain records beyond its retention period, it is important for you to know what this retention period is. You might even decide to forego your bank search if it is based on a stale lead and the bank’s document retention period has long passed.

B) Use The Legal Tools

If you were curious about your neighbor’s bank account balance you could not simply phone your local bank and expect the bank to supply it to you. This is because your neighbor’s bank customer information is not public information. Therefore, you should use the legal tools that may be available to you. The tools can include subpoenaing domestic banks and serving letters rogatory on offshore banks.  You might also be able to use authorization forms for the release of bank account information (i.e. compelled consent forms).

C) Avoid Backdoor Channels

In most cases, it is a crime to collect bank account information by phoning a bank and impersonating a bank customer. This phone call is based on false pretenses and is known as a pretext call.  Another backdoor channel is bribing a bank teller for bank account information. If you hire private investigators or data brokers to illegally access bank account information, then you could be criminally liable. On July 25, 2008 private investigator Victoria J. Tade pleaded guilty to hiring data broker BNT which made illegal pretext calls to banks, the IRS, medical offices; etc. One piece of evidence prosecutors used against Ms. Tade was a transcript of a phone call between Ms. Tade and BNT.  This phone call had been monitored by federal law enforcement agents. As the transcript reveals, Ms. Tade had discussed making pretext calls. Click on the image below to read the full transcript.

Copyright 2021 Fred L. Abrams

Tax fraudsters usually hide undeclared revenue &/or assets by using common concealment methods. By studying the methods you can improve your ability to identify hidden assets. This in turn increases your odds that your asset searches will be successful. The tax fraud case against NYC restaurateur Mr. Adell Kellel, highlights the concealment method of transferring money into or through multiple bank accounts.  At Mr. Kellel’s January 24, 2020 plea hearing, Mr. Kellel pleaded guilty to tax fraud under 26 U.S.C. § 7201. On November 30, 2020 Mr. Kellel was sentenced to serve 2 years in prison.

Mr. Kellel’s January 24, 2020 information accused Mr. Kellel of hiding over $2 million in business revenue from the IRS. Page 4 ¶ 12 of the January 24th information alleged Mr. Kellel hid the $2 million by depositing more than 150 checks into 12 bank accounts. Mr Kellel’s suspected tax fraud scheme is also described at pp. 14-18 of Mr. Kellel’s January 24, 2020 plea hearing. Mr. Kellel reportedly caused a combined tax loss of at least $771,195 to the IRS and the New York State Department of Taxation and Finance for years 2011-2015. For a list of federal crimes related to tax fraud investigations read the second paragraph at my post “An Asset Search By Pursuing Interviews & Tips.”

Copyright 2020 Fred L. Abrams

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