I) PANAMÁ OFFSHORE LEGAL SERVICES

You won’t have an easy asset search if your adversary hires a Nominee Incorporation Service, (“NIS”), to hide assets from you. A NIS helps its customers establish corporations &/or other entities. In The Matter Of The Tax Liabilities Of John Does, prosecutors essentially alleged the Panamanian law firm known as Panama Offshore Legal Services, (“POLS”), was a NIS.  According to prosecutors, taxpayers had used offshore services offered by POLS to commit tax fraud.

II) THE JOHN DOE SUMMONSES

Therefore, In The Matter Of The Tax Liabilities Of John Does, prosecutors argued in court that the IRS needed John Doe summonses. The IRS could use the John Doe summonses to identify taxpayers who had hidden money via POLS, the prosecutors said. Prosecutors asked the Court to allow the IRS to serve the John Doe summonses on: Federal Express Corporation; FedEx Ground Package System, Inc.; DHL Express; United Parcel Service, Inc.; the Federal Reserve Bank of New York; The Clearing House Payments Company LLC; HSBC Bank USA, N.A.; Citibank, N.A.; Wells Fargo Bank, N.A.; and Bank of America, N.A.

To support their request for the John Doe summonses, prosecutors filed a May 4, 2021 declaration in court. The May 4th declaration was signed by an IRS Internal Revenue Agent who worked for The Offshore Compliance Initiatives Program. Page 17 ¶41 of the May 4th declaration said:

POLS is an entity that provides multi-jurisdictional offshore services in the form of comprehensive entity formation and legal and management services for clients wanting to use Panamanian entities to conceal their ownership of assets, to establish bank accounts in Panama, and to invest in Panamanian real estate.

III) SOME SERVICES POLS OFFERED

Additionally, the May 4th declaration seemed to indicate that taxpayers could have used the following services offered by POLS, to hide assets from the IRS:

IV) CONCLUSION

On July 15, 2021, the Court issued its order allowing the IRS to serve the John Doe summonses concerning POLS.  As all of the above-mentioned suggests, you won’t have an easy asset search if your adversary hides assets from you by hiring a NIS like POLS. However, learning the ways your adversary could use a NIS, might help you recognize your adversary’s methods for hiding assets. Once you recognize your adversary’s methods for hiding assets, you can consider the legal remedies available to you for recovering assets from your adversary.

Copyright 2021 Fred L. Abrams

 

There ain't that many smurfs in the world.

If you are trying to detect hidden money you should look for asset search red flags like “smurfing¹.” Smurfing is a form of structuring cash deposits into bank accounts. It is one of the ways to secretly place cash into a money laundering circuit. When a bank customer in the U.S. deposits or withdraws $10,000 or more in cash, the bank must file a Currency Transaction Report (“CTR”). The bank files CTRs with FinCen which is a financial intelligence unit. To prevent the bank from filing a CTR, a smurf would make several cash deposits under $10,000. By structuring the cash deposits this way, the smurf hopes to fly under the radar.

ALLEGED SMURFING IN USA v. BAHADORIFAR, ET. AL.

Count Five of the 7/13/21 superseding indictment in USA v. Bahadorifar, et. al., 21 Cr. 00430(RA), highlights an alleged smurfing scheme. The smurfing scheme was supposedly carried out by California resident and department store employee, Ms. Niloufar Bahadorifar. Page 34 ¶¶ 41-42 of the 7/13/21superseding indictment at Count Five says:

[B]etween at least approximately April 2019 and May 2021, BAHADORIFAR structured cash deposits totaling at least approximately $505,822 at a financial institution in individual deposits of less than $10,000 each.

Additionally, page 9 ¶ 12 of the 7/13/21 superseding indictment claims that since July 2020, Ms. Bahadorifar made about $472,000 in unexplained cash deposits into her bank account. This allegedly included 98 cash deposits totaling approximately  $444,000 that were each less than $10,000. Ms. Bahadorifar is also thought to have tried to secretly transfer money by using debit &/or credit cards.

THE SUSPECTED IRANIAN TERRORIST NETWORK

Meanwhile, an Iranian terrorist network, (“the Network”), may be the true beneficial owner of Ms. Bahadorifar’s alleged $472,000 in unexplained cash deposits. The Network is comprised of Iranian intelligence officers and/or their intelligence assets. It is reportedly tasked with kidnapping exiled Iranian dissidents for rendition to Iran. Once the kidnapped victims are back in Iran, they face imprisonment &/or execution. According to the 7/13/21 superseding indictment, the Network planned to kidnap Iranian journalist Masih Alinejad, who lives in exile in Brooklyn, NY.  The Network apparently set its sights on Ms. Alinejad because she is vocal about the Government of Iran’s human rights abuses.

MISUSE OF PRIVATE INVESTIGATORS

During the alleged scheme to kidnap Ms. Alinejad for rendition to Iran, the Network allegedly hired licensed private investigators to place Ms. Alinejad under surveillance in Brooklyn, N.Y. The Network through its intelligence officers &/or intelligence assets hired the private investigators under the pretext of recovering money Ms. Alinejad supposedly stolen &/or supposedly owed to a foreign creditor. The Network is thought to have even hired a Manhattan-based private investigator to place a vehicle with a hidden camera in front of Ms. Alinejad’s Brooklyn home. This could provide the Network with live video monitoring of the home.

THE DECISION TO INITIATE OR DECLINE PROSECUTION 

Even though the Network hired private investigators to surveil Ms. Alinejad, prosecutors declined prosecution of the private investigators.The prosecutors might have believed the Network duped the private investigators into surveilling Ms. Alinejad. Prosecutors similarly declined prosecution of Ms. Bahadorifar for a conspiracy to kidnap Ms. Alinejad.  Prosecutors declined this prosecution although Page 9 ¶ 12 of the 7/13/21 superseding indictment alleges Ms. Bahadorifar “caused a payment to a private investigator for surveillance of [Ms. Alinejad]…”

Continue Reading Asset Search Red Flags, Smurfing, Private Investigators & A Kidnap Plot

Everybody knows there can be hidden community property in ultra-high-net-worth divorces.  Meanwhile, the ultra-high-net-worth divorce between Mr. Bill Gates and his wife Melinda does not now appear to involve hidden community property.  Their divorce does however, give us a glimpse of the kinds of community property the Court often divides in ultra-high-net worth divorces. Mr. and Mrs. Gates recently filed an agreement in Court which reportedly identifies and divides their community property. Additionally, Mr. Gates is thought to have already transferred $2.4 billion to Mrs. Gates. Part of this transfer to Mrs. Gates included 14.1 million shares of Canadian National Railway Co. and 2.94 million shares in AutoNation Inc. Among other things, the couple’s community property includes 422 square miles of land across more than a dozen states, cars & art.

3 Ways Community Property Can Be Hidden

Although Mr. & Mrs. Gates appear to be amicably dividing their community property, here are some ways a spouse can hide community property during an ultra-high-net worth divorce:

  • Arts / Antiquities: Ultra-high-net worth couples often possess valuable art / antiquities. However, a divorcing spouse may secretly purchase valuable art / antiquities. During the divorce this spouse may then fail to disclose the art / antiquities.
  • Yachts & / or Airplanes: Some businesses offer their clients the service of titling a yacht & / or aircraft in the name of a Delaware or other shell company. A divorcing spouse may hide community property by employing and abusing these services.  Furthermore, a divorcing spouse may easily place a yacht & / or airplane out of reach by parking it offshore across international borders.
  • Bulk Cash Smuggling: Contrary to what one would think, enormous amounts of cash can be hidden.  This cash may then be washed at a money laundering circuit.  At AMC’s Breaking Bad tv episode “Say My Name,” fictional lawyer Daniel Wachsberger used at least nine safety deposit boxes to smuggle cash for his clients. A real world case of suspected bulk cash smuggling involved Zhenli Ye Gon (“Ye Gon”). Ye Gon was extradited from the United States to Mexico for an alleged drug conspiracy. During March 2007, the hundreds of millions in cash shown here were found in Ye Gon’s Mexican home in a concealed room next to his bedroom:

Copyright 2021 Fred L. Abrams

Mr. Alhassan Iddris Lari’s indictment says he had hidden cash in a Bronx bank account between 2014 & 2020.  Mr. Lari apparently maintained this bank account in the name of a shipping company which was just a shell company.  A press release from the IRS about Mr. Lari claims the hidden cash totaled $1.5 million. The press release alleges the cash was criminal proceeds from online romance scams &/or other e-mail scams.

Mr. Lari is thought to have wire transferred the $1.5 million out of the Bronx to criminals located in the Republic of Ghana. The press release suggests as part of Mr. Lari’s scheme to hide cash, Mr. Lari ran an unlicensed money transmitting business in the Bronx.  Based upon all of the foregoing Mr. Lari is believed to have hidden the $1.5 million by employing the following asset concealment tools:

On February 3, 2021 Mr. Lari pleaded guilty to conspiracy to commit money laundering and operating an illegal money transmitting business.  Mr. Lari faces a maximum of 10 years in prison for the money laundering conspiracy and up to 5 years in prison for operating an illegal money transmitting business. According to Mr. Lari’s docket report, the Court will next sentence Mr. Lari in Manhattan on June 16, 2021.

Copyright 2021 Fred L. Abrams

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