Today’s post is about Mr. Alex Nain Saab Moran (“Saab”) and Mr. Alvaro Pulido Vargas (“Pulido”) who could have hidden money at offshore banks; multiple jurisdictions; and in a nominee bank account (i.e. a bank account titled in the name of an intermediary).  I listed these three methods for hiding assets at “Red Flags For An Asset Search.”  On July 25th Mr. Saab and Mr. Pulido were indicted in Florida for suspected money laundering & an alleged bribery scheme. The alleged scheme is believed to have involved Mr. Saab’s and Mr. Pulido’s bogus invoices which they submitted to the Venezuelan government.

I. SUSPECTED HIDDEN MONEY AT OFFSHORE BANKS

Their July 25th indictment basically alleges Mr. Saab and Mr. Pulido hid the money the Venezuelan government paid them because of the alleged bogus invoices.  These payments to Mr. Saab and Mr. Pulido could have been for as much as $350 million U.S. dollars. Mr. Saab and Mr. Pulido are thought to have laundered the payments by transferring the payments from banks in Venezuela to offshore banks in multiple jurisdictions. Mr. Saab and Mr. Pulido may have also hidden money by using a nominee bank account titled in the name of a co-conspirator.  Based on the foregoing, money laundering indicators in this case might possibly have been the use of: offshore bank accounts; multiple jurisdictions; and a nominee bank account.

II. HOW THE ALLEGED SCHEME WORKED

In 2011 the Venezuelan government awarded Mr. Saab and Mr. Pulido a contract to construct low-income housing in Venezuela.  Mr. Saab and Mr. Pulido then shipped construction materials to Venezuela to build the housing. Mr. Saab’s and Mr. Pulido’s July 25th indictment claims they submitted bogus invoices to the Venezuelan government for these construction materials.  The indictment alleges Mr. Saab and Mr. Pulido invoiced the Venezuelan government for multiple shipments of construction materials when they sent only one.  Mr. Saab and Mr. Pulido supposedly bribed Venezuelan government officials who photographed one shipment of construction materials in different locations to make the one appear to be multiple shipments.  Bribe-taking officials allegedly made sure the Venezuelan government paid Mr. Saab and Mr. Pulido’s bogus invoices. The July 25th indictment also says Mr. Saab’s and Mr Pulido’s alleged bribe payments violated the U.S. Foreign Corrupt Practices Act.

III. MORE ALLEGED WRONGDOING

Finally, Mr. Saab’s and Mr. Pulido’s indictment was not the only thing that happened to them on July 25th. On July 25th the U.S. Treasury Department accused Mr. Saab and Mr. Pulido of stealing money from a food program for the poor in Venezuela.  Mr. Saab and Mr. Pulido supposedly hid these illicit proceeds by employing shell companies. Consequently, the U.S Treasury Department put Mr. Saab and Mr. Pulido on one of its sanction lists.

Copyright 2019 Fred L. Abrams

As part of your asset searches, you or your lawyer may hire private investigators. These private investigators sometimes interview witnesses to find hidden assets. However, ethical rules apply to your lawyer when he/she employs private investigators for witness interviews. The applicable ethical rules can vary, depending on the state or jurisdiction a lawyer practices law in.

A. AVOID TRICKING WITNESSES WHILE INTERVIEWING THEM

Interviewing witnesses or gathering informants’ tips can be critical to the success of asset searches. The witnesses or tipsters can be an ex-husband or ex-wife; a paramour; disgruntled business partner; bookkeeper; etc. Meanwhile, ethical rules prohibit lawyers from using trickery while interviewing these witnesses and collecting their tips.  Therefore, when lawyers hire private investigators, the private investigators  should not make misrepresentations to witnesses or trick the witnesses at interviews. Otherwise, the lawyers who hired the investigators could violate ethical rules.

B. ASSET SEARCHES, PRIVATE INVESTIGATORS & A WITNESS INTERVIEW

The following hypothetical featuring a Michigan lawyer, shows how ethical rules can be violated. The Michigan lawyer represents a divorcing wife in her Michigan divorce.  The divorcing wife tells the Michigan lawyer that her ultra-high-net worth husband is hiding marital assets. Therefore, the Michigan lawyer hires private investigators to perform asset searches of the husband.  Since the husband has a paramour, the Michigan lawyer tells one of the private investigators to befriend the paramour. The private investigator is to use the bogus friendship to interview the paramour about the husband’s assets. The Michigan lawyer also tells the private investigator to use the bogus friendship to conceal the fact that the private investigator works for the Michigan lawyer.

Meanwhile, a review of The Michigan Rules Of Professional Conduct reveals that the Michigan lawyer violated these five ethics rules:

Copyright 2019 Fred L. Abrams

I. STARTING ASSET SEARCHES AT BANKS

Asset searches at banks raise the question: how do you search for bank accounts you are unaware of? One wife found a box in the basement. Her divorcing husband forgot to take it when he moved out.  This box had an offshore bank’s brochure and the husband’s application to open his secret account there. Clues that can help you detect bank accounts usually come from: witness interviews or informant’s tips; forensic examinations of a cell phone, personal computer, or gps system; phone bills; hotel bills; credit card statements; frequent flyer miles statements; passports; court files from past lawsuits; physical surveillance; & trash pulls.

II.  DO’S & DON’TS FOR ASSET SEARCHES AT BANKS

Proper ways for conducting asset searches at banks include employing:

In general, it is illegal to elicit bank account information by:

If you illegally gather bank account information you could violate privacy or other laws listed at  “Pretexting During An Asset Search.” Furthermore, you might be held criminally or civilly liable if your private investigator violates laws while conducting asset searches on your behalf. Perhaps most important to know, is that some individuals offering asset searches will sell you snake oil. For example, former private investigator Elaine White and her husband ex-cop Cullen Johnson offered to perform asset searches at banks. These two however, sold their clients fabricated bank account information. They are mentioned at the “Investigators Gone Bad” video:

Video: courtesy of Offshore Alert

Copyright 2019 Fred L. Abrams

This 38th post in the “Divorce & Hidden Money” series shows you how your divorcing spouse can open secret offshore bank accounts.  The post also talks about presenting evidence in court about the offshore bank accounts.

I. FOUR STEPS FOR OPENING A SECRET OFFSHORE BANK ACCOUNT

Your divorcing spouse can open a secret offshore bank account by:

  1. establishing a shell company;
  2. hiring a straw person to act as the shell company’s nominee director;
  3. telling the nominee director to open an offshore bank account titled in the name of the shell company.
  4. & by finally transferring money into the offshore account.

By following these steps your divorcing spouse could secretly own offshore bank accounts. Your divorcing spouse would however, have to control the nominee directors of the shell companies.  Some methods for controlling nominee directors are discussed by The International Consortium of Investigative Journalists’ webpage “How the nominee trick works.” Meanwhile, “The Anonymous Panama Corporation” webpage seems to sell shell companies via the Internet. Besides shell companies, this webpage apparently offers nominee directors.

II. PRESENTING THE COURT WITH EVIDENCE ABOUT OFFSHORE BANK ACCOUNTS

If your divorcing spouse has secret offshore bank accounts, you will need to collect evidence about the offshore bank accounts. You will need the following documents for each of your divorcing spouse’s offshore bank accounts: monthly bank account statements; signature cards; account opening documents; etc.  You must also authenticate these documents and present them to the Court. The Court can then consider these offshore accounts when it distributes marital assets to you; awards you alimony &/or child support.

The best way to collect offshore bank account information will usually be through legal assistance requests/letters rogatory.  The Court presiding over your divorce can issue letters rogatory. Your letters rogatory would ask the foreign courts with legal authority over the offshore banks, to help you collect evidence.  Pursuant to your letters rogatory, foreign courts may direct the offshore banks to supply you with documents about your divorcing spouse’s offshore bank accounts.

The letter rogatory reproduced below was issued by the Family Court in San Isidro, Argentina.  The wife in that family court case sought alimony.  The wife apparently suspected her husband had offshore accounts at Merrill Lynch/Bank of America in New York City at Avenue of the Americas & 42nd Street:

 

A) HOW MONEY IS HIDDEN IN OFFSHORE TRUSTS

Your divorcing spouse may be hiding assets at an offshore trust. Your divorcing spouse may secretly transfer marital assets to the offshore trust.  The divorcing spouse could also make new purchases through the offshore trust. The trust could purchase: real property; jewelry; valuable automobiles; and almost anything else. This means your divorcing spouse could hide assets by titling assets in the name of an offshore trust.

Todd Kozel was accused of this kind of scheme. Mr. Kozel allegedly hid assets at a sham Isle of Jersey trust, as set forth by “ Ways To Hide Money & Commit Crimes.” Although real estate mogul Michael R. Mastro’s case didn’t involve divorce, Mr. Mastro allegedly used three trusts to hide assets.  This  was mentioned at “Mr. Mastro’s Bankruptcy Estate & His Self-Settled Trusts.” If your divorcing spouse is using an offshore trust to hide marital assets from you, you may be able to gather documents that can help you identify: the custodial bank for the trust; the trust’s income beneficiaries; the trustees; etc.

B) A LIST OF DOCUMENTS FOR FINDING OFFSHORE TRUSTS

Below is a list of documents/ a production request related to a divorcing spouse who was a U.S. taxpayer hiding marital assets at an offshore trust.  The list has been sanitized/changed for privacy reasons. If you are in a pending divorce, you may be able to use the list during the pretrial discovery phase. You could use the list for your request that your divorcing spouse supply you with documents, (i.e. your production request).  You might use the list even if you are not in a pending  divorce. This is true because the list can focus your attention on documents that could reveal your divorcing spouse has hidden assets at an offshore trust.

First Image: Gustavo Frazao/Shutterstock.com

Copyright 2019 Fred L. Abrams

In USA v Dan Horsky prosecutors claimed Mr. Horsky had hidden money in Zurich, Switzerland at Credit Suisse and at other offshore banks. The gravamen of the allegations at Mr. Horsky’s criminal complaint was that Mr. Horsky concealed $200 million from the IRS in a tax fraud scheme. Two years ago Mr. Horsky was sentenced to seven months of prison for his scheme. Mr. Horsky also paid a $100 million fine for failing to report his offshore bank accounts/failing to file FBAR 114 Forms with the U.S. Government. Meanwhile, Mr. Horsky’s scheme seems to have been replete with money laundering indicators. These money laundering indicators were Mr. Horsky’s suspected use of:

  1. multiple jurisdictions;
  2. offshore bank accounts;
  3. shell companies;
  4. nominees (intermediaries/strawpersons);
  5. valuable art;
  6. & an offshore credit card.

By transferring money through multiple jurisdictions; offshore bank accounts; etc., one can disguise the beneficial ownership of money. An individual or corporation might use just one of these elements or a combination of them to secretly transfer money.  The elements can be used as laundering links to wash hidden money in a money laundering circuit.  Mr. Horsky is thought to have hidden money by transferring it through multiple jurisdictions at banks in the United States and Zurich, Switzerland. Mr. Horsky is believed to have titled his offshore bank accounts in the names of offshore shell companies he had established.

At his shell companies, Mr. Horsky allegedly used a nominee director who lived in Zurich. Mr. Horsky reportedly hid valuable stock certificates he owned in an online auction company, by physically depositing them into a Swiss stock custody account.  In addition, Mr. Horsky purchased fine art from auction houses across the globe and apparently paid for the art with monies from his offshore bank account(s). Mr. Horsky was also accused of having an offshore credit card which he only used in Europe. At the “Position Of The United States With Respect To Sentencing,” you can read more about how Mr. Horsky supposedly hid his money.

Copyright 2019 Fred L. Abrams

Private Investigator Searching For Assets

I)  WEBSITES THAT CAN HELP YOUR ASSET SEARCHES

This is my 12th post covering what private investigators can and can not legally do when conducting asset searches. One thing most private investigators do during asset searches is look for publicly available information a.k.a. Open Source Intelligence (“OSINT”). Websites that can help private investigators collect OSINT, are listed at the  OSINT Framework. It has links to websites like Spydialer which identifies phone numbers & FotoForensics the digital photo forensics tool. Additional OSINT tools are featured at the blog article OSINT Reasearchers-Human vs Machines.

II)  HOW OSINT CHANGED THE COURSE OF A MONEY LAUNDERING INVESTIGATION

Law enforcement officials also use OSINT.  This is demonstrated by prosecutors in Poland who were searching for assets allegedly laundered by a shell company. The prosecutors researched the shell company by using CorporationWiki’s website, which harvests OSINT. This research revealed the shell company had addresses in London, the U.K. & in Delaware, U.S.A. Based on the Delaware address, the prosecutors drafted a letter rogatory which was eventually filed with the Court in Delaware.  The letter rogatory basically asked the Court for permission to subpoena witnesses in Delaware who knew about the shell company.

III) WHERE OSINT COMES FROM

CorporationWiki reportedly gathers OSINT from data brokers &/or from data mining on the Internet. Computer browsers and mobile devices allow data brokers to track us by our clickstream.  The Federal Trade Commission’s video Sharing Information: A Day in Your Life explained that our: location, interests, prescriptions & medical histories may all be “shared or sold.” Furthermore, there are a large number of companies that sell data mining applications. Just one of them is Sintelix.  Its video displayed below says “with the harvester feature you can extract text from websites, social media sites, chats and e-mails.”

Image: Who is Danny/Shutterstock.com

Copyright 2019 Fred L. Abrams

HIDDEN MONEY & CRIMES

When one spouse uses different ways to hide money from the other spouse, criminal laws are sometimes violated. The spouse who has hidden money because of a divorce could conceivably commit one or more of these crimes:

  1. 26 U.S. Code § 7201 (tax fraud);
  2. 18 U.S. Code § 1341 (mail fraud);
  3. 18 U.S. Code § 1343 (wire fraud);
  4. 18 U.S. Code § 1956 (money laundering).

Mr. Benjamin’s Divorce & His White Collar Crimes and my post mentioning Dr. Michael Brandner, are about divorcing husbands thought to have hidden money from their wives and the IRS.  Mr. Benjamin apparently hid money domestically & Dr. Brandner reportedly hid money offshore.  Although Mr. Benjamin & Dr. Brandner are believed to have used different ways to hide money, both were convicted of tax fraud (26 U.S. Code § 7201) & wire fraud (18 U.S.C. § 1343).

SOME WAYS TO HIDE MONEY

Prosecutors claimed Mr. Benjamin had hidden money by: failing to file tax returns; pocketing cash payments from customers; paying personal expenses from a business bank account; and cashing customers’ checks instead of depositing them into his bank account. Meanwhile, prosecutors in USA v. Brandner alleged Dr. Brandner hid money by driving across international borders with cash &/or checks &/or gold.  Prosecutors also alleged at their superseding indictment or trial brief that Dr. Brandner hid money via: a safe deposit box in Costa Rica; bank accounts in Costa Rica & Panama; & a Panamanian shell company which had a nominee president who was Dr. Brandner’s intermediary.

AN ISLE OF JERSEY TRUST

Last month prosecutors in USA v. Kozel similarly claimed millionaire Todd Kozel hid money from his ex-wife by going offshore. From 2004 to 2014 Mr. Kozel was the CEO of Gulf Keystone Petroleum Ltd. While CEO, Mr. Kozel reportedly had an average annual income of about $10 million.  Mr. Kozel’s December 14, 2018 criminal complaint basically alleged that with the help of a Swiss lawyer/gatekeeper, Mr. Kozol formed a sham offshore trust on the Isle of Jersey.  Mr. Kozol apparently used the trust to conceal his true beneficial ownership of millions of Gulf Keystone Petroleum Ltd. stock share certificates. Additionally, Mr. Kozol is thought to have concealed his beneficial ownership of a NYC condominium which Mr. Kozol claimed he only rented. Mr. Kozol is alleged to have secretly purchased the condominium through a NYC shell company supposedly controlled by Mr. Kozol’s trust.  Mr. Kozol’s December 14th criminal complaint is reproduced below.

Copyright 2019 Fred L. Abrams

Asset Recovery Workshop October 8-11, 2018
Photo from the asset recovery workshop held October 8-11, 2018 in Abuja, Nigeria.

Fifteen West African countries sent judges; &/or prosecutors; &/or law enforcement agents to attend the asset recovery workshop I recently lectured at in Abuja, Nigeria. I was one of four resource persons at the workshop which was a joint project of the European Union and the Inter Governmental Action Group Against Money Laundering In West Africa. At the work shop, I talked about government officials, (i.e “politically exposed persons“), who launder large bribe payments offshore. I explained that others hiding vast sums of money also usually launder their money offshore. Therefore, if you are going to conduct asset searches to detect hidden money, you should learn to spot the money laundering indicators.

I) MONEY LAUNDERING INDICATORS

The indicators include: employing strawpersons to act as bank signatories; abusing trusts; hoarding cash/engaging in bulk cash smuggling; etc. I made a list of the indicators at my post “Red Flags For An Asset Search.” The money laundering case involving  Mr. Vladimir Kuznetsov has some of these indicators. As I mentioned in a lecture I gave during the asset recovery workshop, Mr. Kuznetsov was a Russian diplomat working at the United Nations in New York City. Prosecutors in the United States accused Mr. Kuznetsov of washing bribe payments through Nikal, Ltd. which was a suspected offshore shell company Mr. Kuznetsov had formed. Mr. Kuznetsov used Nikal, Ltd. to open an offshore bank account in Antigua & Mr. Kuznetsov titled the offshore bank account in the name of Nikal, Ltd.

Mr. Kuznetsov’s associate, (who took bribe payments from companies seeking contracts at the United Nations), transferred bribe payments to Mr. Kuznetsov’s offshore bank account. Mr. Kuznetsov then reportedly wire transferred the bribe payments in his offshore account to financial accounts in New York City at Chase Manhattan Bank &/or the United Nations Federal Credit Union. On March 2, 2007, Mr. Kuznetsov was convicted of conspiracy to commit money laundering.  On October 12, 2007, Mr. Kuznetsov was  sentenced to fifty one months’ imprisonment. Money laundering indicators or red flags that Mr. Kuznetsov had hidden money were Mr. Kuznetsov’s use of a  suspected shell company, Nikal, Ltd. &  Mr. Kuznetsov’s use of the offshore bank account.

II) ASSET SEARCHES & THE MONEY LAUNDERING STAGES

Besides recognizing money laundering indicators, understanding the way money laundering works can help you succeed at your asset searches. Money laundering occurs in three stages: placement, layering & integration. These stages are thought to have been present in Mr. Kuznetsov’s case. Mr. Kuznetsov’s associate placed bribe payments into Mr. Kuznetsov’s money laundering circuit. This placement occurred when the associate wire transferred bribe payments to Mr. Kuznetsov’s offshore bank account. Mr. Kuznetsov layered by washing the bribe payments through his offshore bank account titled in the name of Nikal, Ltd. This layering disguised Mr. Kuznetsov’s beneficial ownership of the offshore account & the bribe payments. Integration would have happened if Mr. Kuznetsov introduced the washed bribe payments into the economy.  Mr. Kuznetsov could have integrated the bribe payments reportedly at the New York financial accounts, by using the bribe payments to buy things. Placement, layering & integration are described at this Egmont Group Money Laundering Video:¹

¹Video Courtesy of The Egmont Group of Financial Intelligence Units.

Copyright 2018 Fred L. Abrams

On October 8th & 9th in Abuja, Nigeria I will lecture about asset recovery & tracking assets.  I will present 2 lectures to law enforcement agents who work in West Africa. The lectures are called “Whistleblowers, Secret Bank Accounts & Recovering Hidden Assets” & “Asset Recovery Case Studies & Discussion.” I am presenting the lectures during an asset recovery workshop held by The Inter Governmental Action Group Against Money Laundering In West Africa (GIABA).

I. Whistleblowers, Secret Bank Accounts & Recovering Hidden Assets

At this lecture I analyze how vast sums of money can be hidden in a wide variety of cases.  I talk about cases as diverse as narcotrafficking; terrorist financing; public corruption; tax fraud; securities fraud; & divorce.  I also discuss the tools for finding assets hidden offshore.  During the lecture I emphasize how law enforcement agents can employ whistleblowers to try to detect hidden assets. I additionally cover:

II. Asset Recovery Case Studies & Discussion

At “Case Studies & Discussion” I go over how criminals hide their illicit assets offshore.  I also talk about how law enforcement agents try to track illicit assets through: (1) mutual legal assistance treaty (“MLAT”) requests & (2) asset forfeiture laws.

III. My Coursebooks For The Lectures

To review the coursebooks I am giving to those attending my October 8th & 9th lectures, click on these images:

 

 

Image: Lucian3D/Shutterstock.com

Copyright 2018 Fred L. Abrams