Beneficial owners can try to use a nominee, (i.e. intermediary/straw owner), to hide money with complete anonymity in a bank account. Through websites like Offshore-Protection.com beneficial owners may purchase a shell company and retain a nominee director for the shell company.  The beneficial owner may then title a bank account in the shell company’s name. This kind of bank account is known as a “nominee bank account”. The beneficial owner can even hire a third party to to act as a bank signatory for this bank account.

By using a shell company, nominee director and third party as a bank signatory, a beneficial owner may be able to maintain a secret bank account.  Businesses which help their customers establish shell companies and open nominee bank accounts are called nominee incorporation services. According to page 64 of the 2007 National Money Laundering Strategy, nominee incorporation services that arranged U.S. bank accounts and shell companies were believed to annually launder as much as $36 billion just from the former Soviet Union.


Instead of retaining a nominee incorporation service, some beneficial owners hide assets by using friends or relatives as nominees.  According to his twenty-one count forty-four page July 26, 2005 indictment, Mr. Edwards for example, had stolen insurance premiums and then concealed them in nominee financial accounts in the names of his wife and two shell companies.  Mr. Edwards had also used his wife as the nominee purchaser of his mountain chalet and a  “palatial” home– both of which were bought with stolen insurance premiums.

All of the foregoing had been part of Mr. Edward’s insurance and tax fraud scheme which lasted from about January, 1999 through April 30, 2001.  Via his indictment, Mr. Edwards was charged with: mail fraud (18 U.S.C. § 1341 & 18 U.S.C. § 1342); wire fraud ( 18 U.S.C. § 1343); making false statements to a  financial institution (18 U.S.C. § 1014);  theft from a health care benefit program (18 U.S.C. § 669); money laundering (18 U.S.C.§ 1957 [a] & [b]); and tax evasion (26 U.S.C. § 7201).

Mr. Edwards was accused of collecting insurance premiums from various employers while unlicensed to do so.  Instead of providing thousands of employees with workers’ compensation insurance, he converted their insurance premiums for his own use.  Between January 1, 2000 and April 30, 2001 Mr. Edwards also allegedly stole $2.5 million from his company Fidelity Group, Inc., which was a health care benefit group as mentioned by 18 U.S.C. § 24 (b).  Furthermore, when Mr. Edwards actually did apply for some workers’ compensation insurance coverage, he allegedly understated payroll and the type / number of employees to fraudulently secure lower insurance premiums.

When Mr. Edwards administered an employer’s self-insured health insurance plan, he also allegedly delayed or wrongfully denied medical benefits the employees were entitled to.  Mr. Edwards indictment additionally alleged that he had filed a false joint Income tax return for 1999, by underreporting taxable income.  In 2000, Mr. Edwards had supposedly underreported income in a false joint tax return and paid just $724 in taxes.  He was similarly accused of failing to file any tax return for the year 2001.

As the Court’s June 26, 2006 Judgment demonstrated, Mr. Edwards ultimately pleaded guilty to four of the twenty-one counts mentioned by his indictment: two counts of mail fraud; one count of theft from a health care benefit program; and one count of tax fraud.  Pursuant  to his plea agreement, Mr. Edwards was sentenced to serve 150 months in prison and ordered to pay fines, make restitution, etc.

(Edited July 24, 2018)
Copyright 2007-2018 Fred L. Abrams