Photo Of A Money TrailWhen vast sums of money are hidden in a bank account there is usually an electronic trace or other kind of money trail.  A skilled investigator may help detect the money trail, as suggested by my 2010 post Secreting Assets Without A Border Trace.  The post quoted “Roger” a former foreign intelligence officer who was working as a private investigator.  At the post, Roger discussed some asset concealment methods and investigative techniques for following a money trail.  As these concealment methods and investigative techniques are still being used, the relevant part of Secreting Assets Without A Border Trace is featured below.  This is also the 4th post in my series about what private investigators can and cannot do legally when searching for assets.¹

As a consequence of his U.S.-based Ponzi scheme, Bill the investment adviser was indicted for alleged violations of 18 U.S.C. § 1956 (money laundering); 26 U.S.C. § 7201 (tax fraud); 18 U.S.C. §§ 1341 and 2 (mail fraud); 15 U.S.C. §§ 78j(b) and 78ff(a) (securities fraud); and 15 U.S.C. §§ 80b-6 and 80b-17 (investment adviser fraud). The critical question now was: what had happened to the $35 million dollars lost by the damaged investors in Bill’s Ponzi scheme? After Bill insisted he dissipated this $35 million by gambling and on cocaine, prostitutes, etc., federal agents interdicted $1 million U.S. dollars hidden in a bedroom wall at Bill’s California home.

Among the other items the agents seized during their search of Bill’s home, were Bill’s passport, desktop computer, cell phone, bank statements and jewelry store receipts.  Some of these items revealed that Bill laundered $7.5 million of the damaged investors’ money through a nominee bank account opened in the name of a Nevada shell company.

Bill had eventually withdrawn this $7.5 million to purchase diamonds and other portable valuable commodities at Nevada jewelry stores He next traveled as an airline passenger to Zurich, Switzerland, according to his passport. To date, the only recovery from Bill’s Ponzi scheme has been the $1 million once hidden in his bedroom wall. Given all of the above, “Roger” explained how investigators could try to determine whether Bill had secreted any of the $35 million in a foreign bank account:

Bill’s purchase of the diamonds in Nevada and his travel to Zurich are money laundering red flags. Bill might have smuggled the diamonds into Zurich flying across U.S.-Swiss borders. Assuming Bill had flown to Zurich with the diamonds, he may have hired a driver with a car to pick him up at the airport. They might have then driven together through Northern France into Luxembourg.

In this possible scenario, Bill could have easily sold the diamonds in Zurich, (which is a major diamond centre), using the illicit proceeds to open a Luxembourg bank account. Alternatively, he may have opened an account at a Swiss bank which provides a service of security boxes (safes). In a security box he could leave the diamonds until such time as the pressure from the authorities had lifted.

Whatever happens, today Bill needs to produce a credit card for car-hire or a hotel stay. The credit card has to be issued by a bank, usually the bank where he maintains his security box and / or account with funds. The credit card expenses could also show the monthly debit for a security box and direct debit details if Bill has bought or rented property abroad.

By driving or taking a train into Luxembourg to open the foreign bank account, Bill could have traveled without leaving a border trace. Bill however, would still have likely committed at least some detectable errors. Bill for instance, may have left an electronic trace if he used a credit card to pay the driver and to buy gas for his car trip to Luxembourg.

If Bill stayed at hotels in Switzerland, France, or Luxembourg, he could have also paid his hotel bills with a credit card connected to a Swiss or other foreign bank account. If Bill used his hotel room telephone to communicate with a foreign bank witness, there would similarly be a record. These kinds of leads are reasons why money laundering investigations concentrate on foreign hotels, payment information, telephone records and on credit card expenses for details of physical movements and lifestyle.”

¹Some information supplied by this post has been sanitized/changed for privacy reasons.

First image courtesy of Flickr (Licensed) by Serge Melki

Second image courtesy of Flickr (Licensed) by Tsahi Levent-Levi

Copyright 2015 Fred L. Abrams