Schemes to hide assets can involve bulk-cash smuggling combined with other methods.
A scheme to hide assets from you may be carried out by combining bulk-cash smuggling with other concealment methods.

A divorcing spouse; judgment debtor; tax cheat; etc. may use several methods to conceal assets. “Red Flags For An Asset Search” listed 18 of these methods.  The methods for hiding assets included: bulk-cash smuggling; shell companies; multiple jurisdictions; foreign bank accounts; & nominees.  These methods might have been combined by Mr. Victor Lipukhin to conceal more than $10 million dollars in secret Swiss bank accounts. The press release “Former President of Russian Steel Producer’s U.S. Subsidiary Indicted for Hiding Assets in Secret Swiss Bank Accounts,” talked about Mr. Lipukhin’s alleged scheme to hide assets from the IRS.

Mr. Lipukhin was indicted on 3/20/2014 because of the suspected scheme.  The indictment suggests Mr. Lipukhin may have employed bulk-cash smuggling; multiple jurisdictions; shell companies; & other methods to conceal his alleged beneficial ownership of Swiss bank accounts. Mr. Lipukhin is thought to have initially formed shell companies in the Bahamas which he allegedly used to open the Swiss bank accounts. Mr. Lipukhin might have hired a nominee director for the shell companies, who could have acted as a bank signatory on the Swiss bank accounts.

If Mr. Lipukhin used a nominee director, it would have helped hide his suspected beneficial ownership of the Swiss accounts. According to the indictment, Mr. Lipukhin supposedly relied on real estate transactions; mortgages & a Canadian lawyer to hide assets.  Mr. Lipukhin also reportedly bought an automobile by paying approximately $24,539 in cash.  Although the seller of the automobile was required to notify the IRS by filing a Form 8300, Mr. Lipukhin allegedly tried to persuade the seller to keep quiet about the sale.  If this actually happened, it would have been a red flag that Mr. Lipukhin might have engaged in bulk-cash smuggling or money laundering.  The criminal case against Mr. Lipukhin is still pending at the prosecutor’s office, as the Court’s docket report reveals.

Image: Gorich/Shutterstock.com

Copyright 2016 Fred L. Abrams

Smuggling Cash Across Iraq’s Borders” mentioned Donnie the former DEA agent who had trained Iraqi border personnel to interdict bulk-cash smugglers.  To help detect these smugglers, governmental authorities also use declaration forms to track the cross-border movement of cash and monetary instruments.

As mentioned by my April 13, 2009 “Asset Search News Roundup“, one such declaration form is the “FinCen 105”.  It generally requires disclosure to the Bureau of Customs and Border Protection, when individuals physically transport, mail or ship more than $10,000 in cash or monetary instruments into the U.S.:

(To View The Complete Form, Click On The Image)

To avoid triggering the mandatory filing of a FinCen 105, Virginia medical doctor Andrew Silva had illegally structured cash by smuggling it in packages containing less than $10,000.  During an abusive offshore tax avoidance scheme, Dr. Silva mailed these packages of cash from Switzerland into the U.S., as outlined by his “statement of facts” filed in U.S.A. v. Andrew B. Silva.

Continue Reading A Doctor, A Lawyer & Bricks Of Cash In Switzerland

I first wrote about Donnie in my post, Forfeiture & The DEA’s Asset Search.  In that post, I mentioned that Donnie was a former Special Agent with the Drug Enforcement Administration who had gone to Iraq to train Iraqi Police.  Donnie recently left the Numaniyah National Police Training Academy to travel about an hour’s drive southeast of Baghdad on a military convoy to Al Kut ( Camp Delta).  He had gone to Al Kut to work through a contracting company on a new job, similar to that of a Border Police Advisor.

As part of his new job, Donnie will be sent to the Basrah Training Academy where temperatures can reach up to 140-150 degrees in August.  He will advise the Iraqi Department of Border Enforcement about its training course for recruits.  According to a Multi-National Force press release, the Department of Border Enforcement “training course is an eight-week course that involves instruction in military training, border patrols, checkpoint set up, vehicle searches, and detecting narcotic and human smuggling”.

In addition to covering the above subjects, Donnie will teach how to detect bulk-cash smugglers / illicit cash couriers, during border inspections.  As INTERPOL’s First International Conference on Illicit Cash Couriers suggested, training border personnel to detect cash smuggling is critically  important.  This is true because criminals like money launderers and terrorists often use couriers to conceal and transfer cash through airports or other border crossings.  FOXNews.com reported on July 29 for example, that terrorists smuggle cash across Iraq’s borders to help finance al-Qaida’s operating budget in Iraq.

Copyright 2008-2015 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

Panama Papers 4 18 16 PostLast Wednesday, prosecutors in Panama seized dozens of computer servers belonging to the Panama Papers law firm, Mossack Fonseca. The prosecutors might be investigating whether Mossack Fonseca violated money laundering laws when it supposedly helped clients hide assets offshore. A U.S. State Department report published last month analyzed how money is laundered in Panama. The report said:

Money is laundered via bulk cash and trade by exploiting vulnerabilities at the airport, using commercial cover and free trade zones (FTZs), and exploiting the lack of regulatory monitoring in many sectors of the economy. The protection of client secrecy is often stronger than authorities’ ability to pierce the corporate veil to pursue an investigation. (U.S. Department of State International Narcotics Control Strategy Report for Panama, March 2016)

Money can also be laundered in Panama by putting shell companies to work, the same way shell companies are used to launder money in other parts of the world. Assets may be secretly transferred to a shell company &/or a shell company may be used to open a secret offshore bank account. In these situations, the shell companies may act as laundering links which wash assets in a money laundering circuit.

Mossack Fonseca was apparently in the business of establishing shell companies. Businesses that establish shell companies are usually called “nominee incorporation services,” as mentioned by the November 9, 2006 advisory from U.S. Treasury’s Financial Crimes Enforcement Network. The advisory essentially reveals that shell companies & nominee incorporation services can be a money laundering risk. The webpages of Panama Offshore Worldwide demonstrate the way one nominee incorporation service works.

At “Anonymous Panama Corporation” &/or “Panama Bank Secrecy,” Panama Offshore Worldwide seems to describe how you can open a secret offshore bank account by titling the account in the name of a Panamanian shell company. Panama Offshore Worldwide indicates that if you want additional anonymity, you should staff your Panama corporation with nominee directors (i.e. stand-ins/intermediaries):

We provide nominee directors for the corporation, so your name is not actually registered in the government’s documents and therefore cannot be traced back to you.  The corporation is controlled with shares, which are registered by date at a notary and not accessible online like the directors of a corporation. (Panama Offshore Worldwide’s “Panama Bank Secrecy” Webpage. Web. April 16, 2016.)

Image: leolintang/Shutterstock.com

Copyright Fred L. Abrams 2016

shutterstock_15830203
Iran & Qatar sit on the largest natural gas field in the world.  As a consequence of this, Iran may have a discreet & shared income with Qatar.

Part 1 &/or Part 2 of this post described recent efforts by the judgment creditors in Havlish v. bin Laden to collect on their judgment against Iran for more than $1.3 billion dollars.  The judgment creditors sought to attach monies allegedly connected to a deal to purchase Airbus aircraft for Iran’s Mahan Air.  The judgment creditors also issued subpoenas to U.S. Treasury’s Office of Foreign Assets Control.  The subpoenas were about assets related to Iran and various terrorist groups.

How else might the judgment creditors proceed with their asset search & collect on their judgment against Iran?  Although the April 2nd preliminary nuclear accord with Iran lifts many economic sanctions against it, Iran had tried to skirt the sanctions throughout the years.  By recognizing ways Iran may have skirted the sanctions, the judgment creditors might detect money trails.   The judgment creditors would hopefully then be able to follow the money trails by using letters rogatory and other asset recovery tools.  This in turn could bring the judgment creditors closer to collecting on their billion-dollar-plus judgment against Iran.

Discreet Income From The World’s Largest Natural Gas Field?

374px-SouthParsLocationMap

Qatar sits on the largest natural gas field in the world but it also goes under Iran. This is the South Pars/North Dome natural gas field.  Wikipedia says “[a]ccording to the International Energy Agency (IEA), the field holds an estimated 1,800 trillion cubic feet (51 trillion cubic metres) of in-situ natural gas and some 50 billion barrels (7.9 billion cubic metres) of natural gas condensates.”  Iran reportedly allowed Qatar to develop its gas extraction and marketing but only with Iran’s permission.  Furthermore, nobody checks what Qatar does with its income.

It is therefore possible that Iran circumvented economic sanctions via a quiet and discreet shared income from Qatar.  As discussed last week at a Reuters article, Iran announced it will soon open up 2 additional gas operations in the South Pars Field.  The Tasnim News Agency reported that the 2 new gas operations, (i.e. refineries), should bring Iran $6 billion in annual revenue.

Iran’s Cross-Border Elements In Dubai

Iran’s particular location at the Persian Gulf also helped Iran to evade the sanctions.  In geographical terms, the Persian Gulf is dominated by Iran similar, say, to the U.S. dominating the Carribbean and Gulf of Mexico.  Iran’s geographical location made it easy for Iran to maintain cross-border elements in places like Dubai.  Iran has more companies in Dubai than anywhere else in the world excepting Iran itself.  Dubai additionally has a large expatriate population of Iranian businessmen.  So, similar to Austria during the Cold War, Dubai is a little country busy importing.  As reported at “Iran smuggles in $1 billion of bank notes to skirt sanctions” Iran also engaged in bulk cash smuggling through cash couriers & front companies in Dubai and other locations in or near the Persian Gulf.

First Image: Claudionegri79/Shutterstock.com

Second Image: Courtesy of Wikipedia (Licensed) by Alireza824

Copyright 2015-2018 Fred L. Abrams

Multiple Juris Photo

Determined criminals sometimes conceal their illicit cash by laundering it through banks located in multiple jurisdictions.  Criminals are not the only ones concealing assets by using bank accounts in multiple jurisdictions.  Whether you are a divorcing spouse; a creditor in a bankruptcy case; are collecting money owed on a judgment; etc., these ideas may help you search for bank accounts &/or gather legally sufficient evidence about them:

Photo Of Light BulbTHE UNIFORM INTERSTATE DEPOSITIONS AND DISCOVERY ACT (“the UIDDA”)—The UIDDA may apply to your case if you are searching for monies transferred through bank accounts in multiple states in the U.S.  The UIDDA has been codified in N.Y. at CPLR § 3119 & it “provides a streamlined procedure for obtaining disclosure…for use in an action in another state or territory within the United States.” Connors, Practice Commentary, McKinney’s Cons Laws of NY, CPLR § 3119.  Most states in the U.S. have adopted the UIDDA.  This generally makes it easier for you to use subpoenas to depose bank witnesses in multiple states in the U.S.  At these subpoenas, you can also request that the bank witnesses supply copies of the relevant bank account statements; account opening documents & signatory information.

LPhoto Of Light BulbETTERS ROGATORY/FOREIGN LEGAL PROCEEDINGS—Schemes to hide large sums of money often involve parking money offshore in foreign bank accounts.  This money may be transferred offshore by wire transfers; bulk cash smuggling; trade-based money laundering; employing portable valuable commodities like diamonds; etc.  Since the foreign bank witnesses usually reside offshore/lack a nexus to the U.S., you can not compel them to supply bank account information by using a subpoena issued under U.S. laws.  In many countries you can however, employ letters rogatory (a.k.a. letters of request or legal assistance requests).  Letters rogatory are used to try to compel foreign bank witnesses to disclose bank account information.  Besides letters rogatory, there may also be other legal remedies available to you under foreign laws.

Photo Of Light Bulb

PRIVATE INVESTIGATORS—A highly skilled investigator can sometimes be one of the reasons your asset search or asset recovery succeeds.  Such an investigator will know how to relentlessly dig for information.  One private investigator I know spent 17 years investigating an ultra-high net worth family suspected of concealing more than $100 million dollars in a financial fraud.  A good investigator may also be able to sniff out informant’s tips concerning hidden assets, as suggested by my recent post “An Asset Search By Pursuing Interviews & Tips.”  Finally, additional information about searching for bank account information is available at “5 Things To Be Aware Of When Hiring A PI For A Bank Account Search.”

First image: Spectrumblue/Shutterstock.com.

Second image courtesy of Flickr (Licensed) by One Way Stock

Copyright 2015 Fred L. Abrams

In the Breaking Bad television series, Walter White hid profits from his illegal manufacture of methamphetamine.  He hid illicit drug profits in a crawl space under his house, as the video above partly reveals.  Walter and his wife Skyler also laundered money through the A1A Car Wash.  Walter’s partner in crime, (Breaking Bad’s Jesse Pinkman), purchased real property with illicit cash and drug kingpin Gustavo Fring opened 12 secret Swiss bank accounts.  These asset concealment schemes were described by my post “How Walter White Could Take His Money To A Swiss Bank .”  My post also mentioned Walter could have concealed his illicit profits by using diamonds, as set forth at “Secreting Assets Without A Border Trace.”

“Secreting Assets Without A Border Trace” discussed the fact pattern of a Ponzi schemer who might have travelled to Luxembourg and then concealed Ponzi scheme proceeds in a secret bank account there.  Besides the above-mentioned asset concealment schemes, there are countless others.  The following posts also describe what conceivably could have been fact patterns involving asset concealment schemes.

Video: Courtesy of AMC Network Entertainment, LLC

Copyright 2015 Fred L. Abrams

This is the third post in the “Divorce & Hidden Money” series:

One divorcing wife explained to me that she believed her husband had hidden money in offshore bank accounts.  This divorcing wife found a box her husband inadvertently left  in the basement after he moved out of their marital residence.  The box had an account opening application from one offshore bank and brochures from others.

Another divorcing wife found some correspondence at the family’s summer home.  The correspondence  was between her husband and the foreign attorney who helped establish the husband’s secret offshore bank accounts.  A different divorcing wife found a scrap of paper on which her husband had scrawled the name of a Swiss banker and a Swiss financial account number.

The above-described matters raised the same question, how could these husbands secretly transfer funds across international borders into offshore bank accounts?  Like narco-traffickers, tax evaders, terrorist financiers and others, divorcing spouses may use the following methods to secretly transfer assets:

Bulk Cash Smuggling– Determined criminals routinely smuggle cash through porous borders.  Illicit cash couriers for instance, travel through Mexico-U.S. border crossings on behalf of  Mexican drug cartels.  German tax cheats are also known to smuggle undeclared cash into Liechtenstein by stashing the cash in luggage and then driving with it across the German-Liechtenstein border.

Portable Valuable Commodities Like Diamonds & Jewelry– After his arrest, Bernard Madoff seemingly tried to transfer watches, cufflinks and other jewelry worth more than $1 million.  Madoff attempted to mail these items to friends and relatives.  Bradley Birkenfeld the whistleblower, is believed to have similarly smuggled diamonds in a tube of toothpaste while on a jet flying across U.S.-Swiss borders.

Continue Reading Divorce & Hidden Money: Four Ways Assets Can Be Secretly Transferred

As a DEA Special Agent, Donnie worked in Bolivia, Puerto Rico and Peru.  He had also been a liaison with the Mexican Federal Judicial Police.  After retiring from the DEA, Donnie taught Iraqi border policeman a variety of things, including how to detect cash and drugs hidden through smuggling.  Through his work, Donnie became highly skilled at following money trails in order to interdict illicit drugs and other assets.

At the August 16, 2013 “Asset Search News Roundup”,  Donnie discussed a Mexican court’s release of drug kingpin Rafael Caro Quintero.  Rafael Caro Quintero is accused of participating in the heinous murder of DEA Special Agent Enrique “Kiki” Camarena.  At the August 16th Roundup, Donnie disclosed he became a DEA Special Agent because Kiki had been one.  I asked Donnie how governmental authorities could best try to dismantle the drug cartels and prevent tragedies like Kiki’s murder.  Donnie’s answer highlights the role asset forfeiture has in combating the drug cartels:

Besides subjecting drug kingpins and other cartel members to the death penalty or other stiff sentences, asset forfeiture can help dismantle the drug cartels. The cartels launder their illicit drug proceeds by employing: foreign bank accounts; money mules who smuggle bulk cash; shell companies; diamonds or other valuable commodities; lawyers; bankers; and other middleman willing to assist them. The cartels also wash criminal proceeds by commingling them with legitimate funds from existing businesses.  They can hide their illicit proceeds by purchasing valuable property ranging from real estate to expensive automobiles.

When tens of millions of dollars are smuggled across international borders, this smuggling is usually on behalf of a drug cartel or other organized crime. Through wire taps, informants, surveillance, search warrants, etc., a drug cartel’s illicit funds or other illicit proceeds may be detected.  These proceeds can then be seized and forfeited under U.S. or other laws.  Infighting typically occurs at a drug cartel after law enforcement seizes a large amount of drugs or other cartel property. One hopes that enough cartel property can repeatedly be interdicted to the point that this infighting increases and the cartel ceases its normal operations.

Copyright 2013-2018 Fred L. Abrams