The Asia / Pacific Group on Money Laundering explains on its typologies webpage, that one way to hide assets is by purchasing portable valuable commodities like diamonds.  The typologies webpage provides the example of a beneficial owner concealing assets by transferring diamonds to another jurisdiction.  One man who may have tried this kind of asset concealment method is Bernard L. Madoff.  As reported in “U.S. Government to New York Judge: Jail Madoff Without Bail”, Mr. Madoff is alleged to have dissipated assets by mailing $1million dollars in jewelry to relatives and friends vacationing in Florida.

Another man believed to have hidden assets by using portable valuable commodities was recently discovered upon his arrival at N.Y.C’s J.F.K. Airport from Tel Aviv.  A press release states that the 54-year-old U.S. resident employed by the jewelry industry, had concealed three diamonds worth more than $1.2 million in his pocket.  U.S. authorities had first found jewelry receipts in the man’s baggage, then interviewed him and finally interdicted the concealed diamonds during a pat-down.  These diamonds pictured below, were seized pursuant to 19 U.S.C. §1497, (Penalties for failure to declare) and 19 U.S.C. §1595a (c) (1) (A), (Merchandise introduced contrary to law):

                                     

                   

My October 15, 2008 “Asset Search News Roundup” similarly mentioned that UBS banker Stanley Birkenfeld had hidden diamonds in a tube of toothpaste while an airline passenger at Swiss-U.S. border crossings.  As more fully set forth by “UBS and the Diamond Smuggler”, Mr. Birkenfeld had assisted UBS bank customers like billionaire Igor Olenicoff hide assets and / or evade U.S. taxes.  Besides using diamonds, Mr. Birkenfeld hid assets by using phony loans and purchasing artwork with secret Swiss funds.

Photo Courtesy of U.S. Customs and Border Protection

Copyright 2009-2023 Fred L. Abrams

Hunter Biden allegedly used shell companies & the diamond at this chart, in a supposed corruption scheme.*

As was widely reported, The U.S. House Committee on Oversight and Accountability, (“the Committee”), published its August 9th memo about Hunter Biden and some other Biden family members. On the one hand, House Republicans on the Committee allege President Biden, Hunter Biden and some other Biden family members participated in an influence peddling scheme. On the other hand, House Democrats allege President Biden has never done anything wrong. However, as set forth below, there could be money laundering indicators in this case, especially with respect to Hunter Biden.

A) WHAT HOUSE REPUBLICANS ALLEGE

At the Committee’s August 9th & / or its earlier materials, House Republicans essentially allege the following. First, years ago foreign actors from China, Russia, Ukraine, Romania and Kazakhstan supposedly paid tens of millions of dollars in bribes to some Biden family members. Second, foreign actors may have made the supposed bribe payments because they thought Joe Biden would do them favors during his vice presidency. Third, Hunter Biden and some of his business associates might have concealed these payments by transferring them into shell companies. Fourth, page 28 of the Committee’s May 10th memo suggests one alleged bribe payment could have been a 2.8 carat diamond worth about $80,000, which a foreign actor gave to Hunter Biden.

B) COUNTERARGUMENTS BY HOUSE DEMOCRATS

House Democrats basically claim Congressional Republicans have not supplied evidence showing President Joe Biden participated in a corruption scheme. ‘Instead, they rehash the same Hunter Biden business dealings that Congressional Republicans identified at least three years ago,’ the ranking Democrat on the Committee Maryland Rep. Jamie Raskin said. Rep. Raskin’s quote is mentioned by the August 9, 2023 ABC News article House GOP releases new memo on Hunter Biden’s foreign business dealings, reviving old claims. Additionally, this article points out that President Joe Biden has denied he was involved in Hunter Biden’s business dealings.

C) COULD HUNTER BIDEN HAVE ENGAGED IN MONEY LAUNDERING?

Assuming, arguendo, some of President Biden’s family members participated in a corruption scheme, then money laundering must be considered. People facilitate laundering schemes to hide their true beneficial ownership of money. Furthermore, when people launder money, there are usually red flags. Speaking hypothetically, the money laundering red flags concerning Hunter Biden and possibly other Biden family members could be:

  • Politically Exposed Person(s)— are individuals more susceptible to bribery because of their position or influence. Close business associates and relatives of these individuals are also considered politically exposed persons. Under this definition, President Biden’s son Hunter and other close relatives are politically exposed persons.
  • Shell Companies—in some places, a money launderer can form a shell company without disclosing who its shareholders, officers and directors are. The launderer might use the shell company to open bank accounts and then hide money there. Meanwhile, some Biden family members and / or their associates allegedly formed to 20 shell companies.
  • Multiple jurisdictions—you can launder money by transferring it through multiple jurisdictions / across international borders. This makes the money harder to track. In this case, Hunter Biden and others could have received payments transferred to the U.S. from China, Russia, Ukraine, Romania and Kazakhstan.
  • Portable Valuable Commodities—to obscure beneficial ownership, a money launderer can convert cash into diamonds, jewelry, precious metals, etc. These portable valuable commodities are relatively easy to smuggle across international borders. As mentioned above, a foreign actor my have given Hunter Biden a 2.8 carat diamond, possibly as a bribe payment.

*Chart courtesy of U.S. House of Representatives Committee on Oversight & Accountability, May 10th Memorandum, at pp. 35.

Copyright 2023 Fred L. Abrams

Fred L. Abrams, divorce and hidden assets attorney, handles cases involving divorce and hidden assets. Therefore, Attorney Abrams may be able to help you if you are a spouse in a high-net-worth marriage going through a divorce or other places.  The Court’s distribution of marital assets during your divorce can be one of the most

Bulk Cash Smuggling

On February 2, 2021 Mr. Vincent DelGiudice pleaded guilty in his federal case to concealing assets by money laundering and conducting an illegal gambling operation in Illinois. During 1996, a Cook County Illinois court also reportedly convicted Mr. DelGiudice of keeping a gambling place. Meanwhile, Mr. DelGiudice’s federal case gives us a glimpse of 4 ways people conceal assets: bulk cash smuggling; portable valuable commodities, purchasing real estate; & employing offshore elements.

I.               Bulk Cash Smuggling & Portable Valuable Commodities
When federal agents in Mr. DelGiudice’s federal case raided Mr. DelGiudice’s home in April 2019, they found over $1 million in cash. The federal agents would have likely considered this cash to be an indicator that Mr. DelGiudice had concealed assets by bulk cash smuggling.  During their April 2019 raid of Mr. DelGuidice’s home, the federal agents also found coins worth $92,623 and $347,895 in silver bars and jewelry. The federal agents probably viewed the coins, silver bars and jewelry, as indicators that Mr. DelGiudice had used portable valuable commodities to conceal assets.

II.              Real Estate & Cross Border Elements
Mr. DelGiudice is also thought to have hidden money he earned from his gambling operation by using this money to purchase real estate like his Orland Park, Illinois home.  Therefore, at Mr. DelGuidice’s plea agreement in his federal case, Mr. DelGiudice agreed to the government’s forfeiture of the home.  Additionally, Mr. DelGiudice is believed to have used offshore elements to conceal his earnings from his gambling operation. This is shown by Mr. DelGiudice’s employment of an offshore company in Costa Rica which handled the accounting and website management of Mr. DelGiudice’s Illinois-based gambling operation.

Copyright 2022 Fred L. Abrams

Your adversary may be placing assets offshore to hide them from you. Meanwhile, you could be trying to locate these assets through an asset search.  One thing you might be able to do is spot the common methods for placing assets offshore. If you find your adversary used these methods, it might help you sniff out your adversary’s money trail. Common methods for placing assets offshore include:

  • Wire transfers are the most common way people/businesses transfer hidden money offshore. My post “Searching For Assets Hidden By Hawaladars” featured a suspected terrorist financing scheme (Egmont Group Case Ref. No.06060).  That scheme was facilitated by wire transfers to offshore bank accounts.
  • Bulk-cash smuggling: “Concealing Assets By Smuggling Cash.” has links to my posts about cash smuggling into: Liechtenstein, Iraq and Puerto Rico. It also mentioned 2 attempts to smuggle cash in boxes of laundry detergent at Texas border entries.
  • Portable valuable commodities: “Once Jailed Banker Gets $104 Million Whistleblower Payout” talks about ex-UBS banker Bradley Birkenfeld. Mr. Birkenfeld reportedly smuggled diamonds (i.e. portable valuable commodities) in a toothpaste tube across the U.S. border.  A 2008 press release similarly describes how governmental authorities interdicted $1.2 million in jewelry from a passenger arriving at NY’s JFK Airport.
  • Trade-based money laundering:  If your adversary uses a business to hide assets, your adversary could conceivably engage in trade-based money laundering. Trade-based launderig can involve transferring goods offshore. As The Financial Action Task Force (“FATF”) has said, trade-based money laundering consists of: over or under-invoicing of goods or services; the over or under-shipping of goods; falsely describing goods or services; or multiple invoicing.  To learn more about it, read the FATF’s 6/23/2006 publication.

Copyright 2020 Fred L. Abrams

Searching for an adversary’s hidden assets can be like tracking a shell-game-operator.  In USA v. Khalili for instance, Mr. Dan Farhad Khalili was accused of hiding assets & undeclared revenue from the IRS for 15 years at 5 offshore banks. The offshore banks were located in Switzerland & Israel. Although on 4/27/11 Mr. Khalili applied for the IRS’ Voluntary Disclosure Program, the IRS found him ineligible for it. Mr. Khalili ultimately pleaded guilty to failing to file U.S. Department of Treasury Reports of Foreign Bank & Financial Accounts. On 4/25/17 Mr. Khalili was sentenced to 1 year & 1 day of prison. When you search for assets hidden through sophisticated schemes similar to the one Mr. Khalili was accused of, it may help to keep 3 goals in mind. These goals are to detect the paper trails, look for compartmentalization & seek transparency.

I. Detect The Paper Trails

One way your adversary may hide the paper trail of an offshore bank account is to open an offshore post office box. Your adversary could then have the offshore bank send monthly bank account statements & other documents to the offshore post office box. By maintaining these banking documents offshore, your adversary reduces the risk that you; domestic tax authorities; or anyone else; will detect the secret offshore bank account.

II. Look For Compartmentalization

A former intelligence officer I knew kept 1 cellular phone for incoming calls & another for outgoing calls. By compartmentalizing incoming & outgoing calls, the former intelligence officer was trying to hamper any investigation of his telephone toll records. Your adversary may compartmentalize his/her financial activities in a scheme to hide assets from you. For more information read my post “Compartmentalization & An Asset Search.”

III. Seek Transparency

By eliminating paper trails & compartmentalizing, your adversary can make his/her financial activities nontransparent. Your adversary can also make financial activities nontransparent via: fraudulent asset transfers; bulk-cash smuggling; art assets & cultural heritage property; diamonds or other portable valuable commodities; etc. These common concealment methods are outlined at “Red Flags For An Asset Search.”

Image: Brian A Jackson/Shutterstock.com

Copyright 2017 Fred L. Abrams

A person hiding assets from you could park their money in an offshore bank account & hire an intermediary to be the account’s bank signatory. One website offers this “Bank Nominee Signatories Service” for a cost of about $1000 per year.  This person could additionally title their real estate in the name of shell companies. A person can also hide assets by converting cash into portable valuable commodities like diamonds and smuggle the diamonds offshore.

This kind of scheme is outlined by “Detecting Hidden Assets By Following A Money Trail.”  “Searching For Assets Hidden By Lawyers” examines another way to hide assets.  It explains a person might hide their cash by laundering it through a lawyer. In these kinds of schemes the person hides his/her true beneficial ownership of assets. You may be able to detect  true beneficial ownership & search for assets 3 ways:

I. Collecting human intelligence/informants’ tips is sometimes the only practical way to detect a sophisticated scheme to hide assets.  If there is an informant with knowledge of the hidden assets, the informant might be willing to tip you about the assets.  This informant may be a disgruntled: employee; family member; paramour; etc.

II. Private investigators may help you identify informants & gather leads about hidden assets through surveillance or other surreptitious means. Some investigators however, search for assets illegally or provide spurious information. Ex-Toronto private investigator Elaine White & ex-police detective Cullen Johnson for example, ran an “asset locator” business. They supplied their clients with bogus bank account information.

III. Legal tools can be critically important in searching for assets.  “How Does A Divorcing Spouse Recover Assets Concealed In A Swiss Bank Account?” gives a glimpse of the kinds of tools generally available in many countries across the globe. Among other things, the tools can include serving letters rogatory upon foreign bank witnesses & tipping prosecutors or other governmental authorities.

Image: Farizum Amrod Saad/Shutterstock.com

 Copyright 2017 Fred L. Abrams

12 8 16 Post
This 34th post in the “Divorce & Hidden Money” series highlights ways assets may be hidden in a money laundering circuit.

The November 30th New York Times Magazine article “How To Hide $400 Million” described the divorce between Sarah Pursglove & Finnish internet tycoon Robert Oesterlund. A document from Mr. Oesterlund’s lender allegedly indicated Mr. Oesterlund’s net worth was $400 million, “How To Hide $400 Million” said. This article also said Mr. Oesterlund claimed during the divorce that the ‘net family property’ was only worth a few million dollars.

Ms. Pursglove however, did not believe this and tried to search for assets reportedly hidden by Mr. Oesterlund. Based on “How To Hide $400 Million,” Mr. Oesterlund was an ultra-high-net-worth spouse who allegedly hid assets through:

  1. gatekeepers (such as lawyers & bankers);
  2. multiple jurisdictions;
  3. offshore bank accounts;
  4. shell companies;
  5. & trusts.

These can all be used as laundering links which wash assets in a money laundering circuit. A money laundering circuit is shown at a chart on a webpage from FINTRAC, a Canadian financial intelligence unit. An ultra-high-net-worth spouse may place assets into a laundering circuit through: structuring bank deposits; money mules/bulk-cash smuggling; diamonds or other portable valuable commodities; false invoicing schemes (i.e. trade-based laundering); wire transfers; etc. How do you perform an asset search when these methods are used to hide assets? Click here for seven tips.

Image: red mango/Shutterstock.com

Copyright 2016 Fred L. Abrams

12 22 articleBelow is a list of red flags.  Recognizing the red flags can help you detect assets your adversary has hidden from you.  I first published the list in 2007 at my article “Asset Search Indicia For Divorce, Debt Collection & Bankruptcy.”  The list consists of common asset concealment methods:

Image: Davi Sales Batista/Shutterstock.com

Copyright 2007- 2021 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