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During his corruption scheme, former congressman William Jefferson is thought to have hidden bribe monies in his refrigerator. He also apparently hid bribe monies by using shell companies formed in Delaware, Nigeria and other places. U.S. law enforcement officers were able to search for these illicit assets through search warrants and a letter rogatory seeking evidence in the Republic of Nigeria

The jury’s August 5, 2009 verdict in U.S.A. v. Jefferson, found former congressman William Jefferson guilty of hiding bribery proceeds by laundering them, as described by the 12th, 13th and 14th counts of his indictment.  The August 5, 2009 verdict and a U.S. Department of Justice press release also stated that Mr. Jefferson was guilty of soliciting bribes, honest services wire fraud, racketeering and conspiracy.

An August 6, 2009 jury verdict similarly found that about $470,000 dollars in two bank accounts were criminal proceeds subject to asset forfeiture.  Under the August 6 verdict, stock shares in suspected shell companies, (likely used as Mr. Jefferson’s nominees), could be forfeited. These stock shares were for a Nigerian company “W2-IBBS”; a Ghanaian company “International Broad Band Services, LLC”; a Delaware company “Multi-Media Broad Band Services, Inc.”; and a company in Indiana “iGate, Incorporated.”

As was previously reported by the media, investigators in U.S.A. v. Jefferson had interdicted $90,000 in a freezer on August 3, 2005, pursuant to a search warrant executed at Mr. Jefferson’s Washington D.C. home.  A search warrant of Mr. Jefferson’s congressional office had also been executed along with the one below for Mr. Jefferson’s New Orleans home.

To View The Entire Search Warrant, Click On The Above Image

A challenge prosecutors faced in U.S.A. v. Jefferson was that part of Mr. Jefferson’s corruption scheme included cross-border elements in Nigeria, Ghana and other African countries.  To acquire evidence from foreign witnesses, prosecutors sought relief in the form of mutual legal assistance.  Prosecutors also employed letters rogatory like the one available here for gathering evidence in the Republic of Nigeria.  Letters rogatory can be used in a variety of legal matters to search for assets parked offshore.  Under the right conditions, they may even be used to collect evidence from foreign bank witnesses who possess information about secret offshore bank accounts.

Illustration: Svitlana Medvedieva/Shutterstock.com

Copyright 2009-2016 Fred L. Abrams

 

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

During ultra-high net worth divorces, one party can conceal vast sums of money from the other by going offshore.  Stated differently, divorcing spouses may hide their wealth by utilizing cross-border elements, as money launderers do.   The Financial Action Task Force mentions these elements at a F.A.Q. webpage which says “[l]arge-scale money laundering schemes invariably contain cross-border elements.

Cross-border elements can include foreign bank accounts and nominees.  Expensive stamp or coin collections, fine art and antiquities are sometimes secretly purchased offshore or transferred there.  Valuable real estate bought in a foreign jurisdiction might also be possessed with anonymity by titling it in the name of a paramour or other intermediary.  In anticipation of a divorce, yachts, airplanes, luxury automobiles, diamonds and jewelry may too be hidden offshore.

Foreign trusts or foundations, shell companies, sham loans, fraudulent conveyances and offshore credit or debit cards, can also play roles in these cross-border schemes.  The article Hiding Millions From Your Ex Gets Harder, Thanks To Offshore Tax Crackdown discussed the suspected use of offshore elements by a divorcing husband, Alaskan plastic surgeon Michael D. Brandner.  At the time of his divorce, Dr. Brandner may have parked assets in Central America to hide them from his wife of 28 years.

Among other things, Dr. Brandner could have used a shell company to open a secret bank account.  He too might have converted over $3 million into five cashier’s checks and then secretly transferred these funds to Central America.  If guilty of the wire fraud charges he faces, Dr. Brandner could be sentenced to 20 years of prison and fined $250,000.  The case pending against Dr. Brandner is known as USA v. Brandner, United States District Court for the District of Alaska, Index No. 13-cr-00103.  Prosecutors in the case are also seeking asset forfeiture.   To read Dr. Brandner’s First Superseding indictment, click here.

Copyright 2013-2018 Fred L. Abrams

Seizing mob assets and tipping the SEC:

  1. The article “Mafia hurt by asset seizures but still too strong to beat” suggests that Italian asset forfeiture laws are critically important in fighting the Italian mob.  The article quotes a magistrate in Naples who “told Reuters the confiscation of assets was a vital weapon, ‘more important even than the arrest and conviction of bosses,’ because of its visible impact in challenging mafia power.
  2. No End In Sight For Decade-Long Conn. Divorce Case” discusses Ms. Karen Kaiser and her ex-husband David Zilkha.  Ms. Kaiser gathered copies of e-mails from the couple’s home computer and these e-mails were eventually supplied as a tip to the SEC.  The e-mails allegedly help show that Mr. Zilkha had provided nonpublic information about Microsoft Corporation, to Pequot Capital Management, Inc. and Pequot’s founder, Arthur Samberg.  A 2010 news release explained that the SEC ultimately filed a complaint against Pequot and Samberg, for alleged insider trading.  The SEC also brought a related proceeding against Mr. Zilkha.  For their assistance with the underlying SEC insider trading investigation, Ms. Kaiser and her current husband received a $1 million dollar SEC whistleblower reward in 2010.

Copyright 2013 Fred L. Abrams

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

The article “Wirapol Sukphol, Jet-Set Buddhist Monk Shocks Thailand With Religious Scandal” discusses a Buddhist monk in Thailand suspected of misappropriating charitable donations to support his life of luxury.  This article indicates that the now former monk Wirapol Sukphol, may have collected charitable donations by swindling donors, to whom he reportedly once said: ‘Don’t worry, no need to rush. I’ll stay here until the last of you gets to donate.

Sukphol is thought to have accumulated assets worth an estimated $32 million.  He is additionally suspected of narco-trafficking, statutory rape, vehicular manslaughter and hiding assets by money laundering.  The article also features a video showing Sukphol traveling by private jet while seated alongside his Louis Vuitton carry-on:

http://www.youtube.com/watch?v=sANFgwoJeic

The 33-year old Sukphol is believed to have laundered assets by using nominee bank accounts maintained in the names of his relatives; buying luxury automobiles; and by purchasing valuable real property.  The Bangkok Post reports that Thailand’s financial intelligence unit, the Anti-Money Laundering Office, has frozen these kinds of assets apparently owned by Sukphol.  A Thai arrest warrant has been issued for Sukphol and the Bangkok Post states that Sukphol is believed to be staying at his U.S. residence.

Copyright 2013 Fred L. Abrams

International asset recovery and suspected trade-based money laundering:

  1. As Britain a safe haven for plundered assets – experts stated, “successful international asset recovery is notoriously difficult because of the often complex web of financial transactions used to hide illegal sources of money, as well as a lack of cooperation between different countries…”  This article too cited the World Bank and UN Office of Drugs and Crime for the proposition that “[b]etween 1994 and 2009, only $5 billion of stolen assets were recovered globally — less than 2 percent of the lowest estimated amount stolen annually...”
  2. Four Columbian nationals, (one of whom is also an Israeli citizen), were indicted on July 9th, for their suspected involvement in a laundering circuit that washed illicit drug proceeds.  Three of the indicted four, were also separately named as Specially Designated Narcotics Traffickers under the Kingpin Act which has the effect of freezing any of their assets under U.S. jurisdiction.  In connection with the designation, U.S. authorities published a chart depicting trade-based money laundering reportedly carried out by way of offshore banks and companies:

(Click On The Chart To Enlarge) 

Link Chart: U.S. Treasury’s Office of Foreign Assets Control
Copyright 2013 Fred L. Abrams

 

U.S. prosecutors issued a press release yesterday announcing the extradition of former Guatemalan President Alfonso Portillo.  Mr. Portillo’s extradition to the United States was based on his alleged money laundering.

Yesterday, Mr. Portillo was also arraigned in federal court in Manhattan.  Although Mr. Portillo was remanded to the custody of the U.S. Marshal, the Court’s docket reveals that Mr. Portillo will be applying for bail within the next two weeks.

As outlined by a 12/1/2009 indictment, prosecutors accuse Mr. Portillo of participating in a public corruption scheme.  The Forfeiture Bill of Particulars filed by prosecutors, lists Mr. Portillo’s alleged illicit assets reportedly laundered during the scheme.

These assets consisted of funds supposedly washed through bank accounts in multiple jurisdictions, including New York, Miami, Paris, Luxembourg and Switzerland.  Pages 8-9 of an IRS Special Agent’s August 9, 2012 declaration, chart the suspected movement of the funds:

(Click Below To Read The Entire Declaration)

The ACAMS / MoneyLaundering.com article “FATF’s Focus on Asset Forfeiture Could Challenge Some Nations”, especially raises the issue of recovering corruption proceeds.  Near the end of this article, I am mentioned as saying that as part of their effort to crack down on corruption, Financial Action Task Force examiners may expect jurisdictions to track bribes paid by local companies to foreign governments:

FATF’s Focus on Asset Forfeitures Could Challenge Some Nations¹

October 31, 2012, By Brian Monroe

An intergovernmental group’s revised expectations of how countries should seize looted assets may prove difficult to meet, and could lower the mutual evaluation scores nations receive for their anti-money laundering controls.

Earlier this month, the Paris-based Financial Action Task Force (FATF) outlined in guidance how jurisdictions should best assist one another with asset forfeitures, calling for the implementation of formal and informal mutual legal assistance arrangements and the creation of specialized units to expedite responses to intergovernmental inquiries.

How willingly nations cooperate with one another will be an important factor in how FATF evaluates their anti-money laundering (AML) and counterterrorism financing regimes going forward, according to an individual familiar with high-level discussions within the intergovernmental group.

“Asset confiscation and recovery is a very important objective and an indicator of the success of the overall regime,” said the person, who asked not to be named. The issue is linked to FATF’s increased focus on fighting corruption, the individual said.

In February, individuals involved in FATF talks told ACAMS MoneyLaundering.com that the group was revising how it scored regimes to emphasize efficacy, and would consider forfeiture sizes, conviction rates and other factors. The shift follows FATF’s decision to streamline its AML and counterterrorism financing standards earlier this year.

As part of that effort, the group plans to grade countries on both technical compliance and how effectively they implement financial crime controls, including asset forfeitures, sources said this month. The two separate grades will be combined in an overall score included as part of each mutual evaluation.

But meeting FATF’s asset forfeiture standard, as outlined in its Oct. 19 best practices, will be challenging for nations of all stripes, according to Tom Lasich, a former head of training at the Switzerland-based International Centre for Asset Recovery and a former Internal Revenue Service criminal investigator.

Continue Reading Recovering Assets By Cracking Down On Corruption Proceeds

Peter Madoff’s $4 million dollar co-op and the effort to recover assets from Peregrine Financial Group, Inc.

  1. The NYC Park Avenue co-op which belonged to Bernard Madoff’s younger brother Peter, has just been listed for sale.  The $4 million dollar co-op is being sold as part of the asset forfeiture agreement connected to Peter Madoff’s June 29th guilty plea on securities fraud, tax fraud conspiracy and additional charges.
  2. As set forth at a press release, the U.S. Commodity Futures Trading Commission filed a July 10, 2012 civil complaint in U.S Commodity Futures Trading Commission v. Peregrine Financial Group, Inc., et. al., Index No. 12-cv-05383.  A July 17th order then appointed a temporary receiver in the case, with authority over assets beneficially owned by Peregrine’s founder, Russell R. Wasendorf, Sr.  To help recover assets, the order authorizes the receiver to hire former employees of Wasendorf Sr. or his companies.  Pages 5-6  ¶ I of the order indicates that these employees include a chief financial officer, a head pilot and the manager of My Verona, LLC, which is a restaurant:

Copyright 2012 Fred L. Abrams