Asset Search/Fraud Investigation

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My January 13th post notes that divorcing spouses can employ nominees, (i.e. intermediaries), to secretly purchase property, conceal bank accounts, etc.  Prosecutors claimed Attorney Orion Douglas Memmott similarly used nominees to hide assets from the IRS.  Mr. Memmott’s 2010 superseding indictment asserted Mr. Memmott hid assets from the IRS by “placing real property in the names of nominees…” It charged him with attempted tax evasion (26 U.S.C. § 7201) and perjury/false statements (26 U.S.C. § 7206 (1).  Prosecutors alleged Mr. Memmott hid real estate titled in the name of Mr. Memmott’s nominee, his ex-wife Sheila Enos-Boyd.  Mr. Memmott was found guilty of these charges and on December 15, 2014, the Court sentenced him to 18 months of prison.

THE RED FLAGS

A) Nominees

In addition to hiding real estate through his nominee, prosecutors accused Mr. Memmott of embezzling hundreds of thousands of dollars from law firm clients and friends.  One of Mr. Memmott’s victims was Merrill Osmond, lead singer of the world famous Osmond family.  Mr. Memmott is believed to have embezzled $60,000 from Mr. Osmond.  Another victim was Ms. Ranelle Wallace, who was left homeless by Mr. Memmott because he reportedly embezzled $37,000 from her.  Prosecutors claimed Mr. Memmott hid these and other funds he embezzled, in business bank accounts belonging to his nominees.  Mr. Memmott’s suspected use of nominees to conceal assets, was just one red flag of fraud in his case.  Other red flags were: Mr. Memmott’s claim at his June 9, 2005 IRS Form 433-A, that he had no bank accounts; Mr. Memmott’s alleged use of back-dated promissory notes; and Mr. Memmott’s suspected use of a business bank account instead of a trust account.

B) Mr. Memmott’s June 9th 433-A Form

Click Here for the June 9th 433-A Form¹

When the IRS determined that Mr. Memmott owed about $655,555 in unpaid personal federal income taxes for years 1993-1999, it assigned IRS Revenue Officer Miller to search for Mr. Memmott’s assets.  On June 9, 2005 Officer Miller had Mr. Memmott execute an IRS Form 433-A, Collection Information Statement.  At this June 9th Form, Mr. Memmott indicated he had no personal bank accounts.  This was a red flag for Officer Miller who testified at Mr. Memmott’s trial that: “I just found it very odd that the defendant was an attorney, a businessman, he was receiving Social Security, but he had no personal bank accounts. So that was kind of an indicator of fraud for me because it just was so out of the ordinary to have someone of that stature not have a personal bank account.”  
Continue Reading Red Flags & The IRS Search For Attorney Memmott’s Assets

I first published this post on December 14, 2007 and it is now the 12th post in the “Divorce & Hidden Money” series.  As shown below, a divorcing spouse’s effort to valuate marital assets occasionally raises tax fraud or other criminal law issues.  Furthermore, assets and income can be concealed by pocketing cash…

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),…

Like my posts dated July 3 &  February 3, 2014 & December 9, 2013, today’s post outlines tactics for hiding assets.  Today’s post is also the 11th post in my Divorce & Hidden Money series.  

Your divorcing husband/wife may try to cheat you out of your fair share of marital assets by employing the…

This is the 2nd post in my series about private investigators & what they can & cannot do legally when searching for assets.  It is also the 10th post in my Divorce & Hidden Money series.  The Huffington Post article “Uncovering Hidden Assets In Divorce Litigation” observes that information obtained by “surreptitious means” might be used by one divorcing spouse against the other.  Obtaining information through a surreptitious search can be critical to recovering assets in a broad range of criminal & civil cases.  Depending on the circumstances, surreptitious searches might involve wiretaps; bank searches; law enforcement databases; and physical surveillance.  These surreptitious means have however, sometimes been abused by private investigators, attorneys & others in the following ways:

WIRETAPS– As stated in testimony at a 1967 U.S. Senate hearing ‘private bugging in this country can be divided into two broad categories, commercial espionage and marital litigation.’ ¹  Former attorney Mary Nolan handled divorce & family law matters for nearly 30 years before pleading guilty to the wiretapping & tax fraud charges at counts 1-4 &/or 6 of her 2012 criminal indictment.  An amended judgment showed Ms. Nolan was sentenced to serve 24 months in prison, 3 years of supervised release, etc.  Ms. Nolan’s sentencing memorandum said her cases frequently involved allegations that husbands were hiding assets.  The prosecutor’s sentencing memorandum meanwhile, claimed Ms. Nolan had employed a private investigator “to install eavesdropping devices in cars used by her clients’ spouses for use in their divorce proceedings.”

BANK SEARCHES– Some private investigators try to surreptitiously search banks in the U.S. for accounts secretly opened by divorcing spouses, debtors, etc.  These investigators may claim they search through computer research; insiders; or information brokers.  Private investigators cannot ordinarily search banks legally because of privacy and other U.S. laws, as explained by the post available here.   The Court has also noted “it is more likely than not that the only way that information brokers can obtain private financial information from banks is through the use of deception and trickery, including impersonation of account holders.”  Commonwealth v. Source One Associates, Inc., No. CIV. A. 98-0507-H, 1999 WL 975120, at *6 (Mass. Super. Oct. 12, 1999) aff’d sub nom. Com. v. Source One Associates, Inc., 436 Mass. 118, 763 N.E.2d 42 (2002).
Continue Reading Private Investigators: A Surreptitious Search For Money Hidden In Divorce & Other Cases

How can one detect assets one is unaware of?  Sometimes by putting tipsters to work and collecting their tips.  These tips may be gathered in a variety of ways.  “An Asset Search, Tax Fraud & Divorce” describes a private investigation in which a prospective tipster was interviewed by “Brian”, an ex-IRS Special Agent and former high-ranking official at FinCEN.

Brian conducted the interview on behalf of a divorcing wife trying to locate marital assets hidden by her divorcing husband.  “Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street” mentions a tip supplied by an anonymous letter.  This tip letter caused Polish prosecutors to launch a money laundering investigation and search for assets connected to a suspected shell company in Delaware.

Meanwhile, the whistleblower programs at the U.S. Internal Revenue Service and the U.S. Securities Exchange Commission, (“the Commission”), also collect tips.   The two programs respectively sniff out tips about assets hidden in tax or securities frauds.  The article “What Happens To An SEC Whistleblower Tip?” available below, gives an insider’s view of the Commission’s whistleblower program.  One of the article’s authors is Jordan A. Thomas, a former assistant director in the Commission’s Enforcement Division.  Mr. Thomas had a leadership role in developing the Commission’s whistleblower program and he is now a partner and chair of the Whistleblower Representation Practice at Labaton Sucharow LLP.

What Happens To An SEC Whistleblower Tip?¹

One of the questions we’re frequently asked by clients and prospective clients is “what happens to a whistleblower tip once it’s submitted to the SEC, and how does the SEC determine which tips to actively investigate?” These are crucial questions for any potential whistleblower, especially given that the SEC receives approximately 30,000 tips, complaints and referral each year – 3,200 of which were whistleblower tips in 2013 – but can only conduct about 700 active enforcement investigations each year.
Continue Reading Detecting Hidden Assets By Putting Tipsters To Work

At Carmelite Chambers International Fraud & Assert Recovery Conference, I met Advocate & English Barrister Stephen Baker of Baker & Partners from St. Helier, Jersey.  During the Conference, Mr. Baker presented his slideshow with case studies about recovering suspected corruption proceeds or other assets.

Some of Mr. Baker’s slides reveal how foreign bank accounts; multiple jurisdictions and nominees, (i.e. intermediaries), could be used as elements in suspected laundering schemes:

One topic Mr. Baker’s slideshow covers is the investigation of the late Nigerian dictator Sani Abacha.  As Baker & Partners’ webpage explains: “Baker & Partners were central to the successful Jersey investigation into the alleged laundering of the proceeds of the corrupt Nigerian Dictator General Abacha’s crimes through Jersey. This investigation has already resulted in over USD $160,000,000 being returned to Nigeria.”


Continue Reading Searching For Corruption Proceeds & Other Assets On The Island Of Jersey