The bottom of p. 5 of this Wolfsberg Group Statement says money laundering risks include financial “[a]ccounts for ‘gatekeepers’ such as accountants, lawyers, or other professionals for their clients where the identity of the underlying client is not disclosed to the financial institution.“
It is therefore no surprise that assets hidden through laundering
The U.S. Senate Permanent Subcommittee on Investigations August 1, 2006 report on offshore tax haven abuses explains that assets can be hidden with the assistance of “lawyers, brokers, bankers, offshore service providers, and others” offering offshore asset protection. Seattle lawyer Mary Simon appears to have especially provided offshore asset protection services that
“Terrorist Financing, Money Laundering & Financial Intelligence Units” and “Transnationally Tracking The Assets Of Terrorists” discusses the Egmont Group. The Financial Intelligence Units of the Egmont Group search for assets secreted by terrorist financiers and money launderers.
Financial Intelligence Units search for these illicit assets by looking for special indicators.
The New York Post and Bloomberg wrote last month about the appeal pending in Cohen v. S.A.C. Trading Corp., et. al., (11-1390-cv). The Cohen appeal is over the trial court’s March 30, 2011 dismissal of Patricia Cohen’s Second Amended Complaint. The Second Amended Complaint accused Ms. Cohen’s ex-husband, (billionaire hedge fund manager Steven Cohen), of tax fraud, money laundering, securities fraud and other alleged crimes.
This complaint also pleaded civil RICO, common law fraud, breach of fiduciary duty and unjust enrichment claims because Mr. Cohen had purportedly hidden marital assets from Ms. Cohen during their 1990 divorce. The gravamen of the complaint was that Mr. Cohen supposedly defrauded Ms. Cohen out of marital assets which she was arguably entitled to recover.
According to the complaint, Mr. Cohen had invested $8,745,169 dollars in co-op apartment conversions, with former attorney Brett K. Lurie. By January 1987, Mr. Lurie had allegedly repaid Mr. Cohen $5.5 million of the $8,745,169 dollars. The complaint claims the $5.5 million was a marital asset hidden by Mr. Cohen and omitted from his 1988 Statement of Financial Condition. This financial statement identified the $8,745,169 dollar investment with Mr. Lurie as a “non-liquid asset”:
(To Read The Entire Financial Statement, Click On The Highlighted Excerpt)
Continue Reading The Asset Recovery Case Of Cohen v. S.A.C. Trading Corp.
At “Hockey bid a factor in Beckman’s Ponzi trial”, the StarTribune analyzes the Second Superseding Indictment filed in the criminal prosecution against Jason Bo Beckman, Gerald Durand and Patrick Kiley. This StarTribune article explains the three are accused of money laundering and other alleged crimes arising out of Trevor Cook’s securities fraud which was one of the biggest Ponzi schemes in Minnesota history. The article too reveals that the Second Superseding Indictment differs from two earlier ones.
This was true because the Second Superseding Indictment appears to accuse Mr. Beckman of using Ponzi scheme proceeds as part of an alleged attempt to buy an ownership interest in the National Hockey League’s Minnesota Wild team. There is however, another difference between the Second Superseding Indictment and the previous indictments in this matter. Unlike the earlier indictments, Counts 24-25 at pp. 34-36 of the Second Superseding Indictment, basically accuse Mr. Durand of using a nominee’s bank account at Wells Fargo to secretly convert nearly $22,000 in Swiss francs to U.S. dollars.
This supposed currency conversion had conceivably caused Wells Fargo to unknowingly file Currency Transaction Reports with material omissions in them, about who participated in said conversion. Although suspected crimes related to Currency Transaction Reports are typically charged under 31 U.S.C. §§ 5322 &/or 5324, Counts 24-25 of the Second Superseding Indictment allege that Mr. Durand concealed material facts and / or made false statements to the Federal Government in violation of 28 U.S.C. §1001.Continue Reading Prosecutors Add To Indictment Connected To Ponzi Scheme Case
A February 3rd civil complaint filed against Forex dealer Peregrine Financial Group, (“PFG”), alleges “PFG ignored or failed to discern a myriad of objective red flags of fraud…” Complaint at pp. 5-6 ¶12. The complaint asserted a $48 million dollar claim under Minnesota’s fraudulent conveyance law and it was filed by Receiver
“Human Intelligence & The SEC’s Whistleblower Program” examines the government’s handling of tips in its search for assets concealed by securities fraudsters. The IRS Whistleblower Program similarly seeks tips from informants who help the IRS detect assets concealed in tax frauds.
Besides these whistleblower programs, tips can often be generated in a variety of ways. “Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street” highlights a tip supplied through an anonymous letter. This tip letter caused Polish prosecutors to launch a money laundering investigation and search for funds connected to a suspected shell company in Delaware.
“An Asset Search, Tax Fraud & Divorce” meanwhile, describes how a prospective tipster was interviewed by Brian, an ex-IRS special agent and former high-ranking official at FinCEN. Brian conducted this interview to locate marital assets believed to have been hidden by a divorcing husband suspected of tax fraud.
Continue Reading An Asset Search Via Whistleblowers & Other Tipsters
The pretrial discovery phase of a divorce, bankruptcy or other legal matter is often the best chance one has to collect evidence of any assets hidden offshore. The attached letter rogatory* submitted to the Swiss court, was included in one divorcing wife’s pretrial effort to gather such evidence.
At the time of pretrial discovery
A Primer For Gathering Financial Intelligence pronounces “Human intelligence can be the only practical way to uncover some sophisticated asset concealment schemes.” The SEC Whistleblower Program sniffs out human intelligence by offering rewards for tips regarding securities fraudsters. A November 2011 report shows the Whistleblower Program generated 334 tips during the seven week period from August 12, 2011 to September 30, 2011.
Jordan A. Thomas, (once an assistant director and senior attorney at the SEC), had a leadership role in developing this program. Mr. Thomas drafted the proposed whistleblower legislation and briefed House and Senate staffs on it. He is a partner at Labaton Sucharow LLP and chairs its Whistleblower Representation Practice.
His guest post featured below, notes that financial incentives and retaliation protections will cause the whistleblowers to come forward. It also recognizes “the locating of hidden assets will play a major role in these whistleblower actions.”
Jordan A. Thomas
While the Securities and Exchange Commission (SEC) has just released its 2011 annual report touting a record number of enforcement actions, the $2.8 billion in monetary sanctions recovered seems a drop in the bucket against what the serial schemers have stolen. But the game is changing, and the recovery of concealed assets will play a role in this revolution.
Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established a new and, in many ways, revolutionary whistleblower program, which was finalized and implemented in August. With the specter of major financial awards and protection from workplace retaliation, individuals now have powerful incentives to speak out against misconduct and report possible violations of the US securities laws. The eligibility requirements are broad and relatively straightforward.Continue Reading Human Intelligence & The SEC’s Whistleblower Program