In some situations, the transfer of large sums of cash is a red flag that assets have been hidden by money laundering. Government authorities therefore require banks to report their customers who transfer or exchange large sums of cash. For example, banks in the United States are required to report bank customers who deposit or
This is the 10th post in my series about what private investigators can and cannot do legally when searching for assets. The post discusses “K.C.” who was defrauded out of at least $500,000.00 by Patricia Walker-Halstead, a private investigator “K.C.” hired to investigate a suspected stalker. The post discusses wire fraud & bribery—which are
In an entry that was published on this blog, I discussed the ways in which art collectors use undisclosed art holdings and valuation uncertainties to evade legal responsibilities (such as payment of tax bills of alimony to divorced spouses). Just as Audrey Hepburn’s character discovered that her husband hid his wealth in three valuable stamps in the 1963 film “Charade,” art collectors have been using their collections to hide value for years. Difficulties related to valuation arise, particularly when it becomes impossible to locate the artwork or determine the identity of the actual owner. But with breaking news about the “Panama Papers,” suspicion about art’s role in the obstruction of justice and concealment of funds has been confirmed again. Wealthy individuals are using artwork as an investment tool and they are shielding these holdings through shell companies and misleading tools. In light of these facts, the art world is once again coming under scrutiny.
The art market is one of the least regulated markets in the world, as transactions are completed without oversight, due to the nature of the trade. It is particularly shocking as the value of the art market is astronomically high. According to Art Market Report, sales of art exceeded $63.8 billion in 2015.[1]
However, there are valid reasons for anonymity in the art world. First and foremost, secrecy is guarded due to security concerns. Whereas tens of millions of dollars in cash are difficult to walk off with, artworks are usually portable. A single lightweight canvas may be worth over $100 million, making the object vulnerable to theft. It is important to protect information about the works in private collections to limit the information available to thieves fixated on the objects.
Another reason to hide information is more personal. Collectors may not want to admit to selling works due to poor cash flow. Some owners are forced to sell works when facing financial hardships. Those individuals do not want this information to become public. At the same time, buyers may not want competing buyers to procure an overabundance of information about their purchases. Art is a personal passion, and something that some collectors do not want made public.
However, art is also used to hide assets, evade taxes, and unfairly withhold value from deserving parties (like creditors or divorcing spouses). This regrettable use of art was confirmed after the leak of the “Panama Papers.” In April, a Panamanian law firm, Mossack Fonseca, experienced a security breach and had over 11 million documents from internal files become public. Although illegal to assist someone in tax evasion, Mossack Fonseca specializes in establishing corporate structures to hide assets. The information in the leak confirmed the suspicion that wealthy individuals use shell companies to hide assets in contemplation of impending divorces or litigation.
Continue Reading Hiding Art Assets, Anonymity & The Panama Papers
Last 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.
2008 was the first time I wrote an article mentioning hiding assets via a lawyer in Panama. The article was called “Bearer Shares & An Asset Search.” Although the facts at the article were sanitized & changed for privacy reasons, it described a divorcing husband in the U.S hiding assets from both his
How do you hamper an asset search while hiding vast sums of money across the globe? You may be able to do this by compartmentalizing your actions. Using compartmentalization to fly under the radar is nothing new. For example, terrorists in Paris compartmentalized what they did before their heinous November 13, 2015 attack. This is
A trailer for the “Better Call Saul” show features the dry cleaner used by TV’s money laundering lawyer Saul Goodman. For me, the trailer highlights the fact that some lawyers hide their clients’ money by washing it via laundering links in a money laundering circuit. When lawyers wash large
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
If you are a divorcing spouse, judgment creditor or other litigant, how do you conclusively establish whether or not assets have been hidden from you? You can sometimes reasonably determine this by using legal tools to search for assets. In a pending litigation, these tools might include: depositions; subpoenas; interrogatories; production requests; etc.
Below is part of a production request in the hypothetical case of “JOHN DOE.” The production request seeks access to JOHN DOE’s passport; credit cards; phone records; etc. By analyzing this kind of material one might possibly detect secret offshore bank accounts or other hidden assets.
1. JOHN DOE’s original passport of which FRED L. ABRAMS, ESQ. (or his representative), may possess for a period of not more than 45 minutes to photocopy and return to JOHN DOE.
2. All paid and unpaid invoices from creditors arising from obligations incurred by JOHN DOE for the period January 1, 2011 to present.
3. All of JOHN DOE’s telephone records, (including cell phone records), for the period of January 1, 2011 to date.
4. Receipts and copies of airplane tickets for all air flights JOHN DOE traveled, during January 1, 2011 up to the present date.
5. All frequent flyer miles statements relating to any air flights JOHN DOE traveled, during January 1, 2011 up to the present date.
6. Receipts or documents relating to all hotel accommodations JOHN DOE paid for or hotels JOHN DOE stayed at anytime during the period of January 1, 2011 to the present.
7. All records and documents relating to any transaction entered into on or after January 1, 2011 in which JOHN DOE presently has or will have a financial interest or from which JOHN DOE has received or will receive compensation of any nature.
8. All documents related to any transaction since January 1, 2011, entered into by another person or entity for the benefit in whole or in part, of JOHN DOE.
9. All documents showing the amount, purpose or source of all payments over $5,000.00 made since January 1, 2011, to, by or for the benefit of JOHN DOE.
10. Copies of all of JOHN DOE’s current and previous wills and other estate planning documents.
Continue Reading Using A Production Request In Your Asset Search