Divorce & Hidden Money

HIDDEN MONEY & CRIMES

When one spouse uses different ways to hide money from the other spouse, criminal laws are sometimes violated. The spouse who has hidden money because of a divorce could conceivably commit one or more of these crimes:

  1. 26 U.S. Code § 7201 (tax fraud);
  2. 18 U.S. Code § 1341 (mail fraud);
  3. 18 U.S. Code § 1343 (wire fraud);
  4. 18 U.S. Code § 1956 (money laundering).

Mr. Benjamin’s Divorce & His White Collar Crimes and my post mentioning Dr. Michael Brandner, are about divorcing husbands thought to have hidden money from their wives and the IRS.  Mr. Benjamin apparently hid money domestically & Dr. Brandner reportedly hid money offshore.  Although Mr. Benjamin & Dr. Brandner are believed to have used different ways to hide money, both were convicted of tax fraud (26 U.S. Code § 7201) & wire fraud (18 U.S.C. § 1343).

SOME WAYS TO HIDE MONEY

Prosecutors claimed Mr. Benjamin had hidden money by: failing to file tax returns; pocketing cash payments from customers; paying personal expenses from a business bank account; and cashing customers’ checks instead of depositing them into his bank account. Meanwhile, prosecutors in USA v. Brandner alleged Dr. Brandner hid money by driving across international borders with cash &/or checks &/or gold.  Prosecutors also alleged at their superseding indictment or trial brief that Dr. Brandner hid money via: a safe deposit box in Costa Rica; bank accounts in Costa Rica & Panama; & a Panamanian shell company which had a nominee president who was Dr. Brandner’s intermediary.

AN ISLE OF JERSEY TRUST

Last month prosecutors in USA v. Kozel similarly claimed millionaire Todd Kozel hid money from his ex-wife by going offshore. From 2004 to 2014 Mr. Kozel was the CEO of Gulf Keystone Petroleum Ltd. While CEO, Mr. Kozel reportedly had an average annual income of about $10 million.  Mr. Kozel’s December 14, 2018 criminal complaint basically alleged that with the help of a Swiss lawyer/gatekeeper, Mr. Kozol formed a sham offshore trust on the Isle of Jersey.  Mr. Kozol apparently used the trust to conceal his true beneficial ownership of millions of Gulf Keystone Petroleum Ltd. stock share certificates. Additionally, Mr. Kozol is thought to have concealed his beneficial ownership of a NYC condominium which Mr. Kozol claimed he only rented. Mr. Kozol is alleged to have secretly purchased the condominium through a NYC shell company supposedly controlled by Mr. Kozol’s trust.  Mr. Kozol’s December 14th criminal complaint is reproduced below.

Copyright 2019 Fred L. Abrams

Beneficial Ownership Post
Spouses can hide assets through layering & fraudulent transfers, this 35th Post in the “Divorce & Hidden Money” series says.

According to The Financial Action Task Force anti-money laundering group:

Beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. Glossary of the FATF Recommendations, Web. July 10, 2017.

A divorcing spouse may conceal his/her beneficial ownership of community property by titling: bank accounts; real estateart; etc. in the name of an intermediary (i.e. a nominee). The divorcing spouse secretly controls these assets while the nominee appears to own them. The nominee acts as a protective layer which hides the divorcing spouse’s beneficial ownership of assets.

Protective layers can be comprised of: nominees; offshore bank accounts; multiple jurisdictions; shell companies; trusts; & gatekeepers. The layering is the first clue a divorcing spouse could be concealing beneficially owned assets. The second clue a divorcing spouse is concealing assets would be the divorcing spouse’s fraudulent transfers. To detect fraudulent transfers look for the badges of fraud, as more fully set forth at “An Asset Search When Money Is Hidden Offshore.”

Image: kentoh/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

The instant post mentions hiding assets through: a lawyer; offshore bank accounts; etc. It is the 34th post at the "Divorce & Hidden Money" series.
The instant post mentions hiding assets through a lawyer; offshore bank accounts; etc. It is the 33rd post at the “Divorce & Hidden Money” series.

Ohio lawyer David Keith Roland was recently disbarred for using a Swiss bank account in a scheme to help a divorcing wife hide marital assets from her divorcing husband. The divorcing wife in this alleged scheme was chiropractor Denise M. Carradine of Boardman, Ohio. Mr. Roland had represented Ms. Carradine in a divorce action commenced by Ms. Carradine’s then husband, Eric Martin.

As part of the alleged scheme to hide marital assets from Mr. Martin, Ms. Carradine reportedly supplied Mr. Roland with $854,261.10. The Ohio Supreme Court Decision disbarring Mr. Roland said Ms. Carradine had “structured” payments of this money to Mr. Roland “to avoid detection under banking laws.” Mr. Roland deposited the $854,261.10 into two client trust accounts. Mr. Roland then wire transferred $814,105.96 of the $854,261.10, into a bank account at Maerki Baumann & Co. in Zürich, Switzerland.

This Swiss bank account may have been a nominee bank account, (i.e. an account titled in the name of an intermediary), beneficially owned by Ms. Carradine. Some of the money from the Swiss bank account was also transferred into a bank account located in the Turks & Caicos Islands. Based upon the foregoing, Mr. Roland’s & Ms. Carradine’s alleged scheme to conceal marital assets might have involved: structuring; a gatekeeper/lawyer; nominee bank accounts; multiple jurisdictions; & offshore banks.

Illustration: ollo/Shutterstock.com

Copyright 2016 Fred L. Abrams

Zinnel Post
This 32nd Asset Search Blog post in my “Divorce & Hidden Money” series, explains how Steven Zinnel is thought to have hidden assets during his divorce & personal bankruptcy.

Plastic surgeon Michael D. Brandner & business owner Goderick Augustus Benjamin were accused of committing federal crimes & hiding assets from their wives. Like Dr. Brandner & Mr. Benjamin, Steven Zinnel was a divorcing husband suspected of concealing assets from his wife. According to prosecutors in USA v. Zinnel, Steven Zinnel had hidden assets from his wife Michelle Zinnel; & Steven Zinnel had fraudulently concealed assets during his personal bankruptcy.

Mr. Zinnel reportedly filed his personal bankruptcy to hamper the Family Court’s distribution of property to Michelle Zinnel, during the couple’s divorce. Mr. Zinnel’s e-mail to Michelle Zinnel dated July 15, 2001, seemed to give a glimpse into Mr. Zinnel’s bankruptcy scheme. The e-mail said that as a consequence of Mr. Zinnel’s bankruptcy, Mr. Zinnel expected “all the money to be gone in less than two months” & that “[t]he property settlement will then be very easy.

During his personal bankruptcy, Mr. Zinnel however, failed to disclose valuable assets which were apparently hidden from Michelle Zinnel & others. Prosecutors ultimately charged Mr. Zinnel with money laundering & bankruptcy fraud. At Mr. Zinnel’s superseding indictment &/or other court filings, prosecutors essentially claimed that Mr. Zinnel concealed assets four ways, through:

  1. lawyers;
  2. shell companies;
  3. a business associate who Mr. Zinnel employed as his nominee/intermediary;
  4. nominee bank account[s] (i.e. accounts maintained in the name of others).

On March 4, 2014 Mr. Zinnel was sentenced to 17 years & 8 months of prison for bankruptcy fraud & money laundering. This case is perhaps best summarized by these two sentences prosecutors wrote at a June 14, 2013 court filing:

The Government’s theory of this case is that Defendant Zinnel wanted to commit bankruptcy fraud and money laundering for reasons of greed and spite. Zinnel loved money and hated his ex-wife [Michelle Zinnel]. USA v. Zinnel, Gov’t Opposition Paper filed 6/14/13, Docket No. 179, at p. 1.

Image:  Nikolai Moiseenko/Shutterstock.com

Copyright 2016 Fred L. Abrams

Offshore Image 5:30:16
As this 31st post in the “Divorce & Hidden Money” series reveals, you may be able to employ letters rogatory to detect assets hidden offshore.

A letter rogatory is an application to a foreign tribunal. It seeks permission to serve process on or gather evidence from a foreign witness. If you are in a divorce in the United States, letters rogatory can usually help you collect evidence of offshore assets your spouse hid from you. You might use letters rogatory to search for assets which can include: bank accounts; real estate; valuable art; business entities; etc. My February 25, 2015 post mentioned the use of letters rogatory in relation to divorce/child support cases in New York.

The February 25, 2015 post discussed one ex-husband who for 30 years failed to pay spousal maintenance &/or child support to his ex-wife in New York. Since the ex-husband lived in places like Mexico, the Dominican Republic & Barbados, legal proceedings in New York did not get the ex-husband to pay his ex-wife. Had the ex-wife been able to afford it, she might have hired lawyers to seek the issuance of letters rogatory to search for the ex-husband’s offshore assets. You may similarly employ letters rogatory if you are in a divorce outside of the United States & your divorcing spouse hid assets from you in the United States.

These kinds of cases are highlighted at Part 1 & Part 2 of “Asset Searches In The U.S. For Divorces Brought Outside The U.S.”  Below is a translated copy of a letter rogatory arising out of a divorce in the Republic of Colombia at The 8th Family Court, in Barranquilla.¹ In connection with The Family Court’s distribution of community property from a marriage, the letter rogatory requests bank account/bank customer information at Bank of America in the United States.

Letter Rogatory Colomibia

¹The letter rogatory has been partly sanitized for privacy reasons.

Offshore Image With Cash: esfera/Shutterstock.com

Copyright 2016 Fred L. Abrams

This 30th post in the “Divorce & Hidden Money” series highlights a RICO lawsuit Helga Glock commenced in 2014. The lawsuit alleges Glock pistol inventor Gaston Glock initially hid assets via shell companies supplied by Charles Ewert—a resident of Luxembourg known as Panama Charly.

Moneylaundering.com’s Editor-in-Chief Kieran Beer says at his April 11th article, that the Panama Papers represent “an unparalleled look at the…abuse of shell companies, in this case those created by Panama-based law firm Mossack Fonseca.” ¹ Like Mossack Fonseca, Charles Ewert was in the business of forming shell companies. Although based in Luxembourg, Charles Ewert was reportedly called Panama Charly because of the large number of shell companies he had formed in Panama. Charles Ewert is also one of the defendants at Helga Glock’s RICO lawsuit against her ex-husband gunmaker Gaston Glock.

The Court’s docket report shows that last month Helga Glock filed her proposed Second Amended Complaint, (“the Proposed Complaint”), in the RICO lawsuit. The Proposed Complaint asserts that Charles Ewert had supplied Gaston Glock with Panamanian shell company Reofin International S.A. The Proposed Complaint seems to basically allege that Reofin & other shell companies were used as laundering links to conceal assets in a money laundering circuit. It also seems to basically claim that assets belonging to Helga Glock were supposedly hidden from her through: lawyers; sham loans; trade-based money laundering via false invoices &/or leases.

According to allegations at the Proposed Complaint, Charles Ewert, Glock, Inc. & others were members of an alleged RICO enterprise led by Gaston Glock. The Proposed Complaint says that one goal of the alleged RICO enterprise was to deprive Helga Glock of her assets. It claims that Helga Glock detected this alleged scheme in 2011, because of her divorce from Gaston Glock & her ouster from one of Gaston Glock’s companies. Helga Glock apparently filed the Proposed Complaint to search for & recover assets Gaston Glock supposedly hid during the couple’s marriage. Earlier Asset Search Blog posts discussing Helga & Gaston Glock are “Helga Glock’s Search For Gaston Glock’s Assets” & “Helga Glock Claims Gaston Glock Started Concealing His Assets.”

¹Moneylaundring.com’s Webpage, “From The Editor: Will Panama Papers Give Governments New Backbone for Transparency?” Web. Last Viewed May 4, 2016.

Photo: NSC Photography/Shutterstock.com

Copyright 2016 Fred L. Abrams

4 28 16 Post

This post was written by Leila A. Amineddoleh, Esq., of Amineddoleh & Associates LLC. Ms. Amineddoleh has been published extensively on issues related to art, cultural heritage, and intellectual property, and has appeared in major news outlets, including the New York Times, Forbes Magazine, TIME Magazine, and the Wall Street Journal. Ms. Amineddoleh’s post discusses how art assets may be hidden from divorcing spouses, creditors & others. It is also the 29th post at the Asset Search Blog’s “Divorce & Hidden Money” series:

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

1782 article part 2
This 28th post in the “Divorce & Hidden Money” series mentions the petition Helga Glock filed in the U.S. to collect financial records for her Austrian alimony & asset distribution case against gun mogul Gaston Glock.

Part 1 of the instant post notes that if your divorce is outside of the U.S. you may search for assets your spouse hid in the U.S. by filing a 28 U.S.C. § 1782 petition (hereinafter “the petition”).  You can employ the petition to gather financial evidence possessed by a wide variety of witnesses who reside in the U.S.  In some cases these witnesses can range from a financial institution to a paramour.

Helga Glock employed the petition to search for assets gunmaker Gaston Glock allegedly hid from her during the couple’s divorce in Austria.  Helga Glock filed the petition in a U.S. federal court in Atlanta, Georgia on March 18, 2013.  The petition alleged Gaston Glock started concealing his U.S. &/or other assets.  The petition argued that Helga Glock therefore needed to collect financial records in the U.S. for her alimony & asset distribution case in Austria.

As the pages available here partly demonstrate, Helga Glock used the petition to request financial records from Glock, Inc. & two other businesses apparently related to Gaston Glock. Helga Glock succeeded with the petition/ultimately gathered various financial records because of it.  A federal court of appeals has also ruled that Helga Glock could now use these records in her RICO lawsuit in the U.S. against Gaston Glock.

Image: iQoncept/Shutterstock.com

Copyright 2015 Fred L. Abrams

Divorce Image 1782 Petition

This 27th post in the “Divorce & Hidden Money” series looks at a way to search for assets in the U.S. when your underlying divorce case is brought outside of the U.S.

If your underlying divorce case is commenced in a foreign country, how do you search for secret bank accounts or other kinds of assets your spouse hid in the U.S?  You may be able to search for assets your spouse hid in the U.S. by filing a petition in U.S. federal court pursuant to 28 U.S.C. § 1782 (hereinafter “the petition”).

By filing the petition you might elicit evidence from bank & other witnesses who reside in the U.S. You could use the petition to gather evidence about any of your spouse’s U.S.-based: bank accounts; stocks & bonds; business entities; real estate; intellectual property licenses; etc. To file a legally sufficient petition, you must satisfy three statutory requirements:

  1. the bank or other witness the subject of your petition must reside or be found in the district where the court sits;
  2. the evidence possessed by the witness will be used in a foreign case;
  3. you must be an interested party.

The 28 U.S.C. § 1782 petition¹ below was granted via an April 12, 2012 order from the U.S. District Court in Delaware.  This petition sought evidence from a witness in Delaware regarding alimony in a Turkish family court case:

(Click On The Translated Copy Of The Petition)

¹The § 1782 petition has been partly sanitized for privacy reasons.

First Image: Bildagentur Zoonar GmbH/Shutterstock.com

Copyright 2015 Fred L. Abrams