Financial Institutions

Like the IRS & SEC you can sometimes search for assets by using whistleblower tips, my October 3rd program explains.

A) PROGRAM DESCRIPTION

At the New York County Lawyers’ Association on October 3, 2017 from 5:30 PM to 9:00 PM, I will be the program chair of “Whistleblowers, Secret Swiss Bank Accounts & Recovering Hidden Assets.” Attendee registration is available at the website available here or by calling the New York County Lawyers’ Association at (212) 267-6646. During the October 3rd program, I highlight the use of whistleblower tips to recover hidden assets.  I show how to search for assets which can be hidden by high net worth divorcing spouses; corporations; Ponzi schemers; tax fraudsters; etc.  I talk about tools you can use to recover assets hidden in Switzerland and other places across the globe. The October 3rd program also focuses on the Internal Revenue Service & Securities Exchange Commission whistleblower programs which can provide qualifying tipsters with the largest payouts compared to any other reward programs in the world.

Jack BlumWashington, D.C. attorney Jack Blum is well-known internationally for his representation of whistleblowers. In addition to others he has represented,  Mr. Blum will talk about Mr. Hervé Falciani, the whistleblower the media dubbed “the [Edward] Snowden of Swiss banking.”  Mr. Falciani allegedly stole Swiss bank account information from HSBC in Geneva and as a whistleblower turned the information over to French authorities. This alleged HSBC bank account information eventually fell into the hands of the International Consortium Of Investigative Journalists, which published part of it at their webpages known as the Swiss Leaks project.  Furthermore, Mr. Blum appeared on the CBS/60 Minutes television show to discuss the foregoing.  He will similarly discuss these matters at the October 3rd program and analyze: the IRS whistleblower program; problems whistleblowers face in the real world; and the difficulty lawyers may encounter in dealing with whistleblowers either as clients or tipsters.

ThomasLabaton & Sucharow partner Jordan A. Thomas will also speak at the October 3rd program.  Mr. Thomas will discuss the Securities Exchange Commission’s whistleblower program, as he is one of the world’s leading experts on it. He will review the advantages and disadvantages of the different whistleblower programs; and the ethical concerns gatekeepers like attorneys, accountants, officers and directors have, in reporting illegal behavior in both the civil and criminal contexts.  As more fully set forth below, Mr. Thomas: is a former assistant director in the Commission’s Enforcement Division; had a leadership role in developing the Commission’s whistleblower program; and was assigned to many of the Commission’s highest-profile matters such as those involving Enron, Fannie Mae, UBS & Citigroup.

Photo Charles Bott

Charles Bott QC, Head of Carmelite Chambers in the United Kingdom, is a recognized authority on financial crime and its regulation.  Subject to his availability, Mr. Bott may travel to New York to speak at the October 3rd program. He has appeared in more than 80 serious fraud trials including some of the leading cases of recent years and advised many other clients under investigation.  Mr. Bott specializes in cases of serious fraud, money laundering and revenue evasion; and in the United Kingdom, he is regularly instructed in serious criminal cases and regulatory cases of all kinds.

Continue Reading Whistleblowers, Secret Swiss Bank Accounts & Recovering Hidden Assets

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If you are litigating against an adversary who is hiding assets from you, subpoenaing your adversary’s credit card statements might help you track the hidden assets. As my post “Secreting Assets Without A Border Trace” suggests, expenses listed at a credit card statement may lead you to your adversary’s assets. “Secreting Assets Without A Border Trace” is about tracking a Ponzi schemer’s illicit assets. The Ponzi schemer in that post could have: converted cash into diamonds; parked the diamonds in a Swiss security box (i.e. safe deposit box); and opened a secret bank account in Luxembourg.

The subpoena available below has language you can include at a subpoena for credit card records. The subpoena was issued to American Express by the Chapter 7 trustee in Michael Mastro’s bankruptcy case.  Along with credit card statements, the subpoena requested “[c]opies of all checks, money orders, electronic transfer records, and other documents showing the source and manner of each [credit card] payment…” Some of my other posts discussing subpoenas are “An Asset Search of A Lawyer Employed To Conceal Cash” & “Eliciting Evidence From Foreign Bank Witnesses.

American Express Subpoena

Image of torn paper & word subpoena: arfa adam/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

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

Bank Deposit Image

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 withdraw more than $10,000 in cash. The banks fulfill this requirement by electronically filing a Currency Transaction Report.

A bank customer trying to evade the filing of a Currency Transaction Report can be prosecuted for structuring, (a.k.a “smurfing”), in violation of 31 U.S.C. § 5324. Opinion blogger Radley Balko talks about some of these prosecutions at “The federal ‘structuring’ laws are smurfin’ ridiculous.” As discussed by “An Asset Search Over Corruption Proceeds,” prosecutors accused former Russian diplomat Vladimir Kuznetsov of violating structuring law(s).

At Count Two pp. 6-9 of Mr. Kuznetsov’s superseding indictment, prosecutors alleged Mr. Kuznetsov had structured deposits he made in New York City at Chase Manhattan Bank & the United Nations Federal Credit Union. The following case study also discusses structuring.¹  It analyzes how a group of criminals hid illicit drug proceeds by structuring deposits, smuggling cash & going offshore:

Image Egmont Case 06082

Image of hand with money: Africa Studio/Shutterstock.com

¹Case Study/Case Ref: 06082 Courtesy Of The Egmont Group of Financial Intelligence Units

Copyright 2016 Fred L. Abrams

Panama Papers 4 18 16 PostLast 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. The report said:

Money is laundered via bulk cash and trade by exploiting vulnerabilities at the airport, using commercial cover and free trade zones (FTZs), and exploiting the lack of regulatory monitoring in many sectors of the economy. The protection of client secrecy is often stronger than authorities’ ability to pierce the corporate veil to pursue an investigation. (U.S. Department of State International Narcotics Control Strategy Report for Panama, March 2016)

Money can also be laundered in Panama by putting shell companies to work, the same way shell companies are used to launder money in other parts of the world. Assets may be secretly transferred to a shell company &/or a shell company may be used to open a secret offshore bank account. In these situations, the shell companies may act as laundering links which wash assets in a money laundering circuit.

Mossack Fonseca was apparently in the business of establishing shell companies. Businesses that establish shell companies are usually called “nominee incorporation services,” as mentioned by the November 9, 2006 advisory from U.S. Treasury’s Financial Crimes Enforcement Network. The advisory essentially reveals that shell companies & nominee incorporation services can be a money laundering risk. The webpages of Panama Offshore Worldwide demonstrate the way one nominee incorporation service works.

At “Anonymous Panama Corporation” &/or “Panama Bank Secrecy,” Panama Offshore Worldwide seems to describe how you can open a secret offshore bank account by titling the account in the name of a Panamanian shell company. Panama Offshore Worldwide indicates that if you want additional anonymity, you should staff your Panama corporation with nominee directors (i.e. stand-ins/intermediaries):

We provide nominee directors for the corporation, so your name is not actually registered in the government’s documents and therefore cannot be traced back to you.  The corporation is controlled with shares, which are registered by date at a notary and not accessible online like the directors of a corporation. (Panama Offshore Worldwide’s “Panama Bank Secrecy” Webpage. Web. April 16, 2016.)

Image: leolintang/Shutterstock.com

Copyright Fred L. Abrams 2016

Image For Article About Panama Papers

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 wife & the I.R.S. through: a Panamanian lawyer, bearer shares, a shell company & other offshore elements.

Meanwhile, there have been many articles this week discussing the Mossack Fonseca Law Firm headquartered in Panama City, Panama. These articles arise out of the investigation of Mossack Fonseca which is detailed at the “Panama Papers” website published by the International Consortium of Investigative Journalists. Among other things, the website has a page of graphs, with one graph called “The hunt for bearer shares.” This particular graph seems to suggest that Mossack Fonseca employed bearer shares to help clients hide assets offshore.

At its own website, Mossack Fonseca says they are “Offshore Specialists since 1977.”  In this role, Mossack Fonseca is thought to have helped a large number of law-abiding clients transfer assets offshore for legitimate purposes. Mossack Fonseca could however, have also helped a large number of criminals seeking to conceal illicit assets. These criminals might have been tax cheats hiding undeclared revenue; corrupt government officials; & others seeking to conceal money by laundering it offshore.

Any criminals hiding assets through Mossack Fonseca will soon become known, since over 11 million documents at Mossack Fonseca were apparently hacked & leaked to the press. I suspect the hacked documents will show that assets were hidden offshore through elements commonly used to wash vast sums of money. Some of these elements are listed below & they should always be considered by anyone searching for valuable assets hidden from them.

Panama Papers Image: catwalker/Shutterstock.com

Copyright 2016 Fred L. Abrams

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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

 

Production Request
You might be able to access your adversary’s passport; credit card statements & phone records via a production request.

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.

PRODUCTION REQUEST

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

Following A Money Trail

High net worth divorcing spouses, kleptocrats, bankruptcy debtors, judgment debtors, etc., can easily conceal their beneficially owned assets by utilizing Nominee Incorporation Services (“NIS”). Pages 63-64 of “The 2007 National Money Laundering Strategy” essentially explained that individuals may use NIS in schemes to hide assets through money laundering. Individuals sometimes hire a NIS to open secret bank accounts & form non-transparent shell companies. Page 64 of The 2007 National Money Laundering Strategy said “[t]he FBI believes that U.S. shell companies and bank accounts arranged by certain NIS firms are being used to launder as much as $36 billion a year from the former Soviet Union. It is not clear whether these NIS firms are complicit in the money laundering abuse.

An apparent NIS is Capital Asset, Inc. One of its webpages recommends forming companies in Nevada, Wyoming or Delaware. It presumably makes this recommendation because Nevada, Wyoming & Delaware have little or no reporting requirements concerning a company’s shareholders, managers, etc. Someone who wants to hide assets can form a non-transparent shell company in these states & use the shell company to open a bank account at a financial institution in an offshore tax haven. During a bank or asset search, this bank account may be especially difficult to detect because it is titled in the name of the non-transparent shell company.

Another Capital Asset, Inc. wepage asserts:

We use encrypted software, mobile memory sticks, and we back up any information in countries outside the U.S.  There are no paper statements, no debit cards, and all of the accounts are in the names of an IBC [International Business Corporation], just exactly the way Microsoft does it. We imitate in every detail what multinational companies do when they open an offshore account.  Most of our clients use a nominee- they are not officers, directors, or shareholders of the IBC. However, as signatory or beneficial owner of an offshore account, you need to understand there are heavy tax reporting requirements.

Image: jesadaphorn/Shutterstock.com

Copyright 2012-2016 Fred L. Abrams