Hidden Money

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Photo Of A Money TrailWhen vast sums of money are hidden in a bank account there is usually an electronic trace or other kind of money trail.  A skilled investigator may help detect the money trail, as suggested by my 2010 post Secreting Assets Without A Border Trace.  The post quoted “Roger” a former foreign intelligence officer who was working as a private investigator.  At the post, Roger discussed some asset concealment methods and investigative techniques for following a money trail.  As these concealment methods and investigative techniques are still being used, the relevant part of Secreting Assets Without A Border Trace is featured below.  This is also the 4th post in my series about what private investigators can and cannot do legally when searching for assets.¹

As a consequence of his U.S.-based Ponzi scheme, Bill the investment adviser was indicted for alleged violations of 18 U.S.C. § 1956 (money laundering); 26 U.S.C. § 7201 (tax fraud); 18 U.S.C. §§ 1341 and 2 (mail fraud); 15 U.S.C. §§ 78j(b) and 78ff(a) (securities fraud); and 15 U.S.C. §§ 80b-6 and 80b-17 (investment adviser fraud). The critical question now was: what had happened to the $35 million dollars lost by the damaged investors in Bill’s Ponzi scheme? After Bill insisted he dissipated this $35 million by gambling and on cocaine, prostitutes, etc., federal agents interdicted $1 million U.S. dollars hidden in a bedroom wall at Bill’s California home.

Among the other items the agents seized during their search of Bill’s home, were Bill’s passport, desktop computer, cell phone, bank statements and jewelry store receipts.  Some of these items revealed that Bill laundered $7.5 million of the damaged investors’ money through a nominee bank account opened in the name of a Nevada shell company.

Bill had eventually withdrawn this $7.5 million to purchase diamonds and other portable valuable commodities at Nevada jewelry stores He next traveled as an airline passenger to Zurich, Switzerland, according to his passport. To date, the only recovery from Bill’s Ponzi scheme has been the $1 million once hidden in his bedroom wall. Given all of the above, “Roger” explained how investigators could try to determine whether Bill had secreted any of the $35 million in a foreign bank account:
Continue Reading Private Investigators: Detecting Hidden Assets By Following A Money Trail

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The Rembrandt Shown Above Can Be Hidden Easily.  It Was Recovered By U.S. Troops During WWII in Munich, Germany.

Divorcing spouses, debtors, determined criminals or others may hide and secretly transfer art assets and cultural heritage property. The article below was written by Leila Amineddoleh Partner at Tarter, Krinsky & Drogin LLC where she specializes in art law. Ms. Amineddoleh teaches International Art & Cultural Heritage Law at Fordham University School of Law and St. John’s University School of Law. Her article explains that art and cultural heritage property can be used to conceal assets in a variety of ways.  The article covers these topics:

I.   Forgeries, Illicit Imports & Smuggling
II.  Valuating Art In A Divorce
III. Art Transfers By Terrorists & Other Criminals
IV. Suing Over Art

LEGAL CONSIDERATIONS FOR RECOVERING ART ASSETS & CULTURAL HERITAGE PROPERTY

By Leila Amineddoleh, Esq.

Not only are art and antiquities beautiful, fascinating, and rich in cultural significance, but they can be great investments. The growing interest in the art world has introduced a new wave of investment products; entire companies have developed in the field of art investment consultation, using art as an alternative investment type. Some economists even claim that art is more secure than stocks, citing the fact that art outperforms the stock market.[1] Since the Second World War, groups of wealthy investors purchased artwork during unstable economic periods. And as with other asset classes, art and antiquities can be used as vehicles for hiding assets.

I.  FORGERIES, ILLICIT IMPORTS & SMUGGLING

One of the most frustrating aspects of art and antiquities collecting relates to valuation. There is a vast disparity between values for authentic versus forged objects. For example, where a convincing copy of a Jackson Pollock may sell for a few thousand dollars, an authentic work by the Abstract expressionist painter may sell for up to $50 million. And as the past couple decades have demonstrated, it can be difficult to ascertain which works are by the hand of a purported artist versus a talented art forger. (This difficulty recently became headline news as art investors sued the well-known Knoedler Gallery for selling multi-million dollar forgeries.[2])

These same complications arise with antiquities. It is not only difficult to determine whether an artifact is authentic, but it can be challenging to determine its origin. Smugglers bring antiquities into the US, but lie about the origin of the objects. Illicit importing has been committed in ingenious ways: some smugglers will cover an authentic antiquity in a plastic coating to make the object appear to be a cheap tourist toy; once the object has passed through customs, the plastic coating is removed and the valuable cultural object is revealed.[3] Other smugglers don’t even disguise the works, they simply claim that ancient artifacts are modern-day trinkets bought while abroad. Another way that people misrepresent objects relates to the find spot (the location where an artifact was excavated). By lying about the object’s origin, smugglers conceal valuable information regarding the work’s creation, greatly affecting the value and legality of a work. (For example, objects from Syria have been recently scrutinized for fear that looted artifacts enter the US and fuel the market for illicit objects. So smugglers now claim that these looted works are from other areas of the Middle East, thereby avoiding detection by U.S. Immigration and Customs Enforcement.)
Continue Reading Recovering Art Assets & Cultural Heritage Property

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