Money Laundering

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Following a money trail as part of your asset searchI. DURING YOUR ASSET SEARCH LOOK FOR A MONEY TRAIL

There is always a money trail you can follow during your asset search. This is true no matter how your adversary hides assets.  Even if your adversary maintains a secret offshore bank account there is a money trail. The money trail at the offshore bank would consist of: account opening documents; monthly account statements; and bank signature cards.  Therefore, as part of your asset search you would seek these documents from the offshore bank.  You might do this by employing a letter rogatory or a compelled consent form.

II. MONEY TRAILS WITH MANY ELEMENTS

Perhaps most important to remember is that a money trail can involve many elements. The suspected money trail in the criminal case of USA v. Tully Lovisa et. al., is thought to include: nominees (i.e. intermediaries/straw persons); shell companies; and post office boxes in New York and the Netherlands. Prosecutors may claim Mr. Tully Lovisa &/or his co-conspirators used these elements to launder the illicit profits of an advance fee scheme.  The July 10, 2018 indictment in the case alleges Mr. Lovisa &/or his co-conspirators mailed phony prize notices to hundreds of thousands of victims.

The notices supposedly indicated the victims won cash prizes ranging from tens of thousands to millions of dollars.  The notices allegedly said the victims could collect the prizes by mailing a $20 or $25 processing fee to the post office boxes in New York or the Netherlands.  According to the indictment, Mr. Lovisa &/or his co-conspirators never paid valuable prizes to the victims and the supposed scheme generated  more than $30 million in illicit profits from the processing fees paid by the victims.

III. THE 2010 LAWSUIT AGAINST MR. LOVISA

In 2010 the Federal Trade Commission sued Mr. Lovisa for an alleged advance fee scam similar to the alleged advance fee scam described at Mr. Lovisa’s July 10, 2018 indictment. The 2010 lawsuit was settled via a stipulation filed with the Court on 4/19/12.  A review of the 2010 lawsuit reveals the suspected money trail in that case could have consisted of shell companies and post office boxes. The 2010 lawsuit claimed Mr. Lovisa had sent personalized mailers in violation of 15 U.S.C. §45 (a), which prohibits unfair or deceptive acts. One of these alleged mailers mentioned by the 2010 lawsuit, is reproduced below.

First image: pickbiz/Shutterstock.com

Copyright 2018 Fred L. Abrams

An Asset Search For Tax FraudA scheme to hide assets may start out with the primary goal of placing assets beyond your reach. The scheme may then develop the secondary goal of hiding assets from tax authorities/committing a tax fraud. To increase your chances of a successful asset search, you should therefore look for indicators of tax fraud. A good list of the indicators is published by the IRS at IRM 25.1.2.3, Fraud Handbook – Indicators of Fraud.

Just one indicator listed at the Fraud Handbook is “deposits into bank accounts under nominee names.” This means secretly depositing money into bank accounts titled in the names of  intermediaries (i.e. nominees).  “Red Flags & The IRS Search For Attorney Memmott’s Assets” analyzes the tax fraud case against the now-disbarred California attorney Orion Memmott. Prosecutors accused Mr. Memmott of hiding assets from the IRS by titling real estate & bank accounts in the names of nominees.

In USA v. Beverely, Docket No 17−cr−60093, prosecutors similarly accused Timothy J. Beverley of hiding assets from the IRS.  Prosecutors claimed Mr. Beverley of Pompano Beach, Florida failed to report to the IRS $2.2 million he allegedly stole from his employer.  Page 4 ¶14 (b) of Mr. Beverley’s superseding indictment said Mr. Beverley hid his stolen money in bank accounts titled in the names of nominees. Mr. Beverley supposedly committed the theft & alleged tax fraud while on supervised release from his earlier money laundering case.  In the laundering case, prosecutors accused Mr. Beverley of hiding the illicit proceeds of a bank fraud. Mr. Beverley apparently hid the proceeds of the bank fraud by washing them through bank accounts belonging to the NASCAR team Mr. Beverley once owned—Tyler Jet Motorsports.

Copyright 2018 Fred L. Abrams

In the criminal case against Robert Bandfield, the IRS & SEC searched for assets laundered offshore. These assets were the proceeds of stock pump & dump schemes.  The illicit proceeds of the pump & dump schemes were more than $250 million. The $250 million was believed to be hidden by money laundering carried out by Mr. Robert Bandfield & his co-conspirators.

According to a 2/6/17 press release, Mr. Bandfield was the “architect of [an] offshore fraud haven.” Mr. Bandfield seems to have owned 2 nominee incorporation services, which established & sold shell companies. The 2 nominee incorporation services formed offshore shell companies believed to have helped launder the $250 million.

Red flags Mr. Bandfield & his co-conspirators allegedly hid the $250 million included their suspected misuse of:

After Mr. Bandfield’s 9/5/14 indictment by a grand jury sitting in Brooklyn, N.Y., Mr. Bandfiled was arrested on 9/9/14 at the airport in Miami, Florida. The indictment charged Mr. Bandfield & others with conspiracy to commit securities fraud; conspiracy to defraud the U.S. via tax fraud; & money laundering conspiracy. On 2/6/17 Mr. Bandfield was sentenced to 72 months imprisonment.  The sentence was based on Mr. Bandfield’s guilty plea to the money laundering conspiracy charged by his second superseding indictment available here.

Image: Olga Sabarova/Shutterstock.com

Copyright 2017 Fred L. Abrams

A person hiding assets from you could park their money in an offshore bank account & hire an intermediary to be the account’s bank signatory. One website offers this “Bank Nominee Signatories Service” for a cost of about $1000 per year.  This person could additionally title their real estate in the name of shell companies. A person can also hide assets by converting cash into portable valuable commodities like diamonds and smuggle the diamonds offshore.

This kind of scheme is outlined by “Detecting Hidden Assets By Following A Money Trail.”  “Searching For Assets Hidden By Lawyers” examines another way to hide assets.  It explains a person might hide their cash by laundering it through a lawyer. In these kinds of schemes the person hides his/her true beneficial ownership of assets. You may be able to detect  true beneficial ownership & search for assets 3 ways:

I. Collecting human intelligence/informants’ tips is sometimes the only practical way to detect a sophisticated scheme to hide assets.  If there is an informant with knowledge of the hidden assets, the informant might be willing to tip you about the assets.  This informant may be a disgruntled: employee; family member; paramour; etc.

II. Private investigators may help you identify informants & gather leads about hidden assets through surveillance or other surreptitious means. Some investigators however, search for assets illegally or provide spurious information. Ex-Toronto private investigator Elaine White & ex-police detective Cullen Johnson for example, ran an “asset locator” business. They supplied their clients with bogus bank account information.

III. Legal tools can be critically important in searching for assets.  “How Does A Divorcing Spouse Recover Assets Concealed In A Swiss Bank Account?” gives a glimpse of the kinds of tools generally available in many countries across the globe. Among other things, the tools can include serving letters rogatory upon foreign bank witnesses & tipping prosecutors or other governmental authorities.

Image: Farizum Amrod Saad/Shutterstock.com

 Copyright 2017 Fred L. Abrams

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

Money Laundering Typology Post

One way to learn how to search for hidden assets is to read “A Laundry List For An Asset Search.” Another way is to study money laundering typologies. Money laundering typologies are used by law enforcement and regulators to develop countermeasures against emerging criminal trends. “100 Cases from the Egmont Group” contains a wide variety of money laundering typologies.¹ Although “100 Cases from the Egmont Group” arises from data collected during the 1990s, it is still relevant today. “100 Cases from the Egmont Group” describes these methods for concealing assets:

  • Concealment within existing business structures
  • Misuse of legitimate businesses
  • Use of false identities, documents or straw men
  • Exploiting international jurisdictional issues
  • Use of anonymous asset types

Below is the money laundering typology “Example B: Limited edition jewellery.”² It is about an agent who participated in an auction for a diamond necklace. The agent tried to conceal monies from suspected frauds by using multiple jurisdictions; offshore bank accounts & a portable valuable commodity—a diamond necklace.

Example B Limited editon jewellery

¹”100 Cases From The Egmont Group” courtesy of The Egmont Group of Financial Intelligence Units.

²“Example B: Limited edition jewellery” courtesy of The Guernsey Financial Services Commission.

First Image: studiostoks/Shutterstock.com

Copyright 2017 Fred L. Abrams

Back to Back Loan Image

Money Laundering, Marital Assets & Divorce was my first Asset Search Blog post highlighting back-to-back loans (i.e. a fully collateralized loan in which the borrower and the lender are one and the same). That post mentioned a divorcing husband who hid millions from his wife and the IRS, by claiming he was indebted because of an arm’s length business loan. The husband’s claim about owing money to an arm’s length lender was false, as the loan was back-to-back. In other words, the husband hid millions by secretly arranging to be both the borrower and lender of the loan; and by pretending to be in debt.

Federal prosecutors similarly discussed back–to-back loans in their tax fraud case against Los Angeles, California businessman Masud Sarshar. According to prosecutors, Mr. Sarshar hid tens of millions of dollars from the IRS by using two back-to-back loans and offshore bank accounts in Israel and Hong Kong. Mr. Sarshar supposedly maintained the offshore bank accounts in the names of intermediaries (i.e. nominees). Prosecutors also said an Israeli banker delivered offshore bank account statements to Mr. Sarshar by smuggling them into the U.S. on a USB drive hidden in a necklace.

To avoid being flagged as an American by the offshore banks, Mr. Sarshar is believed to have used Israeli and Iranian passports to open his offshore accounts. When Mr. Sarshar mentioned his offshore accounts during conversations with his Israeli bankers, Mr. Sarshar also reportedly spoke in code. On 3/13/17 Mr. Sarshar was sentenced to 24 months in prison for conspiring to defraud the U.S. and for seeking to impair/impede administration of internal revenue laws. Mr. Sarshar’s 8/1/16 plea agreement can be read here.

Image: Ionut Catalin Parvu/Shutterstock.com

Copyright 2017 Fred L. Abrams

computer research

Full-blown asset searches rely on computer-based research; private investigators; and human intelligence from depositions, witness interviews and informant’s tips. Computer-based research is also the cornerstone of most kinds of asset searches. This research may track the ownership of assets ranging from valuable automobiles to patents or other intellectual property.

“An Asset Search Via Data Brokers Like IDI, Inc.” is one of my posts about computer-based research. “A Low-Cost Asset Search” meanwhile, discusses how you can try to find hidden assets by using computer-based research.¹ “A Low-Cost Asset Search” even mentions some asset searches you can perform for free. Another free computer-based research tool is the Corporationwiki website.

Corporationwiki identifies relationships between people and corporations. It and other computer-based research might help you spot intermediaries, (i.e. nominees), suspected of hiding a beneficial owner’s assets. Prosecutors in Warsaw, Poland used Corporationwiki in at least one case in 2009, to try to detect assets hidden through an alleged money laundering scheme. This particular case & the prosecutor’s use of Corporationwiki, is mentioned at page 2 of the request for legal assistance/letter rogatory available below.

(CLICK ON THE IMAGE TO READ THE LETTER ROGATORY)

2009 Letter Rogatory Poland

¹“A Low-Cost Asset Search” contains material courtesy of  L.L. Jones, Concealing Assets In Bankruptcy: What Are the Consequences And How Do Trustees Find The Assets?, Association of the Bar of the City of New York (Presentation: April 24, 2008).

First image: courtesy of Flickr (Licensed) by Jennie

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

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