shutterstock_226179493Many Asset Search Blog articles emphasize the role intermediaries, (i.e. “nominees”), can have in asset concealment schemes.  This 24th post in the “Divorce & Hidden Money” series reminds you that your divorcing spouse might utilize nominees to hide assets from you.

During your divorce you may need to pursue an asset search in order to determine whether your spouse concealed marital assets from you.  Asset searches sometimes include: hiring private investigators; employing forensic accountants; seeking a copy of your spouse’s passport to help look for any assets parked offshore; tracking trademarks, copyrights or other intellectual property your spouse may own; etc.

Your particular circumstances should dictate whether you pursue an asset search in these ways.  Whatever steps you take in your asset search, it is important to always look for any nominees your spouse may have used to hide marital assets.  As discussed by “Nominees & Hidden Assets,” your spouse may rely on a nominee to open a secret foreign bank account.  It is also true that one can hide or transfer almost anything through one’s nominees.

An illustration of this is the Court’s decision in  Dempster v. Overview Equities, Inc., 2004 slip op. 01149 ; 4 A.D.3d 495; 773 N.Y.S.2d 71 (2d Dept 2004).  According to the decision, the divorcing husband fraudulently transferred title to his residence to his Delaware company.  The company was the husband’s nominee.  The husband established the company and transferred his residence to it right before the asset valuation hearing in his divorce.  The transfer was the husband’s apparent attempt to prevent the residence from being partly distributed to his wife during the divorce.

Image: PathDoc/Shutterstock.com

Copyright 2015 Fred L. Abrams

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By serving a subpoena on any lawyers who helped your spouse hide assets, you can collect legal bills sent to your spouse & other documents such as those related to real estate deals.

This is the 23rd post in the “Divorce & Hidden Money” series:

What can you do if your spouse employs a lawyer in the U.S. to hide cash or other marital assets from you?  To help your spouse hide cash from you, some lawyers will place the cash in a financial account where you &/or your spouse’s identity is never given to the financial institution.  Besides maintaining this kind of secret bank account for your spouse, some lawyers may hide marital assets by titling the assets in the name of a shell company; transferring the assets offshore; etc.  “Bearer Shares & An Asset Search” reveals how a Panamanian lawyer helped a divorcing husband conceal millions of dollars from a divorcing wife.¹ The October 2013 article “Lawyer disbarred for helping client hide funds from wife in divorce, then spent the money” is about a New Jersey lawyer accused of conspiring with a divorcing husband to hide $11,000 dollars from a divorcing wife.  The Court’s 45-page decision disbarring the New Jersey lawyer is available here.

If a spouse hires a lawyer to conceal marital assets from you, during your divorce you could pursue an asset search by serving this lawyer with a subpoena duces tecum.  As a consequence of the subpoena, the lawyer may provide you with documents that have clues leading you to the hidden marital assets.  The subpoena should request copies of legal bills the lawyer sent to your spouse. See e.g Colonial Gas Co. v. Aetna Cas. & Sur. Co., 144 F.R.D. 600, 607 (D.Mass.1992) (billing records subject to discovery/nature of services not disclosed).  Although documents revealing the nature of the legal services provided are generally subject to the attorney-client privilege, some of these documents are not privileged.

To cite just one example, if a lawyer was involved in real estate deals for your spouse, many documents underlying the deals may be disclosable.  See In re Grand Jury Subpoena (Mr. S.), 662 F.3d 65, 71-72 (1st Cir. 2011) (closing statements, sales contracts, records of payment revealing source of funds, etc. are all subject to discovery).  If your spouse is using relatives, friends or other intermediaries to transfer marital assets out of your reach, your subpoena might also seek documents reflecting the source of legal fees paid to the lawyer and the identities of the attorney’s clients.  Cf.  Hanover Ins. Co. v. Rapo & Jepsen Ins. Servs., Inc., 449 Mass. 609, 619, 870 N.E.2d 1105, 1113-4 (2007) (legal fees paid & the identities of lawyer’s clients not protected by attorney-client privilege).

¹The fact pattern supplied by “Bearer Shares & An Asset Search” was sanitized & changed for privacy reasons.

Image: Ragma Images/Shutterstock.com

Copyright 2015 Fred L. Abrams

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This 22nd post in the “Divorce & Hidden Money” series says an asset search of your spouse should include inspecting your spouse’s passport:

Did your spouse hide assets from you during your divorce by opening a secret offshore bank account or by placing valuables like diamonds in a safe deposit box offshore? Did your spouse secretly purchase real estate, art or other assets offshore?  If you believe your spouse hid assets from you in these ways, inspect your spouse’s passport.  You can request to see it during the discovery phase of your divorce.  Your spouse’s passport might reveal offshore tax havens or other places your spouse visited to hide assets.  Based on information at the passport, you may even be able to narrow your asset search of your spouse.

What if your spouse alleges he/she does not currently possess a passport?  If your spouse possesses a U.S. passport & is lying, I recommend you make two requests for passport records to the U.S. State Department (hereinafter “the Department”)— one under the Privacy Act of 1974 and the other as a Freedom of Information Act Request (hereinafter “FOIA Request”).  The best way to do this is by submitting 2 consent forms to the Department, signed by your spouse.  If your spouse refuses to sign the 2 forms and your divorce is still pending before the court, you could file a motion asking the judge to direct your spouse to sign the forms.

The 1st consent form is the Department’s “Form DS-4240, Certification of Identity”.  The DS-4240 form & instructions explaining how to file it with the Department, are available here.  The 2nd consent form is the Department’s “Authorization For The Release Of Records To Another Individual.”  An example of this 2nd form is available here with instructions about filing it as a FOIA Request.  By filing these forms with the Department, you can get copies of your spouse’s past passport applications; issued passports; etc.  Although these passport records will not have border stamps/border crossing markings on them, you will be able to demonstrate your spouse lied about possessing a U.S. passport.

Image: Courtesy of Flickr (Licensed) by Mike Dierken

Forms & filing instructions: Courtesy of U.S. Department of State

Copyright 2015-2019 Fred Abrams

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Iran & Qatar sit on the largest natural gas field in the world.  As a consequence of this, Iran may have a discreet & shared income with Qatar.

Part 1 &/or Part 2 of this post described recent efforts by the judgment creditors in Havlish v. bin Laden to collect on their judgment against Iran for more than $1.3 billion dollars.  The judgment creditors sought to attach monies allegedly connected to a deal to purchase Airbus aircraft for Iran’s Mahan Air.  The judgment creditors also issued subpoenas to U.S. Treasury’s Office of Foreign Assets Control.  The subpoenas were about assets related to Iran and various terrorist groups.

How else might the judgment creditors proceed with their asset search & collect on their judgment against Iran?  Although the April 2nd preliminary nuclear accord with Iran lifts many economic sanctions against it, Iran had tried to skirt the sanctions throughout the years.  By recognizing ways Iran may have skirted the sanctions, the judgment creditors might detect money trails.   The judgment creditors would hopefully then be able to follow the money trails by using letters rogatory and other asset recovery tools.  This in turn could bring the judgment creditors closer to collecting on their billion-dollar-plus judgment against Iran.

Discreet Income From The World’s Largest Natural Gas Field?

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Qatar sits on the largest natural gas field in the world but it also goes under Iran. This is the South Pars/North Dome natural gas field.  Wikipedia says “[a]ccording to the International Energy Agency (IEA), the field holds an estimated 1,800 trillion cubic feet (51 trillion cubic metres) of in-situ natural gas and some 50 billion barrels (7.9 billion cubic metres) of natural gas condensates.”  Iran reportedly allowed Qatar to develop its gas extraction and marketing but only with Iran’s permission.  Furthermore, nobody checks what Qatar does with its income.

It is therefore possible that Iran circumvented economic sanctions via a quiet and discreet shared income from Qatar.  As discussed last week at a Reuters article, Iran announced it will soon open up 2 additional gas operations in the South Pars Field.  The Tasnim News Agency reported that the 2 new gas operations, (i.e. refineries), should bring Iran $6 billion in annual revenue.

Iran’s Cross-Border Elements In Dubai

Iran’s particular location at the Persian Gulf also helped Iran to evade the sanctions.  In geographical terms, the Persian Gulf is dominated by Iran similar, say, to the U.S. dominating the Carribbean and Gulf of Mexico.  Iran’s geographical location made it easy for Iran to maintain cross-border elements in places like Dubai.  Iran has more companies in Dubai than anywhere else in the world excepting Iran itself.  Dubai additionally has a large expatriate population of Iranian businessmen.  So, similar to Austria during the Cold War, Dubai is a little country busy importing.  As reported at “Iran smuggles in $1 billion of bank notes to skirt sanctions” Iran also engaged in bulk cash smuggling through cash couriers & front companies in Dubai and other locations in or near the Persian Gulf.

First Image: Claudionegri79/Shutterstock.com

Second Image: Courtesy of Wikipedia (Licensed) by Alireza824

Copyright 2015-2018 Fred L. Abrams

shutterstock_115001698Part 1 of this post discussed the judgment creditors in Havlish v. bin Laden who are are trying to interdict assets owned by Iran.  Part 1 explained the judgment creditors sought to attach monies reportedly earmarked for the purchase of Airbus aircraft. Before seeking the attachment of the monies, the judgment creditors subpoenaed confidential information kept at U.S. Treasury’s Office of Foreign Assets Control (“OFAC”).  This confidential information could help the judgment creditors search for bank accounts or other assets Iran beneficially owns.

OFAC agreed to release the confidential information after the judgment creditors served OFAC with subpoenas & after the Court issued protective orders restricting the judgment creditors’ use of the information.  Via their subpoena dated March 2, 2015, the judgment creditors first requested confidential information about assets in the U.S. blocked at financial institutions because of economic sanctions against Iran.  This subpoena requested that OFAC provide the judgment creditors with the following:

[a]s of March 2, 2015, a list of all financial institutions holding assets in the United States that are blocked due to a nexus with the government of the Islamic Republic of Iran, its political subdivisions, and its agencies and instrumentalities, and the total such assets reported by each such institution, rounded to the nearest $100,000.

The judgment creditors next broadened their asset search by serving a May 17, 2015 subpoena on OFAC.  The May 17th subpoena requested seven categories of information from OFAC regarding: Iran’s financial accounts which had been frozen in Switzerland; financial accounts of Iran’s Mahan Air; financial accounts maintained by the Hezbollah, al Qaeda and Taliban terrorist groups; financial accounts at 3 banks in China; etc.  Click here to view the May 17th subpoena.

Image: Jim Vallee/Shutterstock.com

Copyright 2015-2018 Fred L. Abrams

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Iran’s Mahan Air is thought to have used intermediaries to conceal ownership & prospective purchases of Airbus aircraft similar to the one shown above.

The Court found Iran was behind the 9/11 terrorist attacks and Iran is therefore liable for the money damages set forth by the October 2012 Order issued at In Re Terrorist Attacks On September 11, 2001, U.S. District Court, SDNY, Index No. 03-MDL-1570. The October Order also applies to Havlish v. bin Laden, U.S. District Court, SDNY, Index No. 03-cv-9848.  Pursuant to the October Order, as of March 2, 2015 Iran owed the judgment creditors from Havlish $1,362,277,844 plus interest.  These judgment creditors seem to be trying to collect part of this sum from the suspected intermediaries of Iran’s Mahan Air.  The suspected intermediaries, (i.e. nominees), include Bahar Safwa General Trading; Ali Abdullah Alhay; and possibly others.

Some of Mahan Air’s suspected nominees may have supplied Wilmington Trust Company of Delaware, with monies earmarked for the purchase of Airbus aircraft.  In an effort to attach any such monies, the judgment creditors served their writ of execution on Wilmington Trust Company.  In pursuance of their search for Iran’s assets, the judgment creditors also served Wilmington Trust Company with a June 26, 15 subpoena demanding documents about alleged efforts to purchase Airbus aircraft.  On July 17th, Wilmington Trust Company objected to the subpoena.  In a July 20th answer to the writ of execution, Wilmington Trust Company indicated it did not possess monies subject to the writ.  The July 20th answer also asserted that Delaware law codified at 10 Del. C. § 3502(b), prevented the attachment of monies directed by the writ.

Meanwhile, Mahan Air has been the subject of sanction programs since 2011, as it is linked to state-sponsored terrorism by Iran’s Islamic Revolutionary Guard Corps-Qods Force & the Hezbollah terrorist group.  Under U.S. Treasury Office of Foreign Asset Control (“OFAC”) sanctions, Mahan Air was “blocked” from purchasing Airbus aircraft which had engines with U.S-made parts; U.S. persons were prohibited from new financial dealings with Mahan Air; etc.  The first 15 minutes of Episode 5 of the SanctionLaw podcast series mentions Mahan Air & the OFAC sanctions.  The Podcast features Sam Cutler who is a policy advisor at Ferrari & Associates, PC.  It also features Michael Burton, a partner at Jacobson Burton Kelley PLLC.   The podcast raises these questions about Mahan Air and its suspected nominees:

  • Had Airbus aircraft owned by Mahan Air been leased to or flown by American Airlines, as discussed by the podcast at 2:17; 2:22; 11:40-11:45?
  • Were U.S.-based companies reckless in business transactions now thought to be related to Mahan Air, given the apparent red flags discussed by the podcast at 8:30-9:10?

Copyright 2015-2018 Fred L. Abrams
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This bronze Chola statue was reportedly smuggled into the U.S & sold in 2006 with a false provenance.

A July 1, 2015 press release outlines the recovery of a Chola-period bronze statue, by U.S. law enforcement officials.   The press release mentions the 11-12th century Chola statue was stolen & smuggled into the U.S.  The statue was eventually sold with a false provenance to a collector of Asian antiquities.  A false provenance conceals the true chain of title of art or cultural heritage property.  Some therefore use a false provenance to hide their ownership of art or cultural heritage property.  These owners may also rely on third-parties to help hide art assets.

For example, during an asset search of a judgment debtor, a private investigator decided to investigate the judgment debtor’s lawyer.  The investigator suspected the lawyer was helping the judgment debtor hide assets.  The investigator then did “trash pulls” at the lawyer’s home.  During one of many trash pulls, the investigator discovered an envelope bearing the name of a climate-controlled art storage facility.  This discovery led to the interdiction of a valuable painting the judgment debtor hid at the storage facility with the help of the lawyer.

Furthermore, valuable artwork can be hidden by washing it in a money laundering circuit.  Two articles raising this issue are Dr. Doom Warns of Art-World Money Laundering in Davos & Chinese snap up fine art for use in laundering schemes.  Vaults at foreign banks & freeports are also sometimes used to conceal artwork/cultural heritage property.   Other common concealment methods are described in detail at the March 16, 2015 Asset Search Blog post regarding recovering art assets & cultural heritage property.  The post was written by Leila Aminedoleh, Esq. & covers these talking points:

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

Image: Courtesy of U.S. Department of Homeland Security/U.S. Immigration & Customs Enforcement

Copyright 2015 Fred L. Abrams

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If someone is hiding assets, you might detect the assets by reviewing: corporate records; patents & trademarks; court papers; U.C.C. filings; real estate documents; or through additional basic research.  “A Low-Cost Asset Search” gives information about how to perform basic research.  Although basic research can lead to a good result, it may not help you identify assets hidden through a complex concealment scheme.

The complex schemes might be facilitated by gatekeepers such as lawyers, accountants, officers, directors, etc.  The following details how a lawyer concealed assets with his organized crime client “Mr. M”, in a money laundering scheme:¹

Complex concealment schemes can among other things, also involve fraudulent asset transfers to third-parties & the placement of assets offshore.  To try to locate assets concealed by such schemes, it may be necessary for you to pursue your legal remedies & retain private investigators.  Legal remedies range from civil proceedings brought to attach bank accounts to employing criminal law tools. “An Asset Search In Geneva” lists these remedies for locating & recovering assets hidden at Swiss banks.  These remedies are not just limited to seeking assets at Swiss banks, as similar remedies are available in many countries around the world.

In addition to the use of legal remedies, private investigators can have an important role in asset search or recovery cases.  An investigator in one asset recovery case is described at the article “Private Investigators: An Asset Search By Pursuing Interviews & Tips.”  It highlights an effort to gather human intelligence about a divorcing husband thought to have hidden marital assets and committed tax fraud.  More articles featuring private investigators are: “An Asset Search In Switzerland”, “Following The Money Trail In Zurich” & “Fighting Financial Fraud At UK Banks.”

¹Case 08012, Courtesy of The Egmont Group

First Image: Davi Sales Batista/Shutterstock.com

Copyright 2015 Fred L. Abrams

 The TV shanking of fictional lawyer Dan Wachsberger at Breaking Bad’s 54th episode.  In the 53rd episode, Wachsberger hid monies in safety deposit boxes & became a DEA informant.

shutterstock_213220519“Say My Name” is the 53rd episode of AMC’s Breaking Bad series & it showed fictional lawyer Dan Wachsberger hiding illicit drug monies in at least nine safety deposit boxes for his clients.  After DEA Special Agents catch Wachsberger hiding monies, he became an informant for the DEA & was held in prison.  In the 54th episode “Gliding Over All”, drug kingpin Walter White then hires a gang of white supremacists to kill Wachsberger along with 9 others held in 3 separate prisons.

How many lawyers in the real world hide their clients’ assets like fictional lawyer Wachsberger had done?  I do not know the answer but speculate it is a relatively small number of lawyers.  Meanwhile, some beneficial owners including divorcing spouses; tax cheats; judgment debtors; narcotraffickers; etc. undoubtedly employ lawyers to hide assets.  These beneficial owners hire their lawyers to act as intermediaries/nominees.  The beneficial owners may then transfer their monies into nominee bank accounts titled in the name of the lawyers or titled in the name of shell companies formed by the lawyers.  When these transfers occur there can be red flags indicating the lawyers were involved.  You can sometimes spot the red flags during: an asset search of a person or business entity; the pretrial discovery phase of a litigation; or other times.

There can also be a variety of red flags indicating that a lawyer might have been employed to wrongfully conceal assets.  For example, one divorcing wife supplied me with copies of letters she found in the marital residence she shared with her husband. The letters were from an offshore lawyer to the husband and they revealed the husband possessed a secret offshore bank account worth millions of dollars.  In yet another ultra-high net worth divorce, the red flags were an informant’s tips.  According to these tips & the corroborating evidence I collected, the divorcing husband and his lawyer laundered assets through offshore bank accounts & other elements located across the globe.

Video: Courtesy of AMC Network Entertainment, LLC

Breaking Bag Image: CarmenKarin/Shutterstock.com

Copyright 2015 Fred L. Abrams

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“UPDATE 1-Two more Swiss banks strike deals with U.S. over tax evasion” reported that the U.S. Department of Justice, (“the DOJ”), reached its 22nd agreement with Swiss banks.  A DOJ press release mentions the agreements were pursuant to the Swiss Bank Program.  The Swiss Bank Program “provides a path for Swiss banks to resolve potential criminal [tax] liabilities in the United States,” the press release says.  This program seems to be part of the DOJ’s Offshore Compliance Initiative.  Among other things, the Offshore Compliance Initiative focuses on prosecuting offshore bankers who are suspected of helping tax evaders hide assets from the IRS.  The Offshore Compliance Initiative webpage explains there are open investigations into numerous offshore banks located in Switzerland and elsewhere.  The webpage also says as part of the program, criminal charges were filed between 2008 and 2013 against “over 30 banking professionals.”

I.  RELEVANT U.S. CRIMINAL LAWS

The law most frequently used to criminally charge tax evaders in the U.S. is 26 U.S.C. § 7201 (Attempt to evade or defeat tax).   An offshore banker who opens a bank account to help a tax evader hide assets from the IRS, might be charged with conspiracy to commit a tax fraud.  See 18 U.S.C. § 371 (Conspiracy to commit offense or defraud United States).  If prosecutors believe a foreign banker promoted a fraudulent tax scheme, they might also charge him/her with mail fraud (18 U.S.C. § 1341); wire fraud (18 U.S.C. §1343); or other crimes.  Except for mail & wire fraud, the penalties for each offense can be a maximum sentence of five years.  In the case of mail &/or wire fraud, the maximum sentence in most situations may be twenty years.  A judge can direct that a sentence of imprisonment be served concurrently or consecutively.  There can also be large fines, restitution and/or asset forfeiture.

II.  INITIATING A PROSECUTION

Federal prosecutors follow:

“the principle that, ordinarily, the attorney for the government should initiate or recommend Federal prosecution if he/she believes that the person’s conduct constitutes a Federal offense and that the admissible evidence probably will be sufficient to obtain and sustain a conviction.” U.S. Dep’t of Justice, United States Attorneys’ Manual 9-27.220 §B Comment (1997).

Furthermore, “when deciding whether to prosecute, the government attorney need not have in hand all the evidence upon which he/she intends to rely at trial: it is sufficient that he/she have a reasonable belief that such evidence will be available and admissible at the time of trial.” Id.  Therefore, an offshore banker should expect to be prosecuted if federal prosecutors believe they can gather legally sufficient evidence demonstrating the offshore banker violated U.S. criminal laws.

Image: Olivier Le Moal/Shutterstock.com

Copyright 2015 Fred L. Abrams