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Low cost asset search photoMy last 2 posts discussed asset recovery tools such as recognizing red flags & using compelled consent forms.  Assets might also be recovered as a consequence of researching public records.  This 18th post in the “Divorce & Hidden Money” series focuses on how one can perform a low-cost asset search by digging through public records/databases:¹

I.  Real Estate Searches

Some government databases provide free real property searches, like New York City’s Automated City Register System (“ACRIS”).  ACRIS supplies searches about real property owners in New York City by a party’s name, parcel identifiers (such as borough, block and lot numbers), etc.

II.  Lawsuits

A divorcing spouse’s assets held in the form of personal injury or other type of legal claim, (if any), can sometimes be uncovered via court databases.  Although limited to New York State courts, eCourts is a free database.  After signing up for an access code, PACER enables one to conduct searches of federal courts nationwide.

III.  Corporate & U.C.C. Searches

Free government websites including New York’s http://www.dos.state.ny.us/corps/ may provide ownership or other useful information about duly licensed New York businesses/corporations.

IV.  United States Patent & Trademark Office

Patents and trademarks can be researched for free at http://www.uspto.gov/patft/.

V.  Comprehensive Searches

LexisNexis offers “SmartLinx” which is a fee-based service for attorneys, government authorities, etc.  It can be used to search domestic public records.  Records regarding real property, motor vehicles, telephone numbers, can often be accessed.

 

¹The instant post 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).

Image courtesy of Flickr (Licensed) by Images Money

Copyright 2008-2017 Fred L. Abrams

Photo Of A Red Flag

If a divorcing spouse hides marital assets there usually are red flags.  Red flags are also often found when assets have been hidden by tax fraudsters, Ponzi schemers, bankruptcy debtors, money launderers & narco-traffickers.  This 16th post in the “Divorce & Hidden Money ” series examines the red flags.

Red flags indicating assets might have been hidden are listed at my post “Locating Hidden Assets By Spotting The Red Flags.”  The list describes 18 red flags including the use of: multiple jurisdictions, sham trusts, bulk-cash smuggling, etc.  In addition to the 18 on the list, below are 6 more red flags of asset concealment.  The 6 red flags or money laundering indicators were published by the Egmont Group, an international organization which fights money laundering and terrorist financing.¹   Even though some of them discuss criminals or laundering, the 6 red flags might be used to help locate assets hidden by a divorcing spouse:

Laundering Indicators:Red Flags

¹Six Money Laundering Indicators Courtesy Of The Egmont Group, “100 Cases From The Egmont Group”, p. 172, Appendix A: Most Frequently Observed Indicators.

First Image courtesy of Flickr (Licensed https://creativecommons.org/licenses/by-sa/2.0/) by DBduo Photography/Daniel R. Blume

Copyright 2015 Fred L. Abrams

This post describes a case in which illicit drug monies were concealed offshore and laundered via a Cayman Island bank account.  The case is also about tax fraud; identity theft and a murder.   I published the post earlier at the Asset Search Blog and have used the post as a handout at many of my speaking engagements.  It is an example of how financial fraudsters can operate.  Some of the facts below have been changed/sanitized for privacy reasons.  The following occurred over a four month period during 2002:

TAX FRAUD

As part of his tax fraud, “Mr. Wallace” contacted a Cayman Island bank by mail in order to open a personal account with it.  He mailed account opening documents to it which included a copy of his U.S. passport and also supplied the names of references. According to these documents, Mr. Wallace lived in Miami and was a real estate developer.  Based upon all of the foregoing, the Cayman Island bank opened Mr. Wallace’s personal account with a “O” balance.  Just six days later however, bank “X” in Panama wired $6.3 million to Mr. Wallace’s Cayman account without any mention of the remitter.

Mr. Wallace then went on a business trip to Central America for several months; so he rented his Miami home to “Chuck”.  Although Mr. Wallace hadn’t known at the time, Chuck was a small-time crook.  In fact, soon after Chuck took possession of Mr. Wallace’s home, Chuck started stealing Mr. Wallace’s mail.  One of the letters Chuck had stolen was written by “Bob”, a personal banker from the Cayman Island bank where Mr. Wallace maintained his account.  Bob had written to Mr. Wallace about a lucrative investment opportunity.

THE IDENTITY THEFT & MURDER

Surmising from Bob’s letter that Mr. Wallace had a sizable bank account, Chuck wrote to Bob pretending to be Mr. Wallace.  As the sanitized copy of Chuck’s First Letter partly demonstrates, Chuck had assumed Mr. Wallace’s identity in that particular letter by forging Mr. Wallace’s signature.  To comfort Bob, Chuck’s First Letter had also asked Bob for the minimum balance required to keep Mr. Wallace’s account open. Chuck’s “softening up” letter further suggested to Bob that Mr. Wallace’s funds might soon be needed “at very short notice” for an alleged real estate deal in Mexico.  In the sanitized copy of Chuck’s Second Letter, Chuck again pretended to be Mr. Wallace as he wrote to Bob at the Cayman Island bank.  In his Second Letter, Chuck directed the wire transfer of Mr. Wallace’s funds from the Cayman Island bank to Chuck’s own bank account in Mexico. Continue Reading A Case of Tax Fraud, Identity Theft & Murder

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

Trust Photo

My post “Four Asset Concealment Tools” says that assets can be hidden by fraudulently transferring them to a trust.  This 15th post in the “Divorce & Hidden Money” series concentrates on the evidence a divorcing spouse might try to collect if marital assets are concealed by a trust.

A spouse can use the pretrial discovery phase of a divorce to gather evidence about any marital assets concealed by a trust.  Based on this evidence, the divorcing spouse may be able to credibly argue that assets at the trust are marital property subject to distribution by the Court.  A divorcing spouse might also claim the trust was void if the trust was “self-settled” (i.e. the grantor and beneficiary were found to be one and the same).  Under certain circumstances a divorcing spouse can additionally assert the trust veil should be pierced because the trust wrongly concealed assets &/or facilitated fraudulent transfers.  See Babitt v. Vebeliunas (In re Vebeliunas), 332 F.3d 85, 91 (2d Cir. 2003) (discussing New York cases where right to pierce trust veil was preserved).

Below is a demand for documents, (i.e. a production request) and demand for answers to interrogatories employed by the Chapter 7 trustee in the Seattle, Washington Michael Mastro bankruptcy case.  The Chapter 7 trustee made these demands suspecting Mr. Mastro hid assets at trusts.  Mr. Mastro had formed LCY Trust under Belizean law and it had a Belizean trustee, called “Compass Trust Corporation.”  The Chapter 7 trustee’s demands sought information regarding the location of assets, transfer of assets, banking records, etc.  They give a glimpse of the kind of evidence a divorcing spouse should collect if a trust is thought to conceal marital assets.

(To Access The Discovery Demands Click On Each Image)

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First image courtesy of Flickr (Licensed) by Syed Ikhwan

Copyright 2015 Fred L. Abrams

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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

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This is the 3rd post in my private investigator series discussing what private investigators can and cannot do legally when searching for assets.  My January 6th post mentions that on behalf of clients, former attorney Mary Nolan and her private investigator conspired to place illegal wiretaps in cars.  Their clients were reportedly never accused of committing the wiretapping crimes.  The instant post discusses clients and/or lawyers who are accused of conspiring to commit crimes with the private investigators they use.

In USA v. Moser, private investigators Nathan Moser and Peter Siragusa were indicted along with their client Carlo Pacileo, the alleged director of security at ViSalus Inc.   The Jauary 7, 2015 indictment in their case alleges Mr. Pacileo, Mr. Moser and Mr. Siragusa conspired with computer hackers to illegally gather e-mails and Skype information.  They allegedly sought this information because it might have helped Mr. Pacileo’s employer ViSalus Inc., in a civil lawsuit it had filed.

The 3rd paragraph of the New York Times article “Private Eye Is Said to Face Prosecution in a Hacking” refers to the January 7th indictment in the Moser case.  The New York Times article also discussed the situation of lawyers engaging private investigators.  The article says there was speculation that lawyers sometimes hire private investigators to hack into e-mail accounts to learn about witnesses or evidence.  The article essentially says that in order to have “plausible deniability” there was evidence “some lawyers hire private investigators to obtain information for cases without delving too deeply into how it is gathered.“

Would this strategy prevent the prosecution of a lawyer or client willing to take the risk of having something illegal done?  As the New York Times article “Investigator Admits Guilt in Hiring of a Hacker” explains, authorities are concerned about lawyers gathering information through hackers.  Furthermore, 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.”¹   Stated differently, a prosecutor is not likely to decline a prosecution if he or she thinks an individual hired a private investigator to commit a crime.

¹USAM 9-27.220

First image courtesy of Flickr (Licensed) by Dennis Skley

Second image courtesy of Flickr (Licensed) by Tsahi Levent-Levi

Copyright 2015 Fred L. Abrams