Domestic tax authorities, financial Intelligence units, bankruptcy trustees and banks rely on red flags to detect illicit assets, as mentioned by “Recognizing Hidden Assets, The Red Flags.” Recognizing Hidden Assets, The Red Flags notes that a broad range of litigants may uncover hidden assets by spotting the red flags.  These red flags are listed at “Asset Search Indicia For Divorce, Debt Collection and Bankruptcy”, which I initially published during 2007:

Asset Search Indicia For Divorce,
Debt Collection and Bankruptcy

People don’t typically think of the common money laundering indicia when searching for hidden assets the subject of a: divorce; bankruptcy; commercial collection or other legal proceeding.  Such indicia can be effectively used as part of an asset search / recovery effort even in situations where there is no money laundering.  In the United States, the indicia or red flags of money laundering are described at Appendix “F” of the Bank Secrecy Act / Anti-Money Laundering Examination Manual.  They are also described in Money Laundering Prevention, A Money Services Business Guide, at pages 16-24.
Money laundering indicia are sometimes used outside of the United States.  For example, India’s Financial Intelligence Unit relies on “broad categories of reason for suspicion”; the Belgian Financial Intelligence Unit (“CTIF-CFI”) uses Money Laundering Indicators; the Swiss Federal Banking Commission has the Schedule: Indicators of Money Laundering ; and the Asia / Pacific Group on Money Laundering also uses such a list.  Recognizing the following money laundering indicia may however, lead to the discovery of assets concealed in a divorce, commercial collection, bankruptcy or other legal case:

Copyright 2013 Fred L. Abrams

Hiding assets via jewelry or other portable valuable commodities and former Turks & Caicos premier Michael Misick:

  1. “On the trail of Michael Mastro: how to flee the law when you are 87” is about Michael & Linda Mastro.  These two might have secretly transferred bankruptcy estate assets by shipping a Range Rover full of jewelry, (i.e. portable valuable commodities), to Lisbon.  The post “Secreting Assets Without A Border Trace” similarly describes the fact pattern of a Ponzi schemer who had conceivably concealed diamonds by traveling as an airline passenger from the U.S. to Zurich, Switzerland.
  2. The April 21, 2012 Asset Search News Roundup states that former Turks & Caicos premier Michael Misick was the subject of an arrest warrant, reportedly over alleged corruption and supposed money laundering.  This past June 30th, the Turks & Caicos Weekly News published “Mike Misick Fighting Extradition.”   It discusses Misick’s April 13, 2013 re-arrest in Brazil and the effort to extradite him to the Turks & Caicos Islands.

Copyright 2013 Fred L. Abrams

The article “Wirapol Sukphol, Jet-Set Buddhist Monk Shocks Thailand With Religious Scandal” discusses a Buddhist monk in Thailand suspected of misappropriating charitable donations to support his life of luxury.  This article indicates that the now former monk Wirapol Sukphol, may have collected charitable donations by swindling donors, to whom he reportedly once said: ‘Don’t worry, no need to rush. I’ll stay here until the last of you gets to donate.’

Sukphol is thought to have accumulated assets worth an estimated $32 million.  He is additionally suspected of narco-trafficking, statutory rape, vehicular manslaughter and hiding assets by money laundering.  The article also features a video showing Sukphol traveling by private jet while seated alongside his Louis Vuitton carry-on:

http://www.youtube.com/watch?v=sANFgwoJeic

The 33-year old Sukphol is believed to have laundered assets by using nominee bank accounts maintained in the names of his relatives; buying luxury automobiles; and by purchasing valuable real property.  The Bangkok Post reports that Thailand’s financial intelligence unit, the Anti-Money Laundering Office, has frozen these kinds of assets apparently owned by Sukphol.  A Thai arrest warrant has been issued for Sukphol and the Bangkok Post states that Sukphol is believed to be staying at his U.S. residence.

Copyright 2013 Fred L. Abrams

The money laundering investigation at the Vatican Bank and options for U.S. taxpayers who have hidden their assets offshore:

Chart: The Internal Revenue Service

Copyright 2013 Fred L. Abrams

International asset recovery and suspected trade-based money laundering:

  1. As Britain a safe haven for plundered assets – experts stated, “successful international asset recovery is notoriously difficult because of the often complex web of financial transactions used to hide illegal sources of money, as well as a lack of cooperation between different countries…”  This article too cited the World Bank and UN Office of Drugs and Crime for the proposition that “[b]etween 1994 and 2009, only $5 billion of stolen assets were recovered globally — less than 2 percent of the lowest estimated amount stolen annually...”
  2. Four Columbian nationals, (one of whom is also an Israeli citizen), were indicted on July 9th, for their suspected involvement in a laundering circuit that washed illicit drug proceeds.  Three of the indicted four, were also separately named as Specially Designated Narcotics Traffickers under the Kingpin Act which has the effect of freezing any of their assets under U.S. jurisdiction.  In connection with the designation, U.S. authorities published a chart depicting trade-based money laundering reportedly carried out by way of offshore banks and companies:

(Click On The Chart To Enlarge) 

Link Chart: U.S. Treasury’s Office of Foreign Assets Control
Copyright 2013 Fred L. Abrams

 

Liberty Reserve’s red flags, a new Swiss bill and letters rogatory:

  1. “Liberty Reserve’s money laundering spotted in 2009” reports the Costa Rican Financial Intelligence Unit had investigated Liberty Reserve because of  red flags.  This article too mentions that the Financial Intelligence Unit had turned the Liberty Reserve investigation over to Costa Rican prosecutors.
  2. “Swiss government peels back bank secrecy rules” is about the Swiss bill, the Federal Act on Measures to Facilitate the Resolution of the Tax Dispute between Swiss Banks and the United States.  A May 29, 2013 Swiss Federal Council press release¹ discusses the bill.  The bill should ultimately help U.S. authorities identify Swiss bank customers pursuant to U.S.-Swiss double taxation agreements.
  3. Letters Rogatory, (a.k.a Judicial Assistance Requests), are sometimes needed in order to search for assets hidden offshore.  By employing a letter rogatory, evidence may be elicited from foreign bank witnesses.  The March 18, 2013 Order at In Re Application of Anton Stoeckl, U.S. District Court, S.D.N.Y., Index No. 12-cv-414, however, focuses on one letter rogatory the Court refused to execute.

¹May 29, 2013 press release courtesy of The Swiss Federal Administration.

Copyright 2013 Fred L. Abrams

U.S. prosecutors issued a press release yesterday announcing the extradition of former Guatemalan President Alfonso Portillo.  Mr. Portillo’s extradition to the United States was based on his alleged money laundering.

Yesterday, Mr. Portillo was also arraigned in federal court in Manhattan.  Although Mr. Portillo was remanded to the custody of the U.S. Marshal, the Court’s docket reveals that Mr. Portillo will be applying for bail within the next two weeks.

As outlined by a 12/1/2009 indictment, prosecutors accuse Mr. Portillo of participating in a public corruption scheme.  The Forfeiture Bill of Particulars filed by prosecutors, lists Mr. Portillo’s alleged illicit assets reportedly laundered during the scheme.

These assets consisted of funds supposedly washed through bank accounts in multiple jurisdictions, including New York, Miami, Paris, Luxembourg and Switzerland.  Pages 8-9 of an IRS Special Agent’s August 9, 2012 declaration, chart the suspected movement of the funds:

(Click Below To Read The Entire Declaration)

This Asset Search News Roundup discusses the Secrecy for Sale Project and the indictment of a NY attorney along with a Swiss banker:

I)  The US-based  International Consortium of Investigative Journalists, (“ICIJ”), analyzed more than 2.5 million documents in its Secrecy for Sale Project.  The Project began after the ICIJ received a computer hard drive in the mail, which contained the so-called leaked documents.  The Project’s goal was to uncover money launderers, tax cheats, kleptocrats and anyone else with assets hidden offshore.

The Project detected secret foreign bank accounts or other assets allegedly maintained by individuals ranging from American doctors and dentists to Bayartsogt Sangajav, the deputy speaker of Mongolia’s Parliament.  Among other things, the Project investigated a nominee incorporation service known as the Portcullis TrustNet Group.  According to the Project’s webpages, the overall investigation was carried out through link charts generated by NUIX computer software, data mining and “old fashioned shoe leather reporting“.

II)  Hiding Assets Through Gatekeepers With Accounts Across The Globe highlighted the problem of lawyers, accountants, etc., who orchestrated asset concealment schemes.  One such case may involve New York attorney Edgar Paltzer and Swiss banker Stefan Buck.  A press release asserts that the two supposedly employed Swiss bank accounts as part of a conspiracy to hide millions from the IRS.  They were indicted on April 16th in U.S.A. v. Paltzer, et  al., U.S. District Court, S.D.N.Y., Index No. 13-cr-00282.

Copyright 2013 Fred L. Abrams

“Swiss Banks, Smuggling & Other Asset Recovery Issues” will be presented from 6:00 PM to 9:00 PM on April 18, 2013 in New York City, at the New York County Lawyers’ Association.  Jack Blum, Esq., Advocate Robert Fiecther of the Des Gouttes & Partners law firm located in Geneva, Switzerland and Fred L. Abrams, Esq. are speaking at this program.  To attend, please contact the New York County Lawyers’ Association at telephone no. (212) 267-6646.  The program’s description and agenda are as follows:

In its 2007 National Money Laundering Strategy report, the U.S. government estimated that as much as $36 billion annually from just the former Soviet Union, was being secretly transferred through U.S. bank accounts and U.S. shell companies.  Besides using U.S. bank accounts and shell companies, kleptocrats, Ponzi schemers, divorcing spouses, etc., can of course conceal assets by parking them in Swiss or other foreign bank accounts.

This program analyzes how bank secrecy laws, multiple jurisdictions and smuggling are utilized in schemes to conceal vast sums of money. The program discusses mutual legal assistance treaty relief and using letters rogatory as asset recovery tools.  It mentions ways whistleblowers or other tipsters may help sniff out these monies and the difficulty lawyers face in dealing with whistleblowers either as clients or as tipsters.

One of the program’s speakers Jack Blum, Esq., will examine the IRS Whistleblower Program and the ethical concerns gatekeepers such as lawyers and accountants have in reporting illegal behavior in both the civil and criminal contexts.  Mr. Blum served as associate counsel, or assistant counsel, or special counsel to three U.S. Senate committees or subcommittees; and has been quoted by or mentioned in thousands of newspaper and magazine articles around the world.  He was also an expert witness for the U.S. Department of Justice and the Internal Revenue Service.

Mr. Blum’s select clients include Heinrich Kieber, who blew the whistle on customers with offshore accounts at Liechtenstein’s private bank, the LGT Group.  Mr. Kieber sold his whistleblowing tips to the German government, which used them to track suspected tax cheats.  Mr. Blum too represented former Julius Baer Swiss banker Rudolf Elmer, who supplied tips about suspected tax evaders to both WikiLeaks and the IRS.

Another one of the program’s speakers is Robert Fiechter, who is a partner at the Des Gouttes & Partners law firm of Geneva Switzerland, founded in 1834.  Advocate Fiechter also serves as a Deputy Judge at the Court of Justice of Geneva, an appellate court.  He too served as a substitute criminal judge and is the Deputy Secretary of the Supervisory Board of the Swiss Bank’s Code of Conduct.  During the program, Advocate Fiechter will describe the ins and outs of Swiss bank secrecy laws.  He will additionally review the legal remedies available for recovering assets hidden in Switzerland and elsewhere across the globe.

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