“Retired bus drivers lose everything in Ponzi scheme” discussed securities fraudster Thomas Mitchell who just pleaded guilty to violating 18 U.S.C. § 1341. (Mail Fraud).  Mr. Mitchell asserted at page 8 of his plea agreement that he induced over 150 victims to invest their retirement monies in a Ponzi scheme:

(For Hi-Res Click On the Plea Agreement)

According to his plea agreement and / or criminal information, Mr. Mitchell facilitated the Ponzi scheme by misusing: promissory notes; a trust; his financial investment firm; and a Nevada company established in 1998.  Even though Mr. Mitchell has agreed to pay $7.1 to $9 million in restitution to the victims of his scheme, it is not yet known whether this will actually happen.

Governmental or other authorities might therefore still have to search for Mr. Mitchell’s assets, for these victims to have any real chance at an asset recovery.  Such a search would conceivably rely on subpoenas, computer forensics, etc., as described by “Interdicting A Ponzi Schemer’s Assets“.  “Secreting Assets Without A Border Trace” additionally explained that an investigation of a Ponzi schemer can “…concentrate on foreign hotels, payment information, telephone records and on credit card expenses for details of physical movements and life style.”

Copyright 2011 Fred L. Abrams

This "Asset Search News Roundup" discusses a letter rogatory from Italian prosecutors and the recent U.S. fines issued in the case involving India’s Satyam Computer Services.

  • A letter rogatory filed April 1st in federal court by the U.S. Attorney, reveals that Italian prosecutors are investigating the Delaware office of a company called "BACKER & MCKENZIE".  The letter rogatory seems to examine whether two residents of Brescia, Italy, might have fraudulently conveyed the proceeds of a phony invoicing scheme into a "BACKER & MCKENZIE" Swiss financial account.

Copyright 2011 Fred L. Abrams

The following fact pattern has been changed for privacy reasons:

Robert received dunning letters and phone calls from debt collectors because he supposedly owed more than $50,000 dollars in credit card debt.  The debt collectors alleged that various financial institutions had issued Robert seven credit cards many years ago.  These debt collectors too claimed that Robert paid just the monthly minimum on the credit cards for several years, until his recent default.

When Robert tried explaining he had no knowledge of the credit cards, the debt collectors & financial institutions ignored him.  Although Robert had been the victim of an identity theft, the financial institutions damaged Robert’s good credit score by submitting negative references about the alleged debt to TransUnion, Experian and Equifax.  Despite all of the foregoing, Robert ultimately had his good credit score restored and the financial institutions relinquished their claims against him.  This partly occurred because Robert followed the advice of the Federal Trade Commission at its “Tools For Victims” identity theft webpage.

Robert had also hired an attorney who conducted a fraud investigation.  The attorney wrote letters to the financial institutions demanding the production of “account opening” and other relevant credit card documents.  A financial institution responding to these letters supplied a telemarketing application connected to Robert’s case.  The telemarketing application suggested that the identity thief applied for one of the seven credit cards by impersonating Robert on the phone.  As a highlighted and redacted copy of this application shows, the identity thief might have also used a post office box to aid the scheme-

Click On The Telemarketing Application For Full View

Copyright 2011 Fred L. Abrams

“Recognizing Hidden Assets, The Red Flags” explained that bankruptcy trustees, tax authorities, financial intelligence units, etc. search for concealed assets by looking for red flags of fraud or other illicit acts.  Lawsuits brought by investors damaged by Ponzi schemes also may focus on red flags, as described at “Florida Court Unlikely To Find Wachovia, Mastercard Civilly Liable For Missing Ponzi Scheme.”

Among other things, the lawsuits filed by the damaged investors argue that a financial institution negligently or recklessly permitted Ponzi schemers to launder Ponzi proceeds through a particular financial account.  These lawsuits typically seek money damages by arguing that a financial institution ignored money laundering red flags in violation of the Bank Secrecy Act.  The lawsuits assert this even though such claims are routinely dismissed by the Court.

Madoff Trustee Irving Picard similarly discusses red flags at paragraphs 213, 249, 253, 305 of his December 5, 2010 Amended Complaint against HSBC.  Unlike the above-mentioned lawsuits brought primarily under the Bank Secrecy Act, Trustee Picard’s Amended Complaint relies on both bankruptcy, securities laws and New York’s fraudulent conveyance law, to recover alleged Ponzi proceeds.  Counts 20-24 of the Amended Complaint meanwhile, assert common law claims and the Amended Complaint also accuses HSBC of “burying their heads in the sand“.  To document ways HSBC was allegedly related to Madoff’s Ponzi scheme, the Amended Complaint additionally relies on several link charts, including this one:


(Click Link Chart To Enlarge)

Edited  4/18/2015

Copyright 2011-2015 Fred L. Abrams

Asset search indicia, blocking assets under new Libyan sanctions programs & recovering an 18th century cultural artifact:

  1. "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy" reviews measures beneficial owners may take to secrete assets.  It mentions fraudulent asset transfers, offshore bank accounts and additional elements that often have roles in asset concealment schemes.

  2. President Obama’s February 25th executive order and a February 21st Swiss statute available in German, block some of Colonel Muammar Gaddafi’s assets.  These new Libyan sanction programs and ones from the United Kingdom, the United Nations, the European Union and Spain are described by: US Treasury blocks record $30bn of Libya assets; and / or Swiss ban financial transfers to Gaddafi clan; and / or Gaddafi family asset probe has only just begun.

  3. At a February 23rd transfer ceremony in Ohio, an 18th-century cultural artifact was recovered from The Toledo Museum of Art by the German royal von Bruehl family.  The artifact known as the Nereid Sweetmeat Stand is worth over $1 million dollars and is pictured below.

    After the Nereid Sweetmeat Stand was stolen in Germany during WW II, a European art dealer sold it to a New York art gallery in 1955.  The Sweetmeat Stand was next purchased by The Toledo Museum of Art in 1956.  It was returned to the the von Bruehl family on February 23rd pursuant to a settlement agreement between The Toledo Museum and U.S. authorities.

    4. Photo: Immigration and Customs Enforcement

(Edited March 23, 2011)

Copyright 2011 Fred L. Abrams

Nazi-looted art, bankruptcy estate assets, marital assets and almost anything else can conceivably be secretly transferred by common methods.  Just a few of the common methods include the use of intermediaries (i.e. nominees), forgeries, portable valuable commodities and multiple jurisdictions to fraudulently transfer or hide assets.

By studying these kinds of methods, the continuing legal education program “Following The Money Trails From Marital Assets To Nazi-Looted Art“, reveals how individuals and corporations may conceal assets from governmental authorities, creditors, bankruptcy trustees and others.  This three hour program about money trails and tracking assets will be presented on Long Island at the Suffolk County Bar Association on May 24, 2011 and then at the New York County Lawyers’ Association in NYC, June 21, 2011.  It discusses some of the ways one might detect and possibly recover assets concealed in cases involving:

  1. debtors in bankruptcy;
  2. divorcing spouses;
  3. tax cheats;
  4. Ponzi schemers;
  5. post-judgment debtors;
  6. suspected kleptocrats;
  7. Nazi-looted art; etc.

As more fully set forth below, the program faculty are: an attorney who has located tens of millions of dollars hidden in offshore tax havens; a litigator who handled the first Nazi-era art case ever to be tried in federal court; a highly regarded bankruptcy law practitioner with over 28 years experience; and a forensic scientist / former police detective who investigated several high profile matters including the forgery and homicide case of New York socialite Irene Silverman.

FACULTY & OTHER INFORMATION

FRED L. ABRAMS, ESQ.

As the program chair of “Following The Money Trails From Marital Assets To Nazi-Looted Art”, Fred L. Abrams explains how assets can be secretly transferred through money laundering and other ways.  He highlights typical methods used to locate / interdict assets across the globe and describes what can happen if one illegally snoops as part of an “asset search” to uncover an asset concealment scheme.

Practicing in the asset recovery areas of financial intelligence, financial fraud investigations and forced collection proceedings, Mr. Abrams has been cited by Forbes Magazine, The New York Times, FoxBusiness News, MoneyLaundering.com, etc.  He has located tens of millions of dollars hidden in offshore tax havens and filed legal proceedings in Zurich, Geneva, Tel Aviv, Amsterdam and Puerto Rico to seek discovery from foreign bank witnesses.  A member of the New York bar since 1990, Mr. Abrams handled a wide variety of legal matters in which assets were hidden, such as RICO, money laundering, identity theft and tax fraud.

As a guest of the New York County Lawyers’ Association, the Queens County Bar Association, the Brooklyn Bar Association, the Nassau County Bar Association and the Suffolk County Bar Association, he presented continuing legal education programs regarding the interdiction of assets during matrimonial and / or bankruptcy and / or other kinds of cases.

At the Association of the Bar of the City of New York, the Massachusetts’ Chapter of the American Academy of Matrimonial Lawyers and the 8th Annual OffshoreAlert Financial Due Diligence Conference, Mr. Abrams also lectured about how assets may be fraudulently concealed both domestically and abroad.

RAYMOND DOWD ESQ., Partner at  Dunnington Bartholow & Miller LLP

Raymond Dowd is a seasoned litigator representing corporations and individuals in federal and state courts and arbitrations.  He is the author of Copyright Litigation Handbook (West 5th Ed. 2010).  Mr. Dowd litigated Bakalar v. Vavra, Index No. 05-CV-3037 (S.D.N.Y.) the first Nazi-era art case ever to be tried in federal court.  In “Following The Money Trails From Marital Assets To Nazi-Looted Art“, Mr. Dowd discusses the methods by which Nazi-looted art was transferred to museums and private collections.  Through an in-depth case study, he demonstrates how to spot “red flags” to detect looted art and how to marshal evidence and analyze potential legal remedies to recover Nazi-looted art.

Mr. Dowd has lectured widely on Nazi-era art restitution cases including at Yad Vashem, Jerusalem Israel; the Jewish Museum, Berlin Germany; The Prague Conference on Holocaust-Era Assets, Czech Republic; the New York State Bar Association and the Association of the Bar of the City of New York.  Mr. Dowd represents the heirs of Austrian-Jewish cabaret artist Fritz Grunbaum in Bakalar v. Vavra.

Bakalar, Mr. Grunbaum’s heirs were sued by a Massachusetts collector seeking to clear the title to the Egon Schiele drawing “Seated Woman With Bent Left Leg (Torso)”.  The heirs claim that before passing through Switzerland, the Schiele drawing was looted by the Nazis from Mr. Grunbaum’s apartment in Vienna while he was imprisoned in the Dachau concentration camp, where he died penniless in 1941.

LORI LAPIN JONES, ESQ., Member of Lori Lapin Jones PLLC

During “Following The Money Trails From Marital Assets To Nazi-Looted Art“, Lori Lapin Jones examines the concealment of assets in bankruptcy and the ramifications. She also analyzes how bankruptcy trustees locate concealed assets.

Lori Lapin Jones of Lori Lapin Jones PLLC has been practicing bankruptcy law for over 28 years.  She began her career as a staff attorney in the Manhattan District Counsel’s Office of the Internal Revenue Service following which she served as a law clerk to the Honorable Tina L. Brozman, United States Bankruptcy Judge for the Southern District of New York.  After her clerkship, Jones spent seventeen years in private practice at the New York City law firms of Dewey Ballantine and Luskin, Stern & Eisler LLP. In 2005, Jones formed Lori Lapin Jones PLLC.

Jones has represented a wide variety of parties in out of court restructurings and in large and small Chapter 11 and Chapter 7 cases in courts around the country.  She has represented debtor in possession lenders, secured and unsecured creditors, creditors’ committees, indenture trustees, landlords, equipment lessors, purchasers of assets, trustees, purchasers and sellers of claims and defendants in adversary proceedings.

Currently, Jones serves as a Chapter 7 Trustee on the panel of Trustees for the Eastern District of New York and as a Court appointed mediator in the Southern and Eastern Districts of New York.  She has served in a variety of fiduciary roles in Chapter 11 cases including as operating trustee, examiner, post-confirmation trustee and board member. Jones also represents parties in a wide variety of bankruptcy related matters.

Jones co-authored a bimonthly column on bankruptcy law for The New York Law Journal (2005-2008) and co-authored Creditors’ Committee Manual (Warren Gorham & Lamont 1992).  Jones serves on the strategic planning committee and the rules committee for the United States Bankruptcy Court for the Eastern District of New York.  She serves as a frequent lecturer in the area of bankruptcy law and has taught legal research and writing at New York Law School.

In 2009, Jones was selected by Long Island Business News as one of the top 50 most influential women in business on Long Island.  She is the Vice Chairwoman of the Board of Directors for the Organization for Autism Research.

RICHARD T. PICCIOCHI, Member of Access Forensic Group, LLC

At “Following The Money Trails From Marital Assets To Nazi-Looted Art“, forensic scientist / questioned document examiner Richard T. Picciochi talks about his investigations which have included the high-profile forgery and homicide case of Manhattan socialite Irene Silverman.  By discussing these kinds of cases, Mr. Picciochi reveals how forgeries / spurious documents may be used to fraudulently transfer and conceal assets.

He explains that in such cases, identifying handwriting, machine printing, paper, writing instruments and inks may establish “genuineness”.  During this program Mr. Picciochi also mentions analyzing the physical or chemical properties of documents and discusses searching for latent evidence like indented writing impressions, faded writing, watermarks or fingerprints.

Mr. Picciochi is a former NYPD detective and a forensic document examiner since 1982.  He learned questioned document examination through on-the-job apprenticeship at the NYPD and via training by the FBI and Secret Service.  Some of the cases Mr. Picciochi participated in while at the NYPD were: the assassination of Rabbi Meir Kahane (the founder of the JDL); the terrorist attack on the World Trade Center in 1993; the abduction of Harvey Weinstein, who was buried alive for almost two weeks; and the criminal trial of the Zodiac serial killer in NYC.  He has testified as a forensic document examiner in numerous court proceedings, taught about forensic document examination at Hofstra University and lectured to trainees, police investigators, prosecutors and defense attorneys.

AGENDA*

5:30 PM-6:00 PM           Registration

6:00 PM-6:10 PM          Introduction
Fred L. Abrams

6:10 PM-6:45 PM           Asset Search & Recovery Basics

*Methods Used To Secretly Transfer Assets.
*Financial Intelligence & Interdicting Assets

Across The Globe.
*Asset Concealment Red Flags.
*A Case Of Illegal Snooping?
Fred L. Abrams

6:45 PM-7:20 PM           Nazi-Looted Art Cases

*The Transfer Of Looted Art To Museums &

Private Collections.
*Detecting Nazi-Looted Art, The Red Flags.
*Legal Remedies.
Raymond Dowd

7:20 PM-7:35 PM           Break

7:35 PM-8:10 PM           Bankruptcy Fraud & Trustee Investigations

*Concealing Assets In Bankruptcy Cases

And The Consequences Of Concealment.

*Trustee’s Investigation: Scope & Methods.

Lori Lapin Jones
8:10 PM-8:45 PM            Fighting Fraudulent Asset Transfers By

Using ForensicScience

*Transferring Assets Through False

Documents / Forgery.
*Examining Handwriting & Documents To Establish

Genuineness Or Spuriousness.
Richard T. Picciochi

8:45 PM-9:00 PM            Questions & Answers

*Information Subject To Change

(Last Edited 3 / 23 / 11)

Copyright 2011 Fred L. Abrams

Today’s “Asset Search News Roundup” focuses on two publications by the anti-money laundering bellwether, the Financial Action Task Force.  This roundup too mentions a warning from the FinCEN financial intelligence unit about the potential movement of assets out of Egypt.

  • Given the political unrest in Egypt, politically exposed persons from there pose an even greater money laundering risk.  In its February 16, 2011 advisory, FinCEN, (a.k.a. the Financial Crimes Enforcement Network), characterized this laundering risk as “the potential increased movement of assets“.  The February 16th advisory was especially directed toward U.S. financial institutions:

(Click On The Image Above To Enlarge)

Copyright 2011 Fred L. Abrams

According to his wife’s September 28, 2009 affidavit, Dennis Hecker had stopped financially supporting her and was hiding assets.  Dennis Hecker’s wife therefore asked Judge Jay M. Quam of Hennepin County Minnesota, to impute income to Mr. Hecker and to issue an interim order of spousal maintenance and child support.  As more fully set forth at "Has Auto Magnate Dennis Hecker Hidden His Assets?", Mr. Hecker was also accused of hiding assets during his chapter 7 bankruptcy case.

Since Mr. Hecker had concealed assets during his bankruptcy, (and defrauded his financial lenders), he was finally convicted of bankruptcy fraud and conspiracy to commit wire fraud.  Although Mr. Hecker was sentenced on February 11th to serve ten years in prison for these crimes, the question remains: Will Mr. Hecker’s chapter 7 trustee be able to make a meaningful recovery for the creditors of Mr. Hecker’s bankruptcy estate?

While Mr. Hecker is believed to have possessed at bare minimum $18.5 million in assets, his chapter 7 trustee so far reportedly interdicted only about $3.8 million.  This trustee is however hoping to detect the source of Mr. Hecker’s funds by seeking court-ordered discovery.  As a January 21, 2011 court filing demonstrates, the trustee is trying to gather financial intelligence including copies of legal bills, checks, wire transfers, etc.: 

(Click On The Image To Read The January 21st Court Filing)

Copyright 2011 Fred L. Abrams

Money mules and the former Tunisian president’s assets are covered by this “Asset Search News Roundup”:

  1. The Washington Post and FDIC previously outlined how some money launderers pretended to be employers to basically induce their so-called “employees” to wire transfer illicit funds as straw men.  These straw men commonly called money mules, were also just mentioned at a February 3rd article.  The February 3rd article reveals that the financial accounts of the money mule “employees” were used by the launderers to transfer illicit funds from phishing or other frauds.
  2. As a suspected kleptocrat, Tunisia’s Former President Zine al-Abidine Ben Ali could be the target of global asset forfeiture.  A Reuters’ video reports that Mr. Ben Ali’s family is thought to have possibly diverted $66 million in gold from Tunisia to Switzerland.  These corruption allegations may have caused the Swiss freeze of Mr. Ben Ali’s assets via a January 19th “Ordinance on Measures Against Certain Individuals from Tunisia“.  The January 19th ordinance is characterized at one press release as a “rapid precautionary freeze of funds” in anticipation of possible criminal proceedings.  The BBC meanwhile says that the European Union has implemented its own measure to freeze the assets of 46 allies and relatives of Mr. Ben Ali.  According to Bloomberg.com, the European Union measure could have already led to a freeze of Ben Ali’s financial accounts and other assets in Frankfurt, Germany.

Copyright 2011 Fred L. Abrams

The January 21st "Asset Search News Roundup" talks about tracking Nazi-looted art; a proposed rule for detecting bank deposits by foreigners; and the Haitian money trail.

  1. The Swiss have made available on the Internet the "FDHA/FDFA Report on the State of Work on looted Art during the National Socialist era, in particular, on the subject of provenance research".  It analyzes whether Swiss museums are conducting provenance research to identify any Holocaust-era art that might have earlier been looted by the Nazis.  The report indicates that some museums say they lack funds to perform such research which helps track Nazi-looted art.

  2. On January 7th the IRS proposed a rule called "Guidance on Reporting Interest Paid to Nonresident Aliens".  The rule would require U.S. banks to disclose to the IRS, interest on deposits paid to nonresident aliens / foreigners.  This type of financial intelligence may be used by the IRS to detect illicit assets sometimes parked in U.S. banks by foreigners.  It could too help the IRS supply information to tax authorities across the globe, consistent with tax information exchange agreements.

  3. As explained by "Recovering Assets In Switzerland Hidden By Dictators", the Swiss sought to pass their Restitution Of Illicit Assets Act ("RIAA"), after releasing assets of Mobutu Sese Seko and Haiti’s Jean-Claude "Baby Doc" Duvalier.  CNN reports at "Duvalier’s millions in Switzerland likely to return to Haiti", that the RIAA could soon be applied to recover $5.7 million which may be corruption proceeds possibly belonging to Baby Doc.  CNN has additionally published its "Haitian money trail" video concerning aid monies that might have gone missing in public corruption schemes:

 (Last Edited January 24, 2011)

Video: Courtesy of CNN

Copyright 2011 Fred L. Abrams