An "Asset Search With Letters Rogatory" advises that a domestic court may issue a letter rogatory (a.k.a. a "letter of request" or "legal assistance request"), to try to compel a foreign bank to disclose offshore records.

After issued by the domestic court, the letter rogatory would ordinarily be considered by governmental authorities located offshore where the foreign bank resides.

These offshore authorities might however, deem the letter rogatory unenforceable due to foreign bank secrecy laws.

This is what happened in the Brooklyn federal court case of Linde v. Arab Bank, PLC, Index No. 04-cv-02799, which is summarized here.

In Linde, the victims of terrorists sued Jordan’s leading financial institution Arab Bank, for supposedly aiding HAMAS and similar groups.

Since during pretrial discovery these victims sought some of Arab Bank’s offshore bank account records, Arab Bank filed an October 20, 2006 motion applying for letters rogatory from the Brooklyn federal court.

Arab Bank asserted that if letters rogatory were issued to Jordanian, Lebanese and Palestinian authorities, these authorities might permit Arab Bank to disclose bank account information under exceptions to various bank secrecy laws.

Bank secrecy law exceptions can help facilitate bank disclosure as discussed at "Foreign Bank Secrecy Laws & An Asset Search" and such exceptions exist in Jordan and elsewhere, for cases involving money laundering and / or terrorist financing.

Although the Brooklyn federal court granted Arab Bank’s motion seeking letters rogatory in Jordan, Lebanon and the Palestinian Territories, offshore governmental authorities ultimately refused to enforce the same.

The Jordanian Ministry of Justice for instance, specifically claimed in its correspondence that Arab Bank’s disclosure of bank account information would violate the bank secrecy provisions at Articles 72-75 of the Jordanian Banking Law:

(Click On The Image To Read A Translation)

Notwithstanding the above-mentioned correspondence, the Brooklyn federal court issued a July 12, 2010 order penalizing Arab Bank for its non-disclosure, as reported by "Arab Bank Sanctioned by Judge for Withholding Records in Terrorism Suits".

Lebanon’s Minister of Finance subsequently sent his own letter to the Brooklyn federal court complaining about the supposed "untenable position" Arab Bank is in because of Linde.

The Lebanese minister’s letter stated:

"That decision, which is dated July 12, 2010, violates principles of mutual respect for the laws of sovereign nations and puts a commercial enterprise in a untenable position of having to choose between breaking the laws of our Republic where it operates and being subject to severe sanctions in a courthouse in the United States for doing so."

Copyright 2010 Fred L. Abrams

Detecting crimes during a marital asset search and Mexico’s ubiquitous drug cartel violence, are examined by the September 26th "Asset Search News Roundup".

  1. Any crimes committed by a divorcing spouse hiding assets would conceivably be detected during a marital asset search. As the following articles reveal, a divorcing spouse hiding assets might possibly face a prosecution for tax fraud, money laundering, etc.:

Copyright 2010 Fred L. Abrams

In overruling the trial court’s September 2, 2008 opinion in Bakalar v. Vavra, Index No. 05-CV-3037 (S.D.N.Y.), the U.S. Court of Appeals determined that the heirs of Austrian-Jewish entertainer Fritz Grunbaum could proceed with their Holocaust-era art restitution claim.  According to the Court of Appeals’ September 2, 2010 decision, the trial court had wrongly applied Swiss law to the Bakalar case contrary to the proposition that "….in New York, a thief cannot pass good title." 

As "Searching For Nazi-Looted Art" and / or the New York Law Journal reported, Mr. Grunbaum’s heirs in Bakalar, are trying to recover Egon Schiele’s drawing "Seated Woman With Bent Left Leg (Torso)" from its current owner, Massachusetts sculptor David Bakalar.  According to Mr. Grunbaum’s heirs, this drawing had been looted by the Nazis from Mr. Grunbaum who perished at Dachau concentration camp.  These heirs also claimed in Bakalar, that provenance documents for the drawing had been fabricated.

One of these alleged fabricated documents was an April 24,1956 cash receipt purportedly signed by Mr. Grunbaum’s sister-in-law, Mathilde Lukacs.  The April 24th receipt arguably demonstrates that Ms. Lukacs had sold the drawing in 1956 to art dealer Eberhard Kornfeld at Galerie Gutekunst & Klipstein.  At their closing statement during the Bakalar trial, Mr. Grunbaum’s heirs asserted Ms. Lukacs questioned signature on the April 24th receipt was not genuine:

(April 24, 1956 Receipt With Blue Emphasis Added) 

Copyright 2010 Fred L. Abrams

The OECD’s latest paper on transparency in tax matters; a Bulgarian money laundering investigation; and Trevor Cook’s September 9th declaration; are featured at this "Asset Search News Roundup".

  1. The OECD website has published the September 3rd brief, "Promoting Transparency and Exchange of Information for Tax Purposes". The brief highlights the significance of cross-border cooperation as a countermeasure to abusive offshore tax avoidance schemes. It also says that the U.S. Senate estimates that the U.S. annually loses $1 billion in tax revenue because of tax cheats.

  2. On behalf of Bulgarian prosecutors, the Delaware U.S. Attorney’s Office successfully applied last month for the issuance of a letter rogatory. This particular letter rogatory from 2009, was permitted by the Court’s August 2010 Order, pursuant to 28 U.S.C. §1782 (Assistance to foreign and international tribunals and to litigants before such tribunals). Bulgarian prosecutors sought the letter rogatory because they are investigating suspected money laundering which could have a nexus to a witness residing in Delaware.

  3. At his September 9th declaration, securities fraudster / Ponzi schemer Trevor Cook listed foreign banks which could have been the transferees of some of his illicit proceeds. Individuals like Mr. Cook may also try to conceal their illicit proceeds via shell companies, nominees, high-risk geographical locations, multiple jurisdictions, etc. As part of the effort to recover Mr. Cook’s illicit proceeds at foreign banks, Mr. Cook executed "powers of attorney" including the one dated July 15, 2010 regarding Banco Nacional de Costa Rica:

    4. (For Hi-Res, Click On The Images)

Copyright 2010 Fred L. Abrams

An April 20, 2010 statement from the U.S. Attorney for the District of Arizona memorializes the U.S. Department of Justice strategy for fighting the scourge of Mexico’s drug cartels.  The April 20th statement indicates that the Department of Justice concentrates on: gathering intelligence about the cartels; targeting cartel leaders for extradition and seizing illicit assets; investigating the cartels’ U.S. crimes like gun and bulk cash smuggling; battling the cartels’ violent crimes and narco-trafficking in the U.S.; and prosecuting cartel members in federal court.

This statement additionally mentioned the Mérida Initiative, (referred to herein as "the Initiative"), which is funding equipment and training for Mexico to fight the cartels.  Some of the Initiative’s expenditures are listed at the excerpt below from Table 3, p. 25 of the "Merida Initiative: The United States Has Provided Counternarcotics and Anticrime Support but Needs Better Performance Measures":

(To Enlarge Click On The Excerpt)

 

Continue Reading Fighting Mexico’s Drug Cartels By Funding A Financial Intelligence Unit

Securities fraudster Trevor Cook, assets that might have been misappropriated from former East Germany, and over $2 million is interdicted at a U.S.-Mexican border crossing:

  • Ex-Minneapolis money manager and securities fraudster Trevor Cook was sentenced a week ago to serve twenty-five years in prison forviolating 18 U.S.C. §1341 (mail fraud) and 26 U.S.C. §7201 (tax fraud). As Mr. Cook’s sentencing memorandum reveals, he had earlier argued that the Court should impose just a twenty-year sentence.

  • Swiss banking documents that might memorialize the misappropriation of assets by parties and people’s organizations from former East Germany, were turned over to the German Embassy in Bern on July 14th. A July 15th media release issued by the Swiss Federal Department of Foreign Affairs reported that: "Germany had previously asked Switzerland for the documents in order to obtain further information about illegal financial movements before and after the fall of the Berlin Wall."

  • Federal agents for the Calexico downtown port of entry at the U.S.-Mexican border interdicted more than $2 million dollars which possibly belongs to narco-traffickers. The $2 million pictured below, was uncovered on August 8th during a vehicle inspection that included the use of a currency-firearm detector dog. A press release asserts that the $2 million had been hidden in luggage, a duffle bag and a plastic tub that were placed inside a vehicle.

Photo: U.S. Customs and Border Protection

Copyright 2010 Fred L. Abrams

"The Americans & Swiss Target The Kleptocrats" contains an article discussing the Swiss Restitution Of Illicit Assets Act ("RIAA"). This act could be passed next month by the Swiss Parliament. It would be used to freeze the proceeds of public corruption schemes which some dictators and other politically exposed persons might transfer from a foreign state into Swiss bank accounts.

Even if a foreign state fails to make a mutual legal assistance treaty request to forfeit any illicit assets owned by a politically exposed person, said assets could still be frozen pursuant to the act. As local Swiss counsel practicing in Zurich recently advised, "Basically the act provides that if, in the context of a failed state, the country in question can no longer make proper legal assistance requests, money seized in Switzerland from former rulers of that country can be returned anyway, if necessary by being given to some relief organisation."

The act’s sixth article creates a presumption that a politically exposed person possesses illicit assets based on the assertion that the same has sudden unexplained wealth and lives in a state believed to be corrupt:

Art. 6 Presumption of unlawful origin

The presumption that assets are of unlawful origin applies where

a. the wealth of the person who holds powers of disposal over the assets has been subject to an extraordinary increase that is connected with the exercise of a public office by the politically exposed person; and

b. the level of corruption in the country of origin or surrounding the politically exposed person in question during their term of office is or was acknowledged as high.

The presumption ceases to apply if it can be demonstrated that in all probability the assets were acquired by lawful means.The presumption is reversed if evidence of lawful acquisition of the assets is demonstrated with preponderant plausibility.

The act was proposed after Swiss authorities were forced to release assets which had belonged to former dictators such as Haiti’s Jean-Claude "Baby Doc" Duvalier andMobutu Sese Seko of Zaire, now known as the Democratic Republic of Congo. If passed, the act would supplement the existing laws below which can be asserted against dictators or other politically exposed persons suspected of hiding illicit assets in Switzerland.

  1. The Federal Law Pertaining to the Sharing of Confiscated Assets ("the Asset Sharing Act");
  2. The Swiss Federal Money Laundering Act, effective April 1, 1998;
  3. The Swiss Federal Constitution, which at Article 184 paragraph 3 provides for the Swiss government’s issuance of temporary ordinances and decrees to safeguard Swiss interests;
  4. The Swiss Penal Code which can be applied to cases involving a politically exposed person’s illicit assets, money laundering, corruption, etc.
  5. The Swiss Federal Act on International Mutual Assistance in Criminal Matters, effective January 1, 1983. Permits the grant of legal assistance to foreign states not party to the April 20, 1959 European Convention on Mutual Assistance in Criminal Matters and under other circumstances.

Note: The RIAA was passed by the Swiss Parliament of October 1, 2010, as mentioned by The New York Times.

Translated Copy Of RIAA: Courtesy Federal Dep’t Of Foreign Affairs

Copyright 2010 Fred L. Abrams

(Last edited October 20, 2010)

A Van Gogh goes missing; articles about asset recovery basics; and Barclay’s Bank:

  1. Egyptian authorities are trying to recover a Van Gogh that went missing on Saturday after it was stolen from the Mohamed Mahmoud Khalil Museum. The museum houses a fine art collection worth at least $1.2 billion and the the Van Gogh’s theft is described at "Van Gogh $55 Million `Poppy Flowers’ Theft in Cairo Blamed on Lax Security".

  2. Divorcing spouses, judgment creditors, domestic tax authorities, etc. can all be claimants relegated to an asset search / an asset recovery effort against beneficial owners fraudulently concealing assets. Articles I have published regarding asset recovery basics include: "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy"; "Recognizing Hidden Assets, The Red Flags"; "An Asset Search In Geneva"; & "A Primer For Gathering Financial Intelligence.

  3. Barclays Bank PLC has agreed to forfeit $298 million according to U.S. Treasury’s Office of Foreign Assets Control and the U.S. Department of Justice. At paragraphs 5 & 6 of the settlement agreement available here, Barclays admits it sometimes concealed the identities of bank customers who were subject to U.S. sanction programs. Barclay’s investment banking division had meanwhile, recently been the financial advisor, the restructuring agent and sole bookrunner for FDIC’s $233 million dollar sale of commercial mortgage-backed notes, as explained by a press release.

Copyright 2010 Fred L. Abrams

"A Tax Fraud & Identity Theft From Miami" & "Bearer Shares & An Asset Search" described money laundering schemes partly facilitated through Cayman Islands bank accounts. On the one hand, some financial investigators report to me that during 2010 the Cayman Islands continue to be an extraordinary money laundering risk.

Cayman Islands lawyers and bankers on the other hand have told me that anti-money laundering efforts have changed things there. New York attorney and private investigator Richard Horowitz has lectured in seventeen countries about money laundering, terrorist financing, etc. He gives his perspective on money laundering in the Cayman Islands, at the following article:

(Click On The Article To Read It)

"Money laundering and financial crime: The Cayman Islands in a global perspective", Copyright © 2010 Cayman Free Press Ltd., reprinted with permission.

Copyright 2010 Fred L. Abrams

The August 14th “Asset Search News Roundup” mentions money laundering:

  1. So far this summer the Financial Action Task Force published evaluations of the anti-money laundering efforts undertaken by Brazil, India and Saudi Arabia.  The Financial Action Task Force is a leading anti-money laundering organization, as described at “Anti-Money Laundering Bellwether Seeks Transparency Across The Globe“.
  2. Britian’s Financial Services Agency has issued an August 2nd “Decision Notice” fining the Royal Bank of Scotland Group £5.6 million, (i.e. $8.9 million dollars), for acting in derogation of the 2007 Money Laundering Regulation.*  The Royal Bank of Scotland Group was accused of failing to identify bank customers subject to the UK’s terrorist sanction list.  Reuters wrote about the fine and more information about it is available here.
  3. The link chart below supplied by U.S. Treasury’s Office of Foreign Assets Control, shows the alleged Zambada Financial Network.  The chart and its accompanying press release raise the question of whether suspected Sinaloa drug cartel leader Ismael Zambada-Garcia laundered assets through two companies believed to be his nominees, Mexico Arte y Diseno de Culiacan S.A. de C.V. and Autotransportes JYM S.A. de C.V.

 (Click Chart For Hi-Res)**

*Money Laundering Regulations 2007, is reproduced under the terms of Crown Copyright Policy Guidance issued by HMSO.

**Chart: U.S. Treasury’s Office of Foreign Assets Control

Copyright 2010 Fred L. Abrams