U.S. taxpayers who beneficially own a foreign bank account with assets in excess of $10,000, are required to disclose the same at Schedule B, Part III of their U.S. Individual Tax Return Form 1040.  These taxpayers must also separately file a TDF 90-22.1, (a.k.a. a “FBAR” form), the first page of which is shown here:

 

I previously discussed these reporting requirements at “Beneficial Owners Concealing Their Foreign Bank Accounts“.  One Florida resident who failed to follow said requirements as part of his abusive offshore tax avoidance scheme, was Mr. Steven Michael Rubinstein.  Mr. Rubinstein  worked in the yacht industry and recently pleaded guilty to violating 26 U.S.C. § 7206 (1) (perjury on a return / false statements).  According to his Factual Proffer Statement, Mr. Rubinstein had concealed his assets from the IRS by parking them in Switzerland.  He had hidden assets through his nominee British Virgin Island corporation, which secretly held a UBS financial account in Switzerland.

My May 25, 2009 “Asset Search News Roundup” similarly mentioned the abusive offshore tax avoidance scheme facilitated by Florida yacht broker Robert Moran.  Like Mr. Rubinstein, Mr. Moran had hidden assets from the IRS by using a financial account at UBS in Switzerland.  He too pleaded guilty to filing a false tax return in violation of 26 U.S.C. § 7206 (1).  Mr. Moran had specifically used a nominee Panamanian corporation to maintain his hidden financial account at UBS Switzerland.

Copyright 2009 Fred L. Abrams

The "Asset Search News" for this week discusses my interview by AssetForfeitureWatch.com; Transparency International’s press release about Kenyan police corruption; and the file assistant who pleaded guilty to computer intrusions in violation of U.S. privacy law.

+AssetForfeitureWatch.com provides the law enforcement community with training / support in the area of asset forfeiture.  Last Tuesday, AssetForfeitureWatch.com interviewed me for the upcoming article "Following the money trail with a professional asset hunter" which will be available at its website.

 

++My "September 26, 2008 Asset Search News Roundup" mentioned Transparency International’s 2008 Corruption Perceptions Index.  That index ranked Kenya as having a low reputation for honesty, alongside Russia, Bangladesh and Syria.  On one of its webpages, Transparency International has also accused the Kenya Police of being the most corrupt institution in all of East Africa.

 

+++"Pretexting During An Asset Search" explained that U.S. privacy and other laws sometimes prohibit private detectives, information brokers, etc. from using false pretenses as part of an asset search.  U.S. Privacy laws can of course also apply to other kinds of  situations, like that Mr. William A. Celey was in.  According to a press release, Mr. Celey pleaded guilty to computer intrusions that violate  privacy laws.  Based on his one-count criminal information, Mr. Celey, (while a U.S. State Department file assistant), had illegally accessed data:

 "pertaining to the imaged confidential passport application files of various celebrities and their families, actors, models, musicians, athletes, record producers, family members, a politician, and other  individuals identified in the press".  (Criminal Information, at page 1). 

 

 (Edited July 13, 2009)

Copyright 2009 Fred L. Abrams

“A Domestic Subpoena / Summons In An Offshore Asset Search” describes how the IRS and U.S. Department of Justice were granted court permission to serve a “John Doe” summons on UBS AG.  This summons was supposed to help the IRS identify assets and / or undeclared revenue hidden by any U.S. taxpayers who were maintaining offshore bank accounts at UBS.

A July 1, 2008 Order had specifically permitted the IRS to serve UBS with the “John Doe” summons which is reproduced below without its attachments:

(Click On Images To Enlarge)

The IRS has however, argued in U.S.A. v. UBS AG, 1:09-cv-20423, that UBS has not fully complied with the summons.  In UBS AG, the IRS claims that UBS has disclosed under the summons, just 300 bank accounts out of an estimated 52,000 belonging to U.S. taxpayers who could be tax cheats.

As I stated in my February 27, 2009 “Asset Search News Roundup“, UBS must consider Swiss bank secrecy laws, (a.k.a. professional secrecy laws), when supplying the IRS with account information pursuant to the summons.  UBS highlighted the very issue of bank secrecy laws just yesterday, when it filed its “Supplemental Declaration of Professor Isabelle Romy On Swiss Law“.  It had also earlier raised this issue via the “Declaration of Professor Isabelle Romy On Swiss Law“, filed April 30, 2009.

Through these declarations, UBS argued that it would be violating Swiss bank secrecy laws if it fully complied with the summons.  The IRS meanwhile, claimed that UBS should be compelled to fully comply with the summons because UBS allegedly violated its Qualified Intermediary Agreement with the IRS, for the withholding of taxes.  (Declaration of Barry B. Shott, filed February 19, 2009).  U.S.A. v. UBS AG, is next scheduled for hearings on July 13, 2009.

Copyright 2009 Fred L. Abrams

This "Asset Search News Roundup" concentrates on the International Centre For Asset Recovery ("ICAR"), which is part of the Basel Institute on Governance.  ICAR’s "Knowledge Centre" is particularly geared toward helping "asset recovery practitioners, investigators, prosecutors and policy makers worldwide".

The Knowledge Centre generally has information for domestic governmental authorities, about  forced collection proceedings when assets are hidden offshore in public corruption or other criminal schemes.  ICAR’s hyperlink to "Stolen Asset Recovery: A Good Practices Guide for Non-Conviction Based Asset Forfeiture" for instance, describes how governmental authorities may interdict assets through Mutual Legal Assistance, Letters Of Request, (a.k.a. Letters Rogatory / Legal Assistance Requests), etc. 

Legal remedies similar to those mentioned above are also sometimes available at the individual level to private litigants seeking to recover assets hidden offshore.  To cite just one example, private litigants searching for assets hidden offshore in Switzerland, might pursue the remedies mentioned by "An Asset Search In Geneva".

Copyright 2009 Fred L. Abrams

Politically exposed persons who are involved in public corruption schemes, sometimes use money laundering to hide bribes or other illicit proceeds.  Although not accused of money laundering, former Detroit city councilwoman Monica Conyers, was a politically exposed person suspected of accepting bribes.  Monica Conyers is also the wife of House Judiciary Committee Chairman John Conyers. 

The Detroit News and others reported earlier that Monica Conyers was under investigation for supposedly accepting jewelry and cash.  As was also widely reported, she recently pleaded guilty to a charge of conspiracy to commit bribery.  This bribery conspiracy was outlined in a second superseding information filed June 26, 2009.  According to Monica Conyers’ plea agreement, her bribe-taking involved a wastewater treatment contract between Synagro Technologies Inc. and the City of Detroit. 

Unlike Monica Conyers, former Massachusetts state senator Dianne Wilkerson has pleaded not guilty to public corruption charges.  I first wrote about Diane Wilkerson in my November  5, 2008 "Asset Search  News Roundup".  As a second superseding indictment in U.S.A. v. Wilkerson, 1:08-cr-10345 mentions, Dianne Wilkerson is accused of violating 18 U.S.C. §1951 ("the Hobbs Act") and other federal laws.  The government is also seeking the forfeiture of Ms. Wilkerson’s assets, pursuant to 18 U.S.C. §981 (a) (1) (C) and 28 U.S.C. §2461 (c).      

Furthermore, an FBI Special Agent’s Affidavit relies on surveillance video / still photos to support the government’s contention that Diane Wilkerson had taken bribes related to a state liquor license.  The government’s still photos were highly publicized and one of them supposedly showed Diane Wilkerson on June 18, 2007 hiding a $1000 bribe in her bra.  The Special Agent’s Affidavit at pp. 6-7, ¶ 15,  referred to some of these still photos as Exhibits "C" and "D":

 Photos: U.S. District Court File, U.S.A. v. Wilkerson

Copyright 2009 Fred L. Abrams

"Asset Search News Roundups" from this year on January 10, March 17, March 25, April 1, etc., raised a variety of issues related to Bernard Madoff.  My very last post, (i.e. "Will Ruth Madoff Keep Her Remaining $2.5 Million?), was also connected to him.  I again mention Bernard Madoff, among other things: 

  • Monica Conyers also resigned from the Detroit City Council yesterday, as was reported by The Associated Press.  Her criminal case will be discussed in my next article, "Public Corruption Charges Against Two Politically Exposed Persons". 

Copyright 2009 Fred L. Abrams

As a Reuters article suggests, the Court made a June 26 Order which directed Mr. Madoff to forfeit $170 billion in assets.  The U.S. Attorney’s Office is also no longer seeking forfeiture of all of the assets of Bernard Madoff’s wife, Ruth.  It is Instead permitting Mrs. Madoff to retain $2.5 million of her assets since she has relinquished her claims to Madoff owned property under U.S. asset forfeiture laws.  

The foregoing is mentioned in a stipulation with has been filed in Court.  This stipulation explains that $2.5 million will be turned over to Mrs. Madoff once she vacates real property and surrenders her personal property.  (Stipulation, at  pp. 7-8  ¶3).  Despite exempting the $2.5 million from asset forfeiture, Mrs. Madoff may not necessarily get to keep this money.  This is true because the stipulation: 

… does not preclude any other department or agency of the United States or any other person or entity, including but not limited to the United States Securities and Exchange Commission, Irving H. Picard, Esq. as trustee for the liquidation of business of defendant Bernard L. Madoff Investment Securities LLC… from seeking to recover the funds from RUTH MADOFF.  (Stipulation, at page 8, ¶ 3).

  

Mrs. Madoff is therefore still subject to any claims possessed by Madoff trustee Irving Picard and many others.  These claims could arise out of Mrs. Madoff’s alleged role as a wrongful transferee of funds related to Mr. Madoff’s Ponzi scheme.  Mrs. Madoff for example, might have transferred millions to herself in anticipation of Mr. Madoff’s arrest, as mentioned by: "Bernard Madoff & The Badges Of Fraud". 

She is also alleged to be among the beneficiaries of a corporate American Express credit card that may have been used to dissipate assets related to Mr. Madoff’s Ponzi scheme.  Documents which might help show this suspected asset dissipation were attached as "Exhibit 25" to a May 5 affidavit filed for trustee Picard.  One of these documents was included in a Huffington Post article and is reproduced below. 

 

Click On Image To Enlarge

Copyright 2009 Fred L. Abrams

On October 6, 2008 I wrote that an asset search  / investigation focusing on Nazi-looted art could culminate in a Holocaust-related art restitution case.  Holocaust-era art restitution cases are also going to be discussed at the “Holocaust Era Assets Conference“, which starts tomorrow.  This conference is being held in the Czech Republic and  Nobel Laureate Elie Wiesel will be one of its attending delegates.

“US lawmakers press Poland, Lithuania, on Holocaust assets” additionally explains that twenty-five U.S. legislators, (some of whom are delegates of the conference), have just executed letters in favor of restituting property stolen by the Nazis.  In New York meanwhile, the Museum of Modern Art recently moved to dismiss the Holocaust-era art restitution case of Grosz v. The Museum of Modern Art.

As I mentioned in “Laundering Holocaust-Era Loot?“, Grosz is about three paintings possessed by The Museum of Modern Art since the 1940’s and 1950’s.  The plaintiffs’ amended complaint in Grosz, alleges that the three paintings had been stolen from expressionist and Dadist painter George Grosz, due to Nazi persecution.

Also according to plaintiffs’ amended complaint: “the greatest art looting in history occurred during the reign of the National Socialists (‘Nazis’) in Germany (1933-1945)”. (Amended Complaint, at p. 2 ¶4).  Some of this Nazi-looted art is in fact, pictured below.  It had been hidden at a church in Ellingen, Germany and was discovered in 1945 by troops of the U.S. Third Army.

Click On Photo, To Enlarge

 Photo: National Archives and Records Administration

Copyright 2009 Fred L. Abrams

Ernst & Ernst Collector’s Gallery owner Donald Dean Seybold, might forfeit 2000 pieces of fine art which include: paintings, prints, sculptures, plates and books.  Mr. Seybold could also end up forfeiting: a Las Vegas time share, a jeep, a sports utility vehicle and $3.2 million dollars. 

Federal prosecutors are seeking asset forfeiture of these items pursuant to 18 U.S.C. §§981 & 982; 21 U.S.C.  §853(p) and 28 U.S.C. §2461(c). This is happening because Mr. Seybold is accused of defrauding art investors in a Ponzi scheme.  Mr. Seybold’s indictment claims that he made false representations to investors, that they could profit from the purchase and resale of certain art and art packages. 

The relevant art, art packages and art buyers are however, believed to have all been fictitious. (Indictment, at ¶3).  Mr. Seybold is suspected of violating 18 U.S.C. §1343, (wire fraud), by: "fraudulently us[ing] money obtained from later investors to pay off earlier investors."  (Id., at ¶¶6).  The docket report in U.S.A. v. Seybold, additionally reveals that Mr. Seybold made a June 1, 2009 pretrial discovery request to elicit information from prosecutors, about their case against him.

Copyright 2009 Fred L. Abrams

Today’s "Asset Search News Roundup" discusses yesterday’s arrest and indictment of Mr. Allen Stanford, who was the subject of my very last blog post.  Just as Bernard Madoff was accused of money laundering, so is Mr. Stanford.  Mr. Stanford has among other things, been indicted pursuant to 18 U.S.C. §1956 (h) (Conspiracy to commit money laundering).  (Stanford Indictment, at pp. 45-48). 

Mr. Stanford’s indictment claims that Mr. Stanford hid assets by laundering them through foreign bank accounts. (Id.).  In connection with Mr. Stanford’s alleged crimes, U.S. authorities are also seeking the asset forfeiture of bank accounts in the United Kingdom, Canada and in Switzerland, including Geneva. (Id. at pp. 49-57). 

Assuming illicit assets were actually hidden by Mr. Stanford in Geneva, then Swiss statutes like Art. 305bis Swiss Criminal Code: Money Laundering (English Translation), might be relevant.  Finally, "An Asset Search In Geneva", explains some of the legal remedies which could apply to the asset forfeiture / seizure of any Stanford bank accounts maintained in Switzerland.

Copyright 2009 Fred L. Abrams