My September 26, 2008 Asset Search News Roundup mentioned that public corruption crimes can involve concealing bribe payments or other illicit assets.  This is perhaps why financial institutions sometimes check lists of “Politically Exposed Persons“, (i.e. individuals holding high foreign public office, a.k.a. “PEPs”), in an anti-money laundering program.  These lists of “Politically Exposed Persons” are commercially available from World-Check’s PEP Database, WorldCompliance’s Global PEP List, etc.

The Wolfsberg Group and the Financial Action Task Force’s “6th Recommendation” consider Politically Exposed Persons to be money laundering risks.  Page 10 of the Basel Committee’s October 2001 publication “Customer due diligence for banks“, similarly describes the problem of Politically Exposed Persons hiding assets through money laundering.

Furthermore, according to an Associated Press article, (“Davos: Don’t let crisis breed more corruption”), the Annual Meeting of the World Economic Forum just warned that the global financial crisis could lead to even more public corruption.  We may therefore experience an increased risk of Politically Exposed Persons using money laundering to hide bribe payments and / or other criminal proceeds.

(Edited January 5, 2010)

Copyright 2009 Fred L. Abrams

Two U.S. mayors suspected of public corruption crimes are mentioned in this "Asset  Search News Roundup".  The first mayor described below, might have concealed a bribe via a home renovation.  The second one is suspected of hiding gifts.  Meanwhile, a third mayor was just arrested along with his wife for an alleged insurance fraud relating to Hurricane Katrina of 2005.

  • Mayor Sheila Dixon of Baltimore, Maryland, is believed to have hidden gifts and failing to make the necessary financial disclosures about them.  "List of charges against Mayor Sheila Dixon", provides specific details about the January 9th indictment of Mayor Dixon.  Based on both "List of charges against Mayor Sheila Dixon" and a Wall Street Journal article, the Mayor’s supposed scheme included her larcenous taking of holiday gift cards intended for the needy. 
  • Gulfport, Mississippi Mayor Gregory Brent Warr and his wife, Laura Jean Warr, were recently arrested for a suspected insurance fraud arising from Hurricane Katrina.  According to "Miss. Mayor, Wife Charged for Katrina Fraud", the Mayor and Mrs. Warr are accused of defrauding FEMA and an insurer out of $222,798.10.  Their alleged insurance fraud is also described in a Department of Justice press release.

Copyright 2009 Fred L. Abrams

A "Misappropriated Public Assets" civil petition in France claims that the presidents of Gabon, Congo Brazzaville and Equatorial Guinea are likely hiding assets.  The "Misappropriated Public Assets" petition against the three heads of state was filed December 2, 2008 by both Transparency International (France) and the Sherpa Association. 

The assets at issue in France might possibly originate from public funds stolen by President Bongo, President Denis Sassou-Nguesso and President Obiang Nguema.  As a December 2, 2008 press release partly mentions, all three presidents may be using their relatives as nominees to hide valuable real estate and automobiles in France.  President Bongo and President Denis Sassou-Nguesso could also be hiding assets in France through offshore bank accounts opened there.

President Bongo is suspected of hiding 39 Apartments, 70 bank accounts and 9 automobiles.  President Denis Sassou-Nguesso might similarly be concealing 18 apartments, 112 bank accounts and 1 vehicle.  Meanwhile, President Obiang Nguema may be hiding 1 apartment and 8 automobiles.  These particular assets were uncovered during a 2007 police investigation and had been the subject of earlier legal proceedings. 

Copyright 2009-2011 Fred L. Abrams

This “Asset Search News Roundup” discusses criminal liability for hiding assets via money laundering in Mexico; a computer intrusion at Heartland Payment Systems which may have compromised tens of millions of credit / debit card transactions; and the sentencing of a man for identity theft after he was caught with 66 counterfeit driver’s licenses:

1.  The Mutual Evaluation Report of Mexico, (released by the Financial Action Task Force on January 12), mentions that criminal liability for money laundering and / or terrorist financing in Mexico, has yet to meet international standards.  Paragraph 5 at page 3 of the Report’s Executive Summary expressly states this.  Pages 4-5 of the Report’s Executive Summary also detail some of the deficiencies in Mexico’s legal system for regulating money laundering.

2.  What could be the largest theft of credit / debit card information to date, recently occurred at payment processor Heartland Payment Systems of Princeton, New Jersey.   As reported by The Washington Post, tens of millions of credit / debit card transactions may have been recorded by a hacker using malicious software on Heartland’s processing network.  A press release describes how MasterCard and Visa first reported suspicious activity to Heartland, which then used forensic auditors to uncover the computer intrusion.

3.  This past Friday, David Lorenzo Fletcher was sentenced to prison for identity theft (18 U.S.C. §1028), in U.S.A. v. Fletcher.  Mr. Fletcher was given a sentence of eight years and five months in federal court after he was initially indicted on July 26, 2007 for both identity theft and alleged possession of counterfeit securities (18. U.S.C. §513 {a}).  According to the article “Man sentenced for identity-related crime“, Mr. Fletcher had been stopped by a state trooper and at that time possessed: 66 counterfeit Missouri driver’s licenses, 5 Social Security cards from other people, 6 Texas temporary driving permits, 8 forged payroll checks, along with $3,909 cash.

Copyright 2009 Fred L. Abrams

My post "Pretexting During An Asset Search" explained that using false pretenses may violate privacy laws during an asset search.  "Attorney Christensen’s Wiretap Conviction" additionally mentioned the case of a California attorney who violated privacy laws by conspiring to wiretap a divorcing spouse’s phone. 

Privacy laws however, don’t just criminalize certain types of pretexting or wiretapping.  They also prohibit the computer intrusions mentioned at 18 U.S.C. §1030 (Fraud and related activity in connection with computers).  Indicted under 18 U.S.C. §1030 in U.S.A. v. David C. Kernell, was the alleged hacker of Governor Palin’s e-mail account.  The hacker(s) of 33 celebrity Twitter accounts described in "Following The Twitter Hack Trail To DigitalGangster" might similarly be indicted for a suspected violation of 18 U.S.C. §1030.  

Minneapolis Police Officer Michael David Roberts was also indicted pursuant to 18 U.S.C. §1030 for allegedly accessing a police computer system to sell nonpublic information related to a Minnesota license plate.  Meanwhile, former State Department Intelligence Analyst Lawrence C. Yontz entered a plea agreement this past September after he was accused of violating 18 U.S.C. §1030.  Page 4 of Mr. Yontz’s "Factual Basis For Plea" explained that he had accessed a State Department computer out of "idle curiosity" and:

"…viewed the passport applications of nearly 200 celebrities, athletes, actors, politicians and their immediate families, musicians, game show contestants,members of the media corps, prominent business professionals, colleagues, associates, neighbors,and individuals identified in the press." (Id. at page 4).

Copyright 2009 Fred L. Abrams

The "Asset Search News Roundup" for this week describes suspected asset concealment schemes with cross-border elements in Israel, Singapore and the Philippines:

  • On January 11 The Jerusalem Post reported that a New York grand jury is considering indicting U.S. businessman Morris Talansky.  The article explained that Mr. Talansky is suspected of money laundering, tax evasion and bribery arising from financial transfers to Israel’s Prime Minister Ehud Olmert.  As a United Press International article indicated, Prime Minister Olmert was accused of laundering money from Mr. Talansky and secretly transferring it to Israel.  
  • The U.S. Department of Justice is seeking forfeiture of about $3 million dollars part of an alleged scheme to conceal bribe monies paid to the son of the former Prime Minister of Bangladesh.  Based on a U.S. Department of Justice press release and /or The Daily Star,  the $3 million involves bribe proceeds parked in financial accounts in Singapore.  The bribes were supposedly transferred through U.S. financial institutions and allegedly used to influence the award of Bangladeshi public works contracts. 
  • Former priest Rodney Lee Rodis is appealing his recent Virgina state court embezzlement conviction, according to "Pinoy ex-priest in US appeals embezzlement conviction".  Mr. Rodis was earlier convicted in federal court on related charges for a fraud and money laundering scheme.  In his federal case, Mr. Rodis pleaded guilty to defrauding two rural churches / the Catholic Diocese of Virginia.  Among other things, Mr. Rodis had concealed his ill-gotten gains by transferring them to relatives in the Philippines and purchasing upscale waterfront property there.

Copyright 2009 Fred L. Abrams

A search for hidden assets is sometimes actually a quest for greater transparency.  A financial transfer lacking transparency may delay investigators trying to unravel a fraud.  A lack of transparency can also multiply forced collection or asset forfeiture proceedings. This is so because such a financial transfer can obscure the true source or beneficial ownership of funds.  Furthermore, a financial transfer lacking transparency is not always improper, but may naturally come under greater scrutiny.  

Chicago Tribune reporter Andrew Zajac’s January 13, 2009 article "Undelivered Bill Clinton speech perks up curiosity", essentially asks whether a particular $500,000 donation to the William J. Clinton Foundation lacked transparency.  Mr. Zajac’s article identifies Sakura Capital Management as having transferred $500,000 to former President Bill Clinton in 2003, which is: "the highest cash fee he has yet to receive for a speech, for a talk he never delivered."  Mr. Zajac additionally reports that Mr. Clinton then donated said $500,000 to his William J. Clinton Foundation. 

He also writes that $64 million dollar judgment debtor Theoddor Tsuru had been involved with Sakura Capital Management and that a Mr. Tanaka in Tokyo, was alleged to be a source of funds.  According to Mr. Zajac, Sakura Capital Management however, was not named in a list of 208,000 donors released by the former president’s William J. Clinton Foundation.  As the Minneapolis Star Tribune earlier reported, the 2,922-page list was released because of an agreement with President-elect Obama. Apparently, disclosure of the list became necessary for the former president’s wife, Senator Hillary Clinton, to be nominated for Secretary of State. 

Knowing that I had represented a co-defendant of Mr. Tsuru in some well known litigation, Mr. Zajac called me before publishing "Undelivered Bill Clinton speech perks up curiosity", hoping I might provide information regarding Mr. Tsuru.  One thing Mr. Zajac asked me, was whether I could locate  Mr. Tsuru.  Given all of the foregoing, I contacted a confidential informant to inquire about Mr. Tsuru.  The confidential informant then advised: "Mr. Tsuru is a ghost, but he is sometimes in and out of New York".

Copyright 2009 Fred L. Abrams

Whether Bernard Madoff’s Ponzi scheme could have violated foreign criminal laws, is the subject of this "Asset Search News Roundup".  The Serious Fraud Office of the United Kingdom’s criminal justice system has issued a press release stating that it is pursuing an investigation of Mr. Madoff. 

Austria’s Financial Market Authority also announced in its press release, that it had taken control of one of Mr. Madoff’s largest investors– Bank Medici.  This raises the possibility that Austrian criminal investigators have joined those now scrutinizing Mr. Madoff. 

During my interview yesterday on Fox Business News, I mentioned that Mr. Madoff might have violated money laundering laws in foreign / offshore jurisdictions. This could be true for example, if Mr. Madoff used offshore bank accounts to conceal assets arising out of his Ponzi scheme. 

Copyright 2009 Fred L. Abrams

The Asia / Pacific Group on Money Laundering explains on its typologies webpage, that one way to hide assets is by purchasing portable valuable commodities like diamonds.  The typologies webpage provides the example of a beneficial owner concealing assets by transferring diamonds to another jurisdiction.  One man who may have tried this kind of asset concealment method is Bernard L. Madoff.  As reported in “U.S. Government to New York Judge: Jail Madoff Without Bail”, Mr. Madoff is alleged to have dissipated assets by mailing $1million dollars in jewelry to relatives and friends vacationing in Florida.

Another man believed to have hidden assets by using portable valuable commodities was recently discovered upon his arrival at N.Y.C’s J.F.K. Airport from Tel Aviv.  A press release states that the 54-year-old U.S. resident employed by the jewelry industry, had concealed three diamonds worth more than $1.2 million in his pocket.  U.S. authorities had first found jewelry receipts in the man’s baggage, then interviewed him and finally interdicted the concealed diamonds during a pat-down.  These diamonds pictured below, were seized pursuant to 19 U.S.C. §1497, (Penalties for failure to declare) and 19 U.S.C. §1595a (c) (1) (A), (Merchandise introduced contrary to law):

                                     

                   

My October 15, 2008 “Asset Search News Roundup” similarly mentioned that UBS banker Stanley Birkenfeld had hidden diamonds in a tube of toothpaste while an airline passenger at Swiss-U.S. border crossings.  As more fully set forth by “UBS and the Diamond Smuggler”, Mr. Birkenfeld had assisted UBS bank customers like billionaire Igor Olenicoff hide assets and / or evade U.S. taxes.  Besides using diamonds, Mr. Birkenfeld hid assets by using phony loans and purchasing artwork with secret Swiss funds.

Photo Courtesy of U.S. Customs and Border Protection

Copyright 2009-2023 Fred L. Abrams