This "Asset Search News Roundup" highlights shell companies which can be used to conceal bankruptcy estate, marital, probate or other assets.  As "Bank Melli Accused Of Hiding Its Fifth Avenue Assets" mentions, the asset forfeiture case against New York’s ASSA CORP. is perhaps a good example of a domestic shell company suspected of concealing assets via money laundering.

According to the article "New Wyoming business laws aimed at fighting fraud", Wyoming is trying to prevent such criminal misuse of its shell companies.  The article mentions among other things, that Wyoming has made filing false company information a felony punishable up to two years in prison.  The article additionally states that, (according to Wyoming’s Secretary of State Max Maxfield), Wyoming could now be a less attractive venue for some criminals.

Foreign shell companies are however, also commonly used to hide assets. A Department of Justice press release and / or Boston Globe article explain that stolen paintings had been concealed through the Panamanian shell company Erie International Trading Co.  Retired Massachusetts attorney Robert Mardirosian had used Erie International Trading Co., offshore lawyers and a Swiss bank, to hide Paul Cezanne’s Bouilloire et Fruits for twenty years.  Furthermore, he had hidden another six stolen paintings for thirty years the very same way. 

Copyright 2009 Fred L. Abrams

My father attended Far Rockaway High School at the same time as Mr. Bernard Madoff and in fact, they were in the same graduating class.  He remembers from his high school yearbook "The Dolphin", that Mr. Madoff had lived in the Rockaways and was an ardent swimmer.  My father even showed me "The Dolphin", which contains a picture of Mr. Madoff in his youth.  The Far Rockaway of Mr. Madoff’s youth however, has little in common with the offshore high-risk geographical locations Mr. Madoff might have concealed assets in.

As I briefly indicated in the most recent New York Times article "Madoff Spotlight Turns To Role  Of Offshore Funds", enormous sums of money may be hidden by using multiple jurisdictions and nominees.  This same conclusion is partly reached by the Financial Action Task Force, whose "Money Laundering FAQ" webpage states that: "Large-scale money laundering schemes invariably contain cross-border elements."   According to "Madoff Spotlight Turns To Role Of Offshore Funds", cross-border elements in Mr. Madoff’s case might include offshore locations such as: the Cayman Islands, Bermuda, Ireland, Singapore and banks in Switzerland.

To interdict illicit assets possibly hidden by Mr. Madoff in these offshore locations, governmental authorities could be turning to U.S. Treasury Department’s FinCen and other Financial Intelligence Units.  These Financial Intelligence Units may be using red flags to follow a money trail left by Mr. Madoff or his suspected nominees.  By recognizing red flags, Financial Intelligence Units or other governmental authorities might ultimately locate and forfeit assets beneficially owned by Mr. Madoff, which arise from his alleged $50 billion dollar Ponzi scheme.

(Edited January 15, 2009) 

Copyright 2008 Fred L. Abrams

Mentioned by this "Asset Search News Roundup" are: bearer instruments such as money orders, structuring cash deposits and a possible financial fraud at one national chapter of Transparency International:     

*The article "Accused St. Louis drug ring leader pleads guilty of money laundering", explained that Mr. Julius Turrentine was suspected of using bearer negotiable instruments in the form of U.S. Postal Service money orders to conceal assets.  It reported that Mr. Turrentine pleaded guilty to conspiracy to commit money laundering for using postal money orders to send from $120,000 to $200,000 through the mail.  The attached sanitized bearer share certificate from my post "Bearer Shares & An Asset Search", is an example of another type of bearer instrument which may similarly be used to hide assets.   

 

**Although he was sentenced to just ten months and time served, Connecticut convenience store owner Mohammad Ghouse now faces deportation back to his native Pakistan.  Based on "EHartford man gets time served for hiding cash deposits", Mr. Ghouse had structured over $578,000 through 91 cash deposits at Webster Bank between Feb. 1 and July 18, 2005.  Structuring, (a.k.a "smurfing"), bank deposits violates 31 U.S.C. § 5324.  It can also be a red flag of money laundering, as mentioned by "A Diplomat & His Offshore Bank Account".

 

***The website for the Papua New Guinea chapter of Transparency International explains that it "…is raising public awareness of the adverse effects on society of dishonesty and mismanagement".  A press release however, states that the Papua New Guinea chapter and the banks it does business with, may have been victimized by the financial fraud of a Transparency International employee.         

Copyright 2008 Fred L. Abrams

U.S. authorities are seeking the sanction of asset forfeiture in connection with a 36-story Fifth Avenue N.Y.C. building, alleged to be partly owned by Iran’s Bank Melli.   "Assets Seized at Company Suspected of Funneling Money to Iran" and / or a U.S. Treasury Department press release, also report that Bank Melli is accused of concealing its 40% beneficial ownership of 650 Fifth Avenue.  Bank Melli and its related entities ASSA CO. LTD and ASSA CORP., have further been linked to terrorist financing and are named in the attached list of those subject to Weapons of Mass Destruction sanctions programs.

Bank Melli may have additionally disguised Iranian funds as construction "loans" for 650 Fifth Avenue and supposedly transferred rent monies to Iran, which were collected from 650 Fifth Avenue.  Based upon the above-mentioned articles and press release, Bank Melli possibly used the following money laundering methods in connection with 650 Fifth Avenue:  

i)  operating the parent corporation ASSA CO. LTD from the Channel Islands, a high-risk geographical location;

 

ii)  forming the domestic shell company ASSA CORP. as the New York subsidiary of ASSA CO. LTD.;

 

iii) using ASSA CORP. as the nominee purchaser of 40% of 650 Fifth Avenue;

 

iv) disguising Bank Melli monies as construction "loans" for 650 Fifth Avenue– perhaps through "back-to-back" or other types of sham loans.

 

v)  transferring rent collected from tenants at 650 Fifth Avenue through multiple jurisdictions, including New York City, the Channel Islands and Iran. 

Copyright 2008 Fred L. Abrams

O.J. Simpson’s  Pro Football Hall of Fame ring; a report that Minnesota could even suffer because of Bernard Madoff’s suspected $50 billion Ponzi scheme; and Liechtenstein’s new Tax Information Exchange Agreement; are the focus of this "Asset Search News Roundup":

  • By interdicting O.J. Simpson’s diamond encrusted Pro Football Hall of Fame ring, Judgment Creditor Fred Goldman hopes to satisfy part of his $33.5 million judgment arising from the slaying of his son, Ron Goldman.  "O.J. Simpson victim denies he has Hall of Fame ring", reports that memorabilia dealer Alfred Beardsley specifically claims he does not possess the ring.  According to an Associated Press article, Mr. Beardsley further alleged during forced collection proceedings, that O.J. Simpson may have "lost the ring on a golf course years ago".

Copyright 2008 Fred L. Abrams

A foreign bank witness located in an offshore tax haven will likely rely on bank secrecy laws to resist discovery about a bank customer’s financial information.  A foreign court located where this foreign bank witness resides could however, apply an exception to bank secrecy law.  If this happens, the foreign court might then end up directing the foreign bank witness to disclose bank customer information.  This whole process may happen via Letters Rogatory, as suggested by "Foreign Bank Secrecy Laws & An Asset Search". 

Foreign bank secrecy laws can also play a significant role when a domestic court exercises in personam jurisdiction over a foreign witness in possession of a bank customer’s financial information.  To determine whether such a foreign witness is subject to domestic disclosure, a domestic court might analyze foreign bank secrecy laws along with the following factors mentioned in Old Ladder Litigation Co. LLC. v. Investcorp Bank B.S.C, et. al. No. 08-CV-00876 (S.D.N.Y. May 29, 2008):

  1. the competing interests of the nations whose laws are in conflict;
     
  2. the hardship of compliance on the party or witness from whom discovery is sought;
     
  3. the importance to the litigation of the information sought and whether there are alternative means to secure the information;
     
  4. the good faith of the party resisting discovery;
     
  5. whether the information originated in the United States; and
     
  6. the specificity of the request."  (Id. at 10-11).

 

(Edited November 12, 2009)

Copyright 2008 Fred L. Abrams

Past "Asset Search News Roundups" described different schemes in which assets have been hidden. This "Asset Search News Roundup" is similarly about the criminal complaint filed against Illinois Governor Blagojevich, which raises among other things, the question of whether Governor Blagojevich had possibly considered hiding / dissipating assets.

While the criminal complaint against Governor Blagojevich alleges that he tried to: extort the Tribune Co., sell President-elect Obama’s Senate seat, etc., it also claims that Governor Blagojevich learned from a news story that he had been surreptitiously recorded during a criminal investigation.  Presumably because of this criminal investigation, Governor Blagojevich had allegedly discussed conveying monies from his "Friends of Blagojevich" campaign fund to prevent them from being "frozen". (Criminal Complaint at pages 73-74, paragraphs 115 {c} & {d}).

The criminal complaint against Governor Blagojevich further alleges that he discussed whether he should prepay monies to his criminal defense lawyer with the understanding that these same monies might later be returned. The Governor also supposedly talked about depositing campaign contributions into a newly formed fund raising account called "Citiizens for Blagojevich".  All of the foregoing suggests that Governor Blagojevich might have contemplated hiding assets because he anticipated asset forfeiture or other forced collection proceedings as the subject of a criminal investigation.

Meanwhile, The World Bank published a blog post about Governor Blagojevich this week, "Illinois Governor Blagojevich: sign of endemic corruption in the US?".  Said blog post argues that the U.S. does not suffer from endemic levels of corruption despite the fact of the criminal complaint against Governor Blagojevich.  Governor Blagojevich however, is the fifth Illinois governor to face criminal charges in the last fifty years, as mentioned by the Los Angeles Times article "Illinois governor faces corruption charges".  According to that Los Angeles Times article, an FBI agent also made the following comment about Illinois: "If this isn’t the most corrupt state in the United States, it’s certainly one hell of a competitor".

Copyright 2008 Fred L. Abrams

Assets hidden in an offshore tax haven which are  the subject of a divorce, forced collection proceeding, etc., can sometimes be uncovered by eliciting evidence from a bank witness residing in that offshore tax haven.  This is true because letters rogatory or other legal proceedings can usually be brought against an offshore bank  witness in tax havens like Switzerland, as mentioned by “An Asset Search In Geneva”.

The success of  these kinds of “offshore asset searches” however, often depends on whether exceptions to bank secrecy, (a.k.a. professional secrecy), laws are applicable to the particular situation.  To cite just one example, a Swiss bank witness can be compelled in Swiss court to disclose marital assets hidden by a U.S. or other divorcing spouse.  This critical point is emphasized by local Swiss counsel, who wrote to me the following:

 “I notice that you are also active in divorce matters. It sometimes happens that spouses try to hide their assets in Switzerland. This is to no avail since article 170 of the Swiss Civil Code provides that each spouse may request from the other information on his or her income, assets and debts. Upon request, the Judge may obligate the other spouse or third parties (including banks) to provide the required information and produce the necessary documents. This provision is enforceable even if the divorce takes place in the US or any other foreign jurisdiction in application of article 10 of the Swiss Code on Conflict of Laws which provides that the Swiss judicial or administrative authorities may order provisional measures even if they have no jurisdiction to render a decision on the merits.

These provisions often ignored by foreign lawyers provide efficient tools to obtain information, which in other circumstances would be strictly covered by the Swiss banking secrecy.”

Copyright 2008 Fred L. Abrams

Ex-N.Y.P.D. Police Commissioner Bernard Kerik and Puerto Rico’s Governor Anibal Acevedo Vila are among the many indicted for allegedly hiding assets during public corruption and tax fraud schemes.  This "Asset Search News Roundup" is an update about the criminal cases pending against both of them.

The Daily News reported that a superseding indictment was filed this week against Bernard Kerik, who was New York City’s 40th Police Commissioner.  An August 18, 2008 docket entry in Mr. Kerik’s case also mentioned that the news media had unsuccessfully sought the unsealing of grand jury-related materials.  As my December 2, 2007 post "White-Collar Crime & A Former Top Cop" described, Mr. Kerik had among other things, been earlier indicted for an alleged public corruption and tax fraud scheme.

Meanwhile, I mentioned in "Puerto Rico’s Governor & Public Corruption", how Puerto Rico Governor Anibal Acevedo Vila had too been indicted on tax fraud and public corruption charges.  As the Court’s docket however reveals, parts of the Governor’s superseding indictment were just dismissed.  The grounds for said partial dismissal are fully provided in the Court’s December 1, 2008 Order.

Copyright 2008 Fred L. Abrams

If assets are hidden in multiple jurisdictions, it can be necessary to conduct asset searches of foreign banks or other witnesses residing offshore.  Such  “offshore asset searches” typically involve Letters Rogatory, (a.k.a  Legal Assistance Requests), which may be used to compel foreign banks or other witnesses residing offshore to give:

  1. Details about a financial account / sub-account in various currencies and for all purposes including investments, savings, or bank guarantees;
  2. Account opening papers;
  3. Names of beneficial owners from the time an account was opened;
  4. Names of bank signatories;
  5. The date each bank signatory was registered or added to an account.

In the limited circumstance of a domestic court  exercising in personam jurisdiction over a witness  residing offshore, evidence of hidden assets might also possibly be elicited thorough a domestic subpoena served on said witness.  In First American Corp. v. Price Waterhouse, 154 F.3d 16 (2d Cir. 1998), for example, a domestic subpoena was successfully used against an offshore accounting firm that conducted partnership business in N.Y., as mentioned by N.Y. Civ. Prac. L. & R. 310.

Both the IRS and U.S. Department of Justice have similarly used a domestic “John Doe” summons to uncover evidence about assets hidden offshore by suspected U.S. tax cheats.  As a  June 30, 2008 Department of Justice press release and ABC news article both indicate, a John Doe  Summons was sought in federal court in Miami against UBS AG headquartered in Zurich.  In that case, the federal court in Miami issued a July 1, 2008 Order approving service of the John Doe Summons.  After that Order, UBS AG then provided U.S. authorities with the financial information of seventy UBS account holders.  UBS AG however, did not supply U.S. authorities with any ‘Swiss-based client data”,  according to “Indictments expected in UBS inquiry“.

Copyright 2008-2019 Fred L. Abrams