Ndubuisi Joseph Okafor, M.D., had practiced primary care medicine through the Okafor Group in the Washington D.C. metropolitan area.  He was however, sentenced in U.S.A. v. Okafor, to 65 months in prison followed by three years of supervised release for health insurance fraud and tax evasion.  He was also ordered to pay restitution in the amount of $769,192 to tax authorities and $33,060 to Medicare.

As partly described by his July 18, 2008 criminal judgment, Dr. Okafor had entered a plea agreement for violating 18 U.S.C. §1347 (Healthcare Fraud) along with 26 U.S.C. §§7201 (Tax Evasion) & 7206 {2} (False Income Tax Returns).  According to a press release about Dr. Okafor’s plea agreement, Dr. Okafor had: submitted phony bills to Medicare and other health care providers; filed false tax returns; and diverted business revenue by using a corporate checking account to pay for personal expenses. 

Based on that same press release, Dr. Okafor had also engaged in an abusive offshore tax avoidance scheme.  This was true because Dr. Okafor had used his two offshore shell companies formed in the Bahamas to transfer undeclared revenue from his Washington D.C. Okafor Group.  As suggested by "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy", the use of shell companies and a high-risk geographical location like the Bahamas, is a red flag that assets may have been hidden.

Copyright 2008 Fred L. Abrams

This week’s roundup highlights three different matters in which assets were hidden by a "john" patronizing prostitutes; a Pakistani national engaged in terrorist financing; and an attorney from Utah:

  • The Charlotte Observer reported at  "2nd guilty plea in call-girl ring case" , that a "john" pleaded guilty to tax fraud for hiding revenue from the IRS by deducting his payments to prostitutes as a business expense of his construction company. 
  • An FBI press release announced yesterday that Pakistani national Saifullah Anjum Ranjha pleaded guilty to conspiring to launder money and to concealing terrorist financing through the hawala system.  As briefly mentioned by  "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy", hawala and other alternate remittance systems are common money laundering / asset concealment methods. 

 Copyright 2008 Fred L. Abrams

In "Army Major Arrested For Money Laundering", I described how Major John Cockerham and his wife Melissa Cockerham were prosecuted for a bribery / money laundering scheme.  According to their indictment, Major Cockerham had taken bribes as an Army Contracting Officer in Kuwait while awarding contracts for bottled water, etc.  Since their indictment, Major Cockerham pleaded guilty to conspiracy, bribery and money laundering conspiracy, and his wife pleaded guilty to money laundering conspiracy.  Although a recent docket report reflects that Major Cockerham and his wife await sentencing on October 22, 2008, Major Cockerham’s sister Carolyn Blake, is still scheduled for trial in connection with their case. 

A second Army Major however, also awaits sentencing because of the separate bribery scheme described by the three-count Information filed in U.S.A. v. James Momon, Jr.  Major Momon, (who in 2005 took over Major Cockerham’s job as a Contracting Officer in Kuwait), pleaded guilty on August 13 to conspiracy and bribery charges.  A press release about the guilty plea, mentions that Major Momon began taking bribes in 2005, while awarding bottled water and other Army contracts. 

Just as Major Cockerham hid bribe monies by using offshore bank accounts in high-risk locations such as Kuwait and Dubai, Major Momon similarly hid his bribes in bank accounts in the Philippines.  Furthermore, both Major Cockerham and Major Momon had each used shell companies as a means to conceal the bribes they had received.

Copyright 2008 Fred L. Abrams

A litigant demonstrating that an adversary has hidden assets offshore, bears the burden of proof in court under Federal Rule of Evidence 301 or other evidentiary  rules.  Such a litigant may be able to satisfy this burden with admissible evidence like authenticated copies of an adversary’s offshore bank account records.  Evidence like admissible copies of offshore bank account records is however, often located out of the U.S. or otherwise difficult to obtain.

My post “Money Laundering, Marital Assets & Divorce” for example, explained how one divorcing spouse used cross-border elements and a sham loan to conceal his assets.  In this kind of situation, a letter rogatory, (a.k.a “a request for legal assistance” or “letter of request”), can play a vital role in a litigant’s offshore asset search.  This is true because a letter rogatory may possibly be used to elicit legally sufficient evidence from an offshore bank or other foreign witness.

A letter rogatory can sometimes be filed as mentioned by the Hague Evidence Convention (20: Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters Hague Convention).  Examples of some letters rogatory can be found at my posts “An Asset Search In Israel” & “An Asset Search In Switzerland.”

A variety of factors ordinarily determine how effective a letter rogatory will be in eliciting evidence from a foreign bank or other foreign witness.  Some of these factors may include:

  • Whether the letter rogatory is filed pursuant to any foreign law exceptions to bank secrecy / professional secrecy laws;
  • Whether competent foreign counsel has been retained to help draft and then further prosecute the letter rogatory;
  • And whether the Court perceives a letter rogatory to be a fishing expedition because it is overly broad.

(Edited February 25, 2015)

Copyright 2008-2018 Fred L. Abrams

Class-action attorney Richard Scruggs was well-known for his litigation against the tobacco industry, HMOs, State Farm Insurance and many others.  On June 27, 2008, he was however, sentenced to five years of prison for conspiring to pay a $50,000 bribe to Mississippi Judge Henry L. Lackey of the Third Circuit Judicial District Court in Lafayette County.  Mr. Scruggs had used attorney Timothy Balducci, as his nominee, (i.e. representative), to transfer bribe monies to Judge Lackey.  By using a nominee to transfer his bribe, Mr. Scruggs had disguised the fact that he was the source of the bribe.

Another example of how nominees are sometimes used to transfer money in judicial bribery schemes, was provided at my post  "Using Multiple Jurisdictions To Launder Money".  As that post explained, the U.S. Department of Justice filed an amended complaint alleging that Ms. Primarosa Battistella had used Swiss bank accounts and three lawyers to transfer bribe monies to judges in Italy.  According to the amended complaint at paragraphs "16" – "18", the three lawyers had essentially acted as nominees who transferred the bribes.

Mr. Scruggs and Ms. Battistella both remind me of a former client who had been a suspected member of organized crime and was indicted for tampering with a witness.  At that time, the client’s relative approached me in the hallway of my office and said:  "Would it help the case if  the judge was given a cash payment?".  Disgusted, I abruptly walked away.

Copyright 2008 Fred L. Abrams

At “Asset Search vs. Offshore Asset Protection“, I wrote that offshore asset protection services were being used to conceal assets from IRS revenue officers and others.  The Senate’s Permanent Subcommittee On Investigations, just issued a 114-page report examining this same issue.  The Report entitled, Tax Haven Banks And U.S. Tax Compliance, explains how U.S. tax cheats hid assets from the IRS by using the asset protection services of Liechtenstein’s LGT Group and Switzerland’s UBS.

Page 2 of the Report for example, mentioned that the IRS had learned this past February of about 100 suspected tax cheats with offshore accounts at LGT Group.  The 100 were part of a group of 1400 who had allegedly opened offshore accounts at LGT to hide assets from tax authorities around the world.  As more fully described by “Offshore Bank Accounts In Liechtenstein“, the suspected tax cheats were discovered because an LGT employee had sold a stolen LGT customer list.  The stolen customer list was eventually disseminated to the IRS and other tax authorities.

The Report also discussed former UBS banker Bradley Birkenfeld, who had cooperated with Senate Subcommittee investigators as mentioned by a July 17, Bloomberg.com article.  Mr. Birkenfeld pleaded guilty last month to helping billionaire California real estate developer Igor Olenicoff evade U.S. taxes.  According to Mr. Birkenfeld’s indictment, he had conspired to hide assets from the IRS through: nominees; offshore credit cards; shell companies; bank accounts in high-risk locations / tax havens like Liechtenstein and Switzerland; etc. Among other things, Mr. Birkenfeld also violated various IRS reporting requirements and participated in the filing of false IRS income tax returns.

“Finally, in a July 17, 2008 press release about the Report, Ranking Minority Member Norm Coleman (R-Minn), summed up the problem of banks that offered offshore asset protection:
By exploiting gaping loopholes, these foreign banks are enabling felony tax evasion. Simply put, foreign banks should not be Al Capone safe-houses for evading taxes. Closing these loopholes means we must strengthen reporting requirements, broaden the scope of the audit program, and extend the amount of time the IRS has to investigate cases involving an offshore tax haven.”

Copyright 2008 Fred L. Abrams

Privacy and other federal laws generally prohibit pretexting, (the use of false pretenses), when contacting a U.S. bank, phone company or government agency for confidential information.  One example of pretexting would be using a false identity while phoning a bank to elicit a bank customer’s personal account information.  If an information broker, private investigator, etc. pretexts during an asset search, some of the following federal statutes might possibly apply:

  • 15 U.S.C. § 45 (Unfair methods of competition unlawful; prevention by Commission):  By relying on both 15 U.S.C. §45 and 15 U.SC. § 53 (False advertisements; injunctions and restraining orders), the Federal Trade Commission can sue pretexters for fraudulent, deceptive and unfair business practices.
  • H.R. 4709, 109th Congress (2006) (Telephone Records and Privacy Protection Act of 2006):  This statute generally prohibits telephone record pretexting and the sale of illegally acquired telephone records.
  • 18 U.S.C. § 1028 (Fraud and related activity in connection with identification documents, authentication features, and information):  Both this statute & 18 U.S.C. §1028A. (Aggravated identity theft), prohibit a broad range of frauds in connection with identification documents.
  • 18 U.S.C. § 1341 (Frauds and swindles): Covers frauds which use U.S. mail.  It and 18 U.S.C. § 1343 (Fraud by wire, radio, or television), are the ubiquitous federal fraud statutes.
  • 26 U.S.C. § 7213 (Unauthorized disclosure of information): Prohibits the unauthorized inspection or disclosure of U.S. tax returns or return information.   Subsection (a) (4), entitled “Solicitation”, expressly covers the illegal sale and /or illegal receipt of tax return information.
  • 42 U.S.C. § 1307 (Penalty for fraud): Among other things, covers misconduct like eliciting social security numbers through pretext calls to the U.S. Social Security Administration.
  •  47 U.S.C. § 222 (The Telecommunications Act of 1996):  Section (c) (2) of this Act generally prohibits telephone record disclosure absent  “…affirmative written request by the customer, to any person designated by the customer”.

One who pretexts in violation of the foregoing statutes, may face a Federal Trade Commission lawsuit or even criminal indictment.  In Federal Trade Commission v. Action Research Group, Inc. et. al. for example, information brokers ended up stipulating to a final order which permanently enjoined them from telephone record pretexting.  In Federal Trade Commission v. Victor L. Guzzeta d/b/a Smart Data Systems, yet another information broker stipulated to a final judgment, which similarly enjoined him from financial record pretexting.

In the U.S. District Court in Tacoma however, Mr. and Mrs. Torrella are being criminally prosecuted for their pretext calls to the I.R.S., Social Security Administration, pharmacies, medical offices and various state labor departments.  According to their indictment, the Torrellas made the pretext calls while performing asset searches and other services for the private investigators who are their co-defendants.

The Torrellas and /or their co-defendants are charged with Conspiracy and violating many of the above-cited federal statutes: 18 U.S.C. § 1343 (Wire Fraud); 42 U.S.C. § 1307 (Penalty for Fraud); 26 U.S.C. § 7213 (Unauthorized  Disclosure of Information); and 18 U.S.C. §1028A (Aggravated Identity Theft).  Based on their May 20, 2008 plea agreements, both Mr. and Mrs. Torrella await sentencing.  According to a September 3, 2008 entry in their docket report, said sentencing has been scheduled by U.S. District Court Judge Ronald B. Leighton for February 13, 2009.

(Last Edited 11/3/08)

Copyright 2008 Fred L. Abrams

According to Kohl v. Kohl, the Manhattan District Attorney had investigated N.Y.C. contractor Ted Kohl in 1995 for alleged money laundering, larceny and tax evasion.  Mr. Kohl had also been the subject of an asset forfeiture claim because of the District Attorney’s investigation.  As a countermeasure to the forfeiture claim, Mr. Kohl conveyed assets to his spouse, Mrs. Kohl.  Mr. Kohl then accepted a plea deal consisting of probation and a fine of about $2,750,000, during his 1997 money laundering, larceny and tax evasion trial.

Since the District Attorney had relinquished its asset forfeiture claim via the plea deal, Mr. Kohl’s earlier conveyance to Mrs. Kohl was ultimately a non-issue.  All of the foregoing however, suggested that Mr. Kohl’s conveyance may have been fraudulent. This was true because, as mentioned at “Badges Of Fraud In Debt Collection, Divorce & Bankruptcy“, fraudulent conveyances typically occur between related parties, in anticipation of a creditor’s claim, etc.  Mr. Kohl for example, had conveyed assets to a related party, his spouse Mrs. Kohl.  He had also conveyed assets because of the District Attorney’s pending forfeiture claim.

Since fraudulent conveyances are one way assets can be hidden, I asked former New York State Supreme Court Justice Herbert Posner (Retired) what he thought about Mr. Kohl’s conveyance.  During our discussion, former Judge Posner described a particular fraudulent conveyance he had seen.  As he explained: “The divorcing husband had fraudulently induced his wife to transfer her share of their marital residence.  He told his wife to sign some documents, which were supposedly insignificant and just related to operating his business.  The wife eventually learned that by signing those documents, she had actually transferred her interest in the marital residence to the husband’s family.”

Said wife ended up suing both her husband and his family for fraudulently conveying the marital residence.  In doing so, she likely relied on the Uniform Fraudulent Conveyance Act, codified in New York at N.Y. Debt. Cred. Law. §§ 270 – 281.  Bringing such a suit may be advisable when marital assets are fraudulently hidden / transferred away from a divorcing spouse.

Copyright 2008 Fred L. Abrams

Harold is an asset recovery agent, ("repo man"), who works in New England.  He sometimes lives out of his tow truck for a couple of days while searching for a particular debtor’s automobile.  When I recently called Harold on his cell phone, he said: "Until I put the GPS in my tow truck, I had boxes and boxes of road maps.  I’ve also been doing most of my skip-tracing from the truck, right on my laptop.  I am in the middle of a repo right now and a lady is running out of her house into the street.  She is yelling at me, can I call you right back?"

Harold does Internet research on his laptop via the website of IRB, at www.irbsearch.com.  IRB is a comprehensive search service similar to SmartLinx and DEBTORDiscovery, which were mentioned at my post "A Low-Cost Asset Search".  Harold often uses IRB to identify the name and address of a relative, friend or neighbor who may be hiding an automobile as a debtor’s nominee.  Some debtors, divorcing spouses, etc. however, do not just simply use a nominee to conceal their automobiles.  In some debt collection, divorce or bankruptcy proceedings, an automobile may even be registered in or moved through multiple jurisdictions in order to conceal it.

In U.S.A. v. Henry, U.S. District Court for the District of Columbia, Index No. 1:06 Cr 00079, Mr. Henry for example, was accused of concealing his $113,000 dollar Porsche 911 during his Chapter 7 bankruptcy.  According to pages 11-14 of his Second Superseding Indictment, (and other documents), Mr. Henry had concealed his Porsche by temporarily registering / insuring it out of the District of Columbia in the name of a nominee– his brother in New York. 

The Second Superseding Indictment further alleged that Mr. Henry had engaged in a health care fraud scheme, and had  purchased his Porsche with illicit proceeds from the same.  He was also accused of using his purchase of the Porsche as a means to launder money from his health care fraud.  Mr. Henry ultimately pleaded guilty to charges of health care fraud and agreed to forfeit his Porsche, as mentioned by paragraph "7" of the Government’s plea offer.  As the Court’s December 13, 2007 Judgment mentioned, Mr. Henry was sentenced to twenty months of prison.

Copyright 2008 Fred L. Abrams

As the Anti Money Laundering Blog mentioned on April 1, 2008, the U.S. State Department has listed the United Kingdom as a Major Money Laundering Country in 2008.  The State Department however, had also previously listed the United Kingdom as a Major Money Laundering Country in 2007.

The State Department releases its list of Major Money Laundering Countries as part of its annual International Control Narcotics Strategy Report.  At its Country Reports, the 2008 International Control Narcotics Strategy Report mentions that, among other things: 

"The UK should develop legislation and clearly enforceable implementing regulations to ensure that beneficial owners are identified and verified and that customer due diligence is required and ongoing, regardless of an already established relationship with the client."

In my October 8, 2007 post, "Fighting Financial Fraud At U.K. Banks", I too raised the issue of the effectiveness of some of the anti-money laundering regulation in the United Kingdom.  That particular post was partly based on a discussion I had with "Mr. London", who had investigated money laundering in the United Kingdom as a former vice president of a global bank.  Mr. London had suggested during our discussion, that money laundering would likely increase in the United Kingdom because of the "complicity  or misfeasance" of banks and the use of nominees to open bank accounts.   

Copyright 2008 Fred L. Abrams