In the criminal case against Robert Bandfield, the IRS & SEC searched for assets laundered offshore. These assets were the proceeds of stock pump & dump schemes.  The illicit proceeds of the pump & dump schemes were more than $250 million. The $250 million was believed to be hidden by money laundering carried out by Mr. Robert Bandfield & his co-conspirators.

According to a 2/6/17 press release, Mr. Bandfield was the “architect of [an] offshore fraud haven.” Mr. Bandfield seems to have owned 2 nominee incorporation services, which established & sold shell companies. The 2 nominee incorporation services formed offshore shell companies believed to have helped launder the $250 million.

Red flags Mr. Bandfield & his co-conspirators allegedly hid the $250 million included their suspected misuse of:

After Mr. Bandfield’s 9/5/14 indictment by a grand jury sitting in Brooklyn, N.Y., Mr. Bandfiled was arrested on 9/9/14 at the airport in Miami, Florida. The indictment charged Mr. Bandfield & others with conspiracy to commit securities fraud; conspiracy to defraud the U.S. via tax fraud; & money laundering conspiracy. On 2/6/17 Mr. Bandfield was sentenced to 72 months imprisonment.  The sentence was based on Mr. Bandfield’s guilty plea to the money laundering conspiracy charged by his second superseding indictment available here.

Image: Olga Sabarova/Shutterstock.com

Copyright 2017 Fred L. Abrams

Like the IRS & SEC you can sometimes search for assets by using whistleblower tips, my October 3rd program explains.

A) PROGRAM DESCRIPTION

At the New York County Lawyers’ Association on October 3, 2017 from 5:30 PM to 9:00 PM, I will be the program chair of “Whistleblowers, Secret Swiss Bank Accounts & Recovering Hidden Assets.” Attendee registration is available at the website available here or by calling the New York County Lawyers’ Association at (212) 267-6646. During the October 3rd program, I highlight the use of whistleblower tips to recover hidden assets.  I show how to search for assets which can be hidden by high net worth divorcing spouses; corporations; Ponzi schemers; tax fraudsters; etc.  I talk about tools you can use to recover assets hidden in Switzerland and other places across the globe. The October 3rd program also focuses on the Internal Revenue Service & Securities Exchange Commission whistleblower programs which can provide qualifying tipsters with the largest payouts compared to any other reward programs in the world.

Jack BlumWashington, D.C. attorney Jack Blum is well-known internationally for his representation of whistleblowers. In addition to others he has represented,  Mr. Blum will talk about Mr. Hervé Falciani, the whistleblower the media dubbed “the [Edward] Snowden of Swiss banking.”  Mr. Falciani allegedly stole Swiss bank account information from HSBC in Geneva and as a whistleblower turned the information over to French authorities. This alleged HSBC bank account information eventually fell into the hands of the International Consortium Of Investigative Journalists, which published part of it at their webpages known as the Swiss Leaks project.  Furthermore, Mr. Blum appeared on the CBS/60 Minutes television show to discuss the foregoing.  He will similarly discuss these matters at the October 3rd program and analyze: the IRS whistleblower program; problems whistleblowers face in the real world; and the difficulty lawyers may encounter in dealing with whistleblowers either as clients or tipsters.

ThomasLabaton & Sucharow partner Jordan A. Thomas will also speak at the October 3rd program.  Mr. Thomas will discuss the Securities Exchange Commission’s whistleblower program, as he is one of the world’s leading experts on it. He will review the advantages and disadvantages of the different whistleblower programs; and the ethical concerns gatekeepers like attorneys, accountants, officers and directors have, in reporting illegal behavior in both the civil and criminal contexts.  As more fully set forth below, Mr. Thomas: is a former assistant director in the Commission’s Enforcement Division; had a leadership role in developing the Commission’s whistleblower program; and was assigned to many of the Commission’s highest-profile matters such as those involving Enron, Fannie Mae, UBS & Citigroup.

Photo Charles Bott

Charles Bott QC, Head of Carmelite Chambers in the United Kingdom, is a recognized authority on financial crime and its regulation.  Subject to his availability, Mr. Bott may travel to New York to speak at the October 3rd program. He has appeared in more than 80 serious fraud trials including some of the leading cases of recent years and advised many other clients under investigation.  Mr. Bott specializes in cases of serious fraud, money laundering and revenue evasion; and in the United Kingdom, he is regularly instructed in serious criminal cases and regulatory cases of all kinds.

Continue Reading Whistleblowers, Secret Swiss Bank Accounts & Recovering Hidden Assets

Your Search For Assets Hidden Offshore

When naming offshore havens for opening secret bank accounts, people usually mention Switzerland, the Cayman Islands, Liechtenstein, etc.  Meanwhile, bank accounts in almost any country can be put to work to hide & place assets out of reach. “Using Multiple Jurisdictions To Launder Money” discussed a suspected scheme to bribe judges in Italy.  According to prosecutors, illicit proceeds from this offshore scheme were hidden in bank accounts located in the U.S. & elsewhere. “Money Laundering, Marital Assets & Divorce” outlines another scheme which relied on cross-border elements to conceal assets. The scheme involved a divorcing spouse in the U.S. who hid undeclared revenue in a Swiss bank & then “washed” it through a bank in Germany.¹

As the above essentially suggests, tracking assets offshore can become a critically important part of your asset search. How do you search for assets hidden offshore? One way is by employing legal tools. The following article discusses the tools federal prosecutors may use to collect evidence from witnesses residing offshore.² Two of the tools the article mentions are compelled consent forms & letters rogatory.  These two tools are not just for use by prosecutors. They are sometimes used by divorcing spouses, judgment creditors & others searching for offshore bank accounts/assets hidden offshore:

Click On The Image To Read The Entire Article

¹The fact pattern supplied at “Money Laundering, Marital Assets & Divorce,” has been changed & sanitized for privacy reasons.

²“Obtaining Foreign Evidence Outside of The Mutual Legal Assistance Treaty Process,” U.S. Attorneys’ Bulletin March 2007, is supplied courtesy of the Executive Office for United States Attorneys.

Image of offshore banking & tax haven concept: ChameleonsEye/Shutterstock.com

Copyright 2016 Fred L. Abrams

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Spotting the red flags/the money laundering indicators is one way to search for hidden assets.  The red flags may help you sniff out money or other assets concealed in matters ranging from a high net worth divorce to a securities fraud.  Financial Intelligence Units part of the Egmont Group employ red flags to search for money hidden across the globe by terrorist financiers; narco-traffickers; kleptocrats & others.  As more fully set forth here, red flags include:¹

  1. Large-scale cash transactions.
  2. Atypical or uneconomical fund transfer to or from foreign jurisdiction.
  3. Unusual business activity or transaction.
  4. Large and/or rapid movements of funds.
  5. Unrealistic wealth compared to client profile.
  6. Defensive stance to questioning.

The case study below, (sanitized for privacy reasons), is also from the Egmont Group.²  It is about a homicide; public corruption; fraud; & the laundering of $9.5 million dollars in “Economy F.”  The money was washed through a corporate bank account; lawyers’ trust accounts; & bank accounts belonging to money mules.  The Financial Intelligence Unit (“FIU”) involved in the case analyzed Suspicious Transaction Reports (“STRs”); issued orders freezing monies; etc.

ECONOMY F: A CASE STUDY

     The Economy F police received a criminal complaint from a government department involving fraud and theft. The facts related to the predicate offenses indicated that staff working in the government department colluded with an external crime syndicate to assist in obtaining copies of legitimate vendor payments, which were subsequently duplicated and processed to the benefit of various accounts indirectly linked to the syndicate. The initial loss exposure amounted to approximately US$573,000. Police requested Economy F’s FIU’s assistance in blocking the accounts that received the proceeds of crime, with an additional request to identify other possible players.
     The FIU interacted with the relevant accountable institutions and subsequently issued several postponement orders, resulting in US$317,000 of the initial proceeds being secured. This enabled the prosecuting authority to obtain a preservation order to secure the proceeds. These interventions were brought immediately after the police provided proof of the nexus between the criminal offense and the funds that were still available in the identified bank accounts.  Upon analysis of the STRs and bank records received of the accounts, the FIU identified various other payments originating from different government departments, which were unknown to the police at that stage, amounting to US$9.5 million.
Continue Reading An Asset Search Seeking Laundered Money Hidden Across The Globe

Photo Of A Money TrailWhen vast sums of money are hidden in a bank account there is usually an electronic trace or other kind of money trail.  A skilled investigator may help detect the money trail, as suggested by my 2010 post Secreting Assets Without A Border Trace.  The post quoted “Roger” a former foreign intelligence officer who was working as a private investigator.  At the post, Roger discussed some asset concealment methods and investigative techniques for following a money trail.  As these concealment methods and investigative techniques are still being used, the relevant part of Secreting Assets Without A Border Trace is featured below.  This is also the 4th post in my series about what private investigators can and cannot do legally when searching for assets.¹

As a consequence of his U.S.-based Ponzi scheme, Bill the investment adviser was indicted for alleged violations of 18 U.S.C. § 1956 (money laundering); 26 U.S.C. § 7201 (tax fraud); 18 U.S.C. §§ 1341 and 2 (mail fraud); 15 U.S.C. §§ 78j(b) and 78ff(a) (securities fraud); and 15 U.S.C. §§ 80b-6 and 80b-17 (investment adviser fraud). The critical question now was: what had happened to the $35 million dollars lost by the damaged investors in Bill’s Ponzi scheme? After Bill insisted he dissipated this $35 million by gambling and on cocaine, prostitutes, etc., federal agents interdicted $1 million U.S. dollars hidden in a bedroom wall at Bill’s California home.

Among the other items the agents seized during their search of Bill’s home, were Bill’s passport, desktop computer, cell phone, bank statements and jewelry store receipts.  Some of these items revealed that Bill laundered $7.5 million of the damaged investors’ money through a nominee bank account opened in the name of a Nevada shell company.

Bill had eventually withdrawn this $7.5 million to purchase diamonds and other portable valuable commodities at Nevada jewelry stores He next traveled as an airline passenger to Zurich, Switzerland, according to his passport. To date, the only recovery from Bill’s Ponzi scheme has been the $1 million once hidden in his bedroom wall. Given all of the above, “Roger” explained how investigators could try to determine whether Bill had secreted any of the $35 million in a foreign bank account: Continue Reading Private Investigators: Detecting Hidden Assets By Following A Money Trail

How can one detect assets one is unaware of?  Sometimes by putting tipsters to work and collecting their tips.  These tips may be gathered in a variety of ways.  “An Asset Search, Tax Fraud & Divorce” describes a private investigation in which a prospective tipster was interviewed by “Brian”, an ex-IRS Special Agent and former high-ranking official at FinCEN.

Brian conducted the interview on behalf of a divorcing wife trying to locate marital assets hidden by her divorcing husband.  “Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street” mentions a tip supplied by an anonymous letter.  This tip letter caused Polish prosecutors to launch a money laundering investigation and search for assets connected to a suspected shell company in Delaware.

Meanwhile, the whistleblower programs at the U.S. Internal Revenue Service and the U.S. Securities Exchange Commission, (“the Commission”), also collect tips.   The two programs respectively sniff out tips about assets hidden in tax or securities frauds.  The article “What Happens To An SEC Whistleblower Tip?” available below, gives an insider’s view of the Commission’s whistleblower program.  One of the article’s authors is Jordan A. Thomas, a former assistant director in the Commission’s Enforcement Division.  Mr. Thomas had a leadership role in developing the Commission’s whistleblower program and he is now a partner and chair of the Whistleblower Representation Practice at Labaton Sucharow LLP.

What Happens To An SEC Whistleblower Tip?¹

One of the questions we’re frequently asked by clients and prospective clients is “what happens to a whistleblower tip once it’s submitted to the SEC, and how does the SEC determine which tips to actively investigate?” These are crucial questions for any potential whistleblower, especially given that the SEC receives approximately 30,000 tips, complaints and referral each year – 3,200 of which were whistleblower tips in 2013 – but can only conduct about 700 active enforcement investigations each year. Continue Reading Detecting Hidden Assets By Putting Tipsters To Work

I will present my program “The Ins & Outs Of Recovering Assets Via Whistleblowers & Other Tipsters” in London at 11:40 AM June 23, 2014, during the Carmelite Chambers International Fraud & Asset Recovery Conference.   “The Ins & Outs Of Recovering Assets Via Whistleblowers & Other Tipsters” highlights how whistleblowers sniff out vast sums of money hidden through laundering and other asset concealment schemes.  I open the program by discussing the fact pattern of a divorcing husband hiding tens of millions of dollars from his wife and domestic tax authorities, by using shell companies, multiple jurisdictions, etc.

The program features Washington, DC attorney Jack Blum who will talk about the IRS Whistleblower Program.  Mr. Blum has been an expert witness for the U.S. Department of Justice and the Internal Revenue Service.  Mr. Blum additionally served as associate counsel, or assistant counsel, or special counsel to three U.S. Senate committees or subcommittees; and been quoted by or mentioned in thousands of newspaper and magazine articles around the world.

Since he resigned at the end of 2008, as “Of Counsel” to Baker & Hostetler’s Washington, DC office, Mr. Blum practices part-time for a select group of clients.  Just one of Mr. Blum’s clients is whistleblower Rudolf Elmer.  As described by “Swiss Banker Blows Whistle on Tax Evasion”, Mr. Elmer provided tips to the IRS, a U.S. Senate subcommittee and the Manhattan District Attorney’s Office, about suspected tax cheats with offshore bank accounts.  At a January 17, 2011 Frontline Club Press Conference, Mr. Elmer also supplied WikiLeaks with this same kind of information.  Mr. Elmer’s whistleblowing led to his criminal prosecution by Swiss authorities, on charges that he violated Swiss bank secrecy law.

Continue Reading Carmelite Chambers International Fraud & Asset Recovery Conference

Seizing mob assets and tipping the SEC:

  1. The article “Mafia hurt by asset seizures but still too strong to beat” suggests that Italian asset forfeiture laws are critically important in fighting the Italian mob.  The article quotes a magistrate in Naples who “told Reuters the confiscation of assets was a vital weapon, ‘more important even than the arrest and conviction of bosses,’ because of its visible impact in challenging mafia power.
  2. No End In Sight For Decade-Long Conn. Divorce Case” discusses Ms. Karen Kaiser and her ex-husband David Zilkha.  Ms. Kaiser gathered copies of e-mails from the couple’s home computer and these e-mails were eventually supplied as a tip to the SEC.  The e-mails allegedly help show that Mr. Zilkha had provided nonpublic information about Microsoft Corporation, to Pequot Capital Management, Inc. and Pequot’s founder, Arthur Samberg.  A 2010 news release explained that the SEC ultimately filed a complaint against Pequot and Samberg, for alleged insider trading.  The SEC also brought a related proceeding against Mr. Zilkha.  For their assistance with the underlying SEC insider trading investigation, Ms. Kaiser and her current husband received a $1 million dollar SEC whistleblower reward in 2010.

Copyright 2013 Fred L. Abrams

A low-cost asset search; two ex-JP Morgan bankers accused of concealing trading losses; and Rafael Caro Quintero:

Although Caro Quintero was earlier sentenced to 40 years of prison for the heinous 1985 murder of DEA agent Enrique “Kiki” Camarena, a Mexico appellate court released Caro Quintero early. “Mexico seeks to detain recently released drug lord Rafael Caro Quintero” meanwhile, mentions that the Mexican attorney general issued a warrant for the provisional detention of Caro Quintero.  The attorney general did this in anticipation of a formal extradition request from the U.S.  I asked Donnie the former DEA agent to comment on these events and he said:

“Kiki and I went to the same high school and I knew his sisters well.  Kiki was one of the reasons I joined the DEA.  This situation is outrageous and Kiki’s murder should not have happened.  There will never be a closure.  I hope they extradite Caro Quintero to the U.S. and the Mexican Government soon opens its eyes.”

Link Chart: OFAC

Copyright 2013 Fred L. Abrams

A StarTribune article says that Trevor Cook’s currency program fraud was the second-largest Ponzi scheme in Minnesota history. The article too mentions that prosecutors have accused one of the scheme’s participants, Gerald Durand, of a murder-for-insurance plot.  The suspected plot surfaced at the “Government’s Motion For An Evidentiary Hearing Regarding Durand“, filed December 26, 2012 in U.S.A. v. Beckman, et al., U.S. District Court, District of Minnesota, Index No. 11-cr-00228.  As more fully set forth by a December 27th court filing, Mr. Durand’s defense counsel calls the murder plot “imagined” and claims “…the government, at the eleventh hour, has its snitch cry bloody murder.

Meanwhile, the court-appointed receiver tasked with recovering Trevor Cook’s Ponzi scheme proceeds, published statistics about the scheme’s 724 damaged investors.   The statistics are accompanied by a graph, adding insight into the demographics of the damaged investors:

Chart Courtesy of: The Cook, Kiley & Beckman Receiverships

Copyright 2013 Fred L. Abrams