12 22 articleBelow is a list of red flags.  Recognizing the red flags can help you detect assets your adversary has hidden from you.  I first published the list in 2007 at my article “Asset Search Indicia For Divorce, Debt Collection & Bankruptcy.”  The list consists of common asset concealment methods:

Image: Davi Sales Batista/Shutterstock.com

Copyright 2007- 2018 Fred L. Abrams

Identifying and immobilizing assets in a timely fashion can be paramount to asset recovery cases ranging from an ultra- high net worth divorce to a forced collection proceeding against a debtor.

The abstract about “Suspending Suspicious Transactions” ¹ similarly mentions the “timely identification and immobilization” of  assets.  The abstract discusses this with regard to money laundering and terrorist financing:

“Seizure and confiscation of proceeds of crime, and funds intended to finance terrorism, are key objectives of the global initiative to combat money laundering and terrorism financing. The timely identification and immobilization of such funds are critical to permit the action necessary to prevent the flight of illicit assets beyond the reach of national law enforcement and prosecutorial authorities.”

Suspending Suspicious Transactions was published during July 2013 by the World Bank.  It examines the role Financial Intelligence Units, (“FIUs”), can have in freezing assets and/or postponing financial transactions at banks.

Suspending Suspicious Transactions also supplies fact patterns showing how FIUs work under anti-money laundering/countering financing of  terrorism, (“AML/CFT”), laws.  One of these fact patterns at pp.76-77, zeroes in on the way determined criminals utilized nominees, a sham loan and the purchase of  real property  to conceal assets in a money laundering scheme:

Page 76-77: Stroligo, Klaudijo, Horst Intscher, and Susan Davis-Crockwell. 2013. Suspending Suspicious Transactions. World Bank Study. Washington, DC: World Bank. doi:10.1596/978-0-8213-9917-0 License: Creative Commons Attribution CC BY 3.0
Page 76-77: Stroligo, Klaudijo, Horst Intscher, and Susan Davis-Crockwell. 2013. Suspending Suspicious Transactions. World Bank Study. Washington, DC: World Bank. doi:10.1596/978-0-8213-9917-0 License: Creative Commons Attribution CC BY 3.0

¹ Stroligo, Klaudijo, Horst Intscher, and Susan Davis-Crockwell. 2013. Suspending Suspicious Transactions. World Bank Study. Washington, DC: World Bank. doi:10.1596/978-0-8213-9917-0 License: Creative Commons Attribution CC BY 3.0

Copyright 2014 Fred L. Abrams

Freezing bank accounts maintained by nominees and Scottish prosecutors investigate a suspected tax fraud.

  1. Fraudulently conveyed assets may be recovered even if they are concealed in bank accounts maintained by straw persons / intermediaries (i.e. nominees).  A post-judgment creditor for example, can conceivably freeze or restrain nominee bank accounts in New York, as partly suggested by ERA Mgt. v. Morrison Cohen Singer & Weinstein, 605 N.Y.S.2d 91 (1st Dept 1993) and Bingham v. Zolt, 647 N.Y.S.2d 220 (1st Dept 1996).
  2. In their investigation of money laundering connected to a suspected Value Added Tax carousel fraud, Scottish prosecutors are scrutinizing alleged Delaware company “Trust Union LLC”.  The prosecutors’ letter rogatory filed in federal court on August 29th, asserts the suspected criminal scheme involved cross-border elements.  These elements could have included two accounts at Alpha Bank of Greece and the likely purchase of the house at 34 Kenilworth Road, located along this picturesque route in Stirling, Scotland:

    Image: Google Maps

    Copyright 2011 Fred L. Abrams

Using Divorce To Dissipate Assets & Delay Creditors” described allegations from 2008, that ex-Tyco chief executive Dennis Kozlowski might have fraudulently conveyed assets via an excessive divorce settlement.  Stated differently, the ex-Tyco chief was thought to have possibly used his divorce settlement as an asset protection tool.

An August 10th civil complaint filed in federal court by the United States Attorney, similarly accuses former Kansas University official Ben Kirtland of fraudulently conveying assets to his wife at the time of their divorce.  The complaint essentially claims that in anticipation of a $2 million dollar forfeiture judgment against him, Mr. Kirtland supposedly used this divorce settlement to wrongfully transfer assets:

(To Enlarge, Click On The Divorce Settlement)

Copyright 2011 Fred L. Abrams

This “Asset Search News Roundup” is about a few companies currently offering asset protection over the Internet. The first of these companies is Panama Legal, S.A.  Its Web site says that “Bullet Proof Asset Protection” is attainable by forming a “Panama Bearer Share Corporation“.  “Bearer Shares & An Asset Search“, meanwhile mentions that bearer shares may be used with shell companies, multiple jurisdictions, etc., to launder money.

Capital Asset, Inc. is yet another company marketing asset protection through the Internet.  It seems to especially display contempt for the rule of law, as indicated by “If A Judge Can See Your Assets, He Can Seize Them“.  Its Web page entitled “Asset Protection For Doctors”, corroborates this point by stating: “The only way to guarantee you cannot lose anything to a lawsuit is to have asset protection where no judge or attorney can find or see what you own, thus they cannot seize your assets.

Asset Protection Alliance, Inc. also refers to the judiciary in its asset protection Web page: “Remember, if a federal judge can find an asset, he can seize it. Conversely, what he can’t find, or doesn’t know about, he can’t touch.”  This Web page too supplies a fact pattern which, (under certain circumstances), could be a money laundering typology.  According to the fact pattern, a beneficial owner named “Gino” allegedly has no IRS tax or other worries because he apparently conceals his assets via an offshore debit card, nominees and a foreign bank account.

Copyright 2010 Fred L Abrams

"Forced Collections Against A Fraudster Like Madoff" & "Competing Over Mr. Allen Stanford’s Assets" described the problem of competing claimants trying to recover from a limited pool of funds.  This same problem has been encountered by the plaintiffs in The Lautenberg Foundation v. Madoff, 09-Civ-00816, whose lawsuit I mentioned at "Suing Peter Madoff For Bernard Madoff’s Securities Fraud".

The Lautenberg plaintiffs are damaged investors of Bernard Madoff’s Ponzi scheme and their lawsuit alleges they were injured by Bernard’s younger brother Peter.  As mentioned by their lawsuit, Peter Madoff is allegedly liable for his supposed tortious conduct while working as a "control person" at Bernard L. Madoff Investment Securities LLC  ("BLMIS").

While the Lautenberg plaintiffs argue that Peter Madoff is liable to them, a complaint filed in an adversary proceeding claims that the Lautenberg lawsuit tries to wrongly recover BLMIS assets from Peter Madoff.  This May 27, 2010 adversary complaint filed by Bernard Madoff Trustee Irving Picard, asserts that the Launtenberg plaintiffs were participants in Trustee Picard’s claims process for damaged investors.

Continue Reading Peter Madoff & His Competing Claimants

A successful asset search often requires gathering financial intelligence.  One financial investigator sought financial intelligence by doing “trash pulls”.  This investigator did trash pulls at an attorney’s home to elicit intelligence about the attorney’s client.  During one of these trash pulls, an envelope bearing the name of a climate-controlled art storage facility was discovered.  This discovery then led to the interdiction of a valuable painting hidden by the attorney’s client at the art storage facility.

A second financial investigator gathered financial intelligence by searching for leads provided by an adversary’s: passport, airline frequent flyer statements, country club membership, credit cards, phone bills and other records.  A third investigator was able to detect an adversary’s foreign bank account by acquiring financial intelligence from an offshore check printing company.  In addition to the foregoing, eliciting financial intelligence can involve tools ranging from human intelligence to a variety of discovery devices.

Human Intelligence

Human intelligence can be the only practical way to uncover some sophisticated asset concealment schemes.  The concealment scheme analyzed at “Money Laundering, Marital Assets & Divorce“, was in fact detected solely because of human intelligence.  “An Asset Search, Tax Fraud & Divorce” meanwhile, described an effort to access financial information via human intelligence.  It outlined how “Brian”, (a former high-ranking official at the Financial Crimes Enforcement Network, who had earlier been an IRS special agent), sought human intelligence about a divorcing husband.  Brian did this by interviewing a cooperating witness / business associate of the divorcing husband.

Discovery Devices

Another way to try to elicit financial intelligence and locate assets is to utilize discovery devices like depositions, interrogatories, etc.  Under limited circumstances, a court might even permit discovery via the physical inspection of an adversary’s home or place of business.  The court for example, allowed the receiver in the case of Ponzi schemer Trevor Cook, to perform this type of physical inspection.

The Cook receiver had successfully argued in court, that Fed. R. Civ. P. 45(a)(1)(c) & Fed. R. Civ. P. 34(a)(2), provided for an inspection of Mr. Cook’s Apple Valley, Minnesota home.  The receiver then seized receivership estate assets including three automobiles and 31 watches, at the Apple Valley inspection.

Likely more significant, was the receiver’s recovery of over sixty computers and other electronic media.  These were eventually forensically examined in an attempt to access additional financial information.  The receiver had also issued more than 250 domestic subpoenas, which too might have provided financial intelligence.

If cross-border elements / multiple jurisdictions are however used to conceal assets, then letters rogatory can be issued pursuant to the Hague Evidence Convention (20: Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters Hague Convention).

Letters rogatory, (a.k.a. “letters of request” or “legal assistance requests”), may help access financial intelligence possessed by foreign bank or other foreign witnesses, as explained at “An Asset Search With Letters Rogatory“.  They are sometimes even available in jurisdictions where there are strong bank secrecy laws, as this sanitized / changed copy of a Swiss letter rogatory indicates:

(Click Above To Read The Complete Letter Rogatory)

(Last Edited November 15, 2011)

Copyright 2010-2012 Fred L. Abrams

"How To Minimize Your Assets" published at a webpage belonging to Assetprotection.com, indicates that a judgment debtor can mitigate the risk of forced collection proceedings "[b]y becoming a smaller target".  The Assetprotection.com website is also replete with asset protection diagrams.  In cases that illicit proceeds are being hidden, some of these same diagrams could actually be laundering "link charts".

The third chart displayed from the top of its "Domestic Asset Protection Strategies" webpage, suggests that nominees, shell companies, bearer shares and loan agreements may all be effectively used to hide a true beneficial owner’s assets.  These components meanwhile, can be abused by money launderers seeking to wash their monies via "back-to-back" loans from financial institutions.

As partly shown below and more fully described at "Laundered Assets", a back-to-back loan appears at first glance to be an arm’s length transaction but conceals the fact that the borrower and lender are one and the same:

 Copyright 2010 Fred L. Abrams

After I wrote my November 28th, 2009 “Asset Search News Roundup” about Minneapolis money manager Trevor Cook, he was incarcerated on January 25, 2010 for civil contempt of court.  As the Court stated in its January 25, 2010 Opinion, the Securities and Exchange Commission and the Commodity Futures Trading Commission previously filed for injunctive relief against Mr. Cook.

They sought injunctive relief because Mr. Cook had allegedly participated in a Ponzi-like securities fraud which might have involved at least $190 million taken from 1000 or more victims.  Also according to the January 25th Opinion, Mr. Cook violated a November 23, 2009 asset freeze by dissipating assets.  The Court therefore remanded Mr. Cook to jail until “he purges himself of the contempt” by turning over:

  • $27,061,728.35 in foreign accounts;
  • $670,000 in cash;
  • $62,000 transferred to Mr. Cook’s brother;
  • $6,141,470 paid to preferred persons;
  • $2,005,857.88 in domestic accounts;
  • $53,000 from the sale of a Maserati & Hummer;
  • a computer and documents formerly possessed by Mr. Cook’s assistant;
  • a houseboat & a submarine;
  • his BMW, Lexus 430 & Lexus SUV;
  • his Bon Jovi tickets purchased in 2009;
  • and his collections of Faberge eggs and watches;

Continue Reading Mr. Cook Continues His Incarceration For Civil Contempt

The January 29th "Asset Search News Roundup" talks about HealthSouth’s ex-chief Richard Scrushy and includes the most recent remarks of Assistant Secretary For Terrorist Financing David Cohen:

  • "HealthSouth Founder Scrushy Is Acquitted of Fraud" explained that Mr. Scrushy was acquitted in June of securities fraud and other criminal law violations. Mr. Scrushy was however, sentenced to prison in his separate bribery case. HealthSouth shareholders were also awarded a $2.8 billion dollar judgment against Mr. Scrushy. Some of the litigation by these shareholders / post-judgment creditors, is outlined at: "The Richard Scrushy asset search resumes".
  • My post "Transnationally Tracking The Assets Of Terrorists", briefly referred to the funding of Al Qaeda terrorists. Assistant Secretary For Terrorist Financing David Cohen just shared his thoughts about Al Qaeda, with the Council on Foreign Relations. To read the Assistant Secretary’s remarks, click on the following image:

Remarks Courtesy of U.S. Department of the Treasury.

Copyright 2010 Fred L. Abrams