financial institutions

Following a money trail as part of your asset searchI. DURING YOUR ASSET SEARCH LOOK FOR A MONEY TRAIL

There is always a money trail you can follow during your asset search. This is true no matter how your adversary hides assets.  Even if your adversary maintains a secret offshore bank account there is a money trail. The money trail at the offshore bank would consist of: account opening documents; monthly account statements; and bank signature cards.  Therefore, as part of your asset search you would seek these documents from the offshore bank.  You might do this by employing a letter rogatory or a compelled consent form.

II. MONEY TRAILS WITH MANY ELEMENTS

Perhaps most important to remember is that a money trail can involve many elements. The suspected money trail in the criminal case of USA v. Tully Lovisa et. al., is thought to include: nominees (i.e. intermediaries/straw persons); shell companies; and post office boxes in New York and the Netherlands. Prosecutors may claim Mr. Tully Lovisa &/or his co-conspirators used these elements to launder the illicit profits of an advance fee scheme.  The July 10, 2018 indictment in the case alleges Mr. Lovisa &/or his co-conspirators mailed phony prize notices to hundreds of thousands of victims.

The notices supposedly indicated the victims won cash prizes ranging from tens of thousands to millions of dollars.  The notices allegedly said the victims could collect the prizes by mailing a $20 or $25 processing fee to the post office boxes in New York or the Netherlands.  According to the indictment, Mr. Lovisa &/or his co-conspirators never paid valuable prizes to the victims and the supposed scheme generated  more than $30 million in illicit profits from the processing fees paid by the victims.

III. THE 2010 LAWSUIT AGAINST MR. LOVISA

In 2010 the Federal Trade Commission sued Mr. Lovisa for an alleged advance fee scam similar to the alleged advance fee scam described at Mr. Lovisa’s July 10, 2018 indictment. The 2010 lawsuit was settled via a stipulation filed with the Court on 4/19/12.  A review of the 2010 lawsuit reveals the suspected money trail in that case could have consisted of shell companies and post office boxes. The 2010 lawsuit claimed Mr. Lovisa had sent personalized mailers in violation of 15 U.S.C. §45 (a), which prohibits unfair or deceptive acts. One of these alleged mailers mentioned by the 2010 lawsuit, is reproduced below.

First image: pickbiz/Shutterstock.com

Copyright 2018 Fred L. Abrams

Compartments 1

How do you hamper an asset search while hiding vast sums of money across the globe? You may be able to do this by compartmentalizing your actions. Using compartmentalization to fly under the radar is nothing new. For example, terrorists in Paris compartmentalized what they did before their heinous November 13, 2015 attack. This is discussed by former FBI Special Agent Steve Cocco, at “Paris Attackers Displayed Strict OpSec, Planning and Compartmentalization.”

Ponzi schemers; high net worth divorcing spouses; money launderers; tax fraudsters & others can similarly compartmentalize their actions in schemes for hiding assets. The schemes can be as basic as parking money in a secret offshore bank account & directing the offshore bank to mail monthly bank account statements to an offshore post office box. By keeping the money & its monthly bank account statements offshore, they are compartmentalized & out of the spotlight. This makes it harder for domestic tax authorities; a divorcing spouse; a judgment creditor; & anyone else to detect the hidden money.

At earlier Asset Search Blog posts I wrote about the sham loan depicted by the link chart featured below.¹ I mention the loan again because it shows how strict compartmentalization can be employed to hide assets. As set forth at Money Laundering, Marital Assets & Divorce, the loan was used by a divorcing husband to launder both marital assets and undeclared revenue. Prior to the equitable distribution hearing in his divorce proceeding, the husband alleged he had a liability of $29 million owed to a prime bank in Germany because of an arm’s length business loan.

According to the husband, he was indebted to the German bank & had defaulted/failed to repay the loan. The supposed arm’s length loan was however, back-to-back , (i.e. a fully collateralized loan in which the borrower and the lender are one and the same). As a consequence of strict compartmentalization, the divorcing wife would not ordinarily be able to recognize that the divorcing husband was both the borrower and lender of the loan:

(Click On The Link Chart To Enlarge)

 

¹For privacy reasons, some of the facts at the link chart have been changed from the original legal matter.

Copyright 2007-2016 Fred L. Abrams

 

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During his corruption scheme, former congressman William Jefferson is thought to have hidden bribe monies in his refrigerator. He also apparently hid bribe monies by using shell companies formed in Delaware, Nigeria and other places. U.S. law enforcement officers were able to search for these illicit assets through search warrants and a letter rogatory seeking evidence in the Republic of Nigeria

The jury’s August 5, 2009 verdict in U.S.A. v. Jefferson, found former congressman William Jefferson guilty of hiding bribery proceeds by laundering them, as described by the 12th, 13th and 14th counts of his indictment.  The August 5, 2009 verdict and a U.S. Department of Justice press release also stated that Mr. Jefferson was guilty of soliciting bribes, honest services wire fraud, racketeering and conspiracy.

An August 6, 2009 jury verdict similarly found that about $470,000 dollars in two bank accounts were criminal proceeds subject to asset forfeiture.  Under the August 6 verdict, stock shares in suspected shell companies, (likely used as Mr. Jefferson’s nominees), could be forfeited. These stock shares were for a Nigerian company “W2-IBBS”; a Ghanaian company “International Broad Band Services, LLC”; a Delaware company “Multi-Media Broad Band Services, Inc.”; and a company in Indiana “iGate, Incorporated.”

As was previously reported by the media, investigators in U.S.A. v. Jefferson had interdicted $90,000 in a freezer on August 3, 2005, pursuant to a search warrant executed at Mr. Jefferson’s Washington D.C. home.  A search warrant of Mr. Jefferson’s congressional office had also been executed along with the one below for Mr. Jefferson’s New Orleans home.

To View The Entire Search Warrant, Click On The Above Image

A challenge prosecutors faced in U.S.A. v. Jefferson was that part of Mr. Jefferson’s corruption scheme included cross-border elements in Nigeria, Ghana and other African countries.  To acquire evidence from foreign witnesses, prosecutors sought relief in the form of mutual legal assistance.  Prosecutors also employed letters rogatory like the one available here for gathering evidence in the Republic of Nigeria.  Letters rogatory can be used in a variety of legal matters to search for assets parked offshore.  Under the right conditions, they may even be used to collect evidence from foreign bank witnesses who possess information about secret offshore bank accounts.

Illustration: Svitlana Medvedieva/Shutterstock.com

Copyright 2009-2016 Fred L. Abrams