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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This post was written by Leila A. Amineddoleh, Esq., of Amineddoleh & Associates LLC. Ms. Amineddoleh has been published extensively on issues related to art, cultural heritage, and intellectual property, and has appeared in major news outlets, including the New York Times, Forbes Magazine, TIME Magazine, and the Wall Street Journal. Ms. Amineddoleh’s post discusses how art assets may be hidden from divorcing spouses, creditors & others. It is also the 29th post at the Asset Search Blog’s “Divorce & Hidden Money” series:

In an entry that was published on this blog, I discussed the ways in which art collectors use undisclosed art holdings and valuation uncertainties to evade legal responsibilities (such as payment of tax bills of alimony to divorced spouses). Just as Audrey Hepburn’s character discovered that her husband hid his wealth in three valuable stamps in the 1963 film “Charade,” art collectors have been using their collections to hide value for years. Difficulties related to valuation arise, particularly when it becomes impossible to locate the artwork or determine the identity of the actual owner. But with breaking news about the “Panama Papers,” suspicion about art’s role in the obstruction of justice and concealment of funds has been confirmed again. Wealthy individuals are using artwork as an investment tool and they are shielding these holdings through shell companies and misleading tools. In light of these facts, the art world is once again coming under scrutiny.

The art market is one of the least regulated markets in the world, as transactions are completed without oversight, due to the nature of the trade. It is particularly shocking as the value of the art market is astronomically high. According to Art Market Report, sales of art exceeded $63.8 billion in 2015.[1]

However, there are valid reasons for anonymity in the art world. First and foremost, secrecy is guarded due to security concerns. Whereas tens of millions of dollars in cash are difficult to walk off with, artworks are usually portable.  A single lightweight canvas may be worth over $100 million, making the object vulnerable to theft. It is important to protect information about the works in private collections to limit the information available to thieves fixated on the objects.

Another reason to hide information is more personal. Collectors may not want to admit to selling works due to poor cash flow. Some owners are forced to sell works when facing financial hardships. Those individuals do not want this information to become public. At the same time, buyers may not want competing buyers to procure an overabundance of information about their purchases. Art is a personal passion, and something that some collectors do not want made public.

However, art is also used to hide assets, evade taxes, and unfairly withhold value from deserving parties (like creditors or divorcing spouses). This regrettable use of art was confirmed after the leak of the “Panama Papers.” In April, a Panamanian law firm, Mossack Fonseca, experienced a security breach and had over 11 million documents from internal files become public. Although illegal to assist someone in tax evasion, Mossack Fonseca specializes in establishing corporate structures to hide assets. The information in the leak confirmed the suspicion that wealthy individuals use shell companies to hide assets in contemplation of impending divorces or litigation. Continue Reading Hiding Art Assets, Anonymity & The Panama Papers

Image For Article About Panama Papers

2008 was the first time I wrote an article mentioning hiding assets via a lawyer in Panama. The article was called “Bearer Shares & An Asset Search.” Although the facts at the article were sanitized & changed for privacy reasons, it described a divorcing husband in the U.S hiding assets from both his wife & the I.R.S. through: a Panamanian lawyer, bearer shares, a shell company & other offshore elements.

Meanwhile, there have been many articles this week discussing the Mossack Fonseca Law Firm headquartered in Panama City, Panama. These articles arise out of the investigation of Mossack Fonseca which is detailed at the “Panama Papers” website published by the International Consortium of Investigative Journalists. Among other things, the website has a page of graphs, with one graph called “The hunt for bearer shares.” This particular graph seems to suggest that Mossack Fonseca employed bearer shares to help clients hide assets offshore.

At its own website, Mossack Fonseca says they are “Offshore Specialists since 1977.”  In this role, Mossack Fonseca is thought to have helped a large number of law-abiding clients transfer assets offshore for legitimate purposes. Mossack Fonseca could however, have also helped a large number of criminals seeking to conceal illicit assets. These criminals might have been tax cheats hiding undeclared revenue; corrupt government officials; & others seeking to conceal money by laundering it offshore.

Any criminals hiding assets through Mossack Fonseca will soon become known, since over 11 million documents at Mossack Fonseca were apparently hacked & leaked to the press. I suspect the hacked documents will show that assets were hidden offshore through elements commonly used to wash vast sums of money. Some of these elements are listed below & they should always be considered by anyone searching for valuable assets hidden from them.

Panama Papers Image: catwalker/Shutterstock.com

Copyright 2016 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

 

Schemes to hide assets can involve bulk-cash smuggling combined with other methods.
A scheme to hide assets from you may be carried out by combining bulk-cash smuggling with other concealment methods.

A divorcing spouse; judgment debtor; tax cheat; etc. may use several methods to conceal assets. “Red Flags For An Asset Search” listed 18 of these methods.  The methods for hiding assets included: bulk-cash smuggling; shell companies; multiple jurisdictions; foreign bank accounts; & nominees.  These methods might have been combined by Mr. Victor Lipukhin to conceal more than $10 million dollars in secret Swiss bank accounts. The press release “Former President of Russian Steel Producer’s U.S. Subsidiary Indicted for Hiding Assets in Secret Swiss Bank Accounts,” talked about Mr. Lipukhin’s alleged scheme to hide assets from the IRS.

Mr. Lipukhin was indicted on 3/20/2014 because of the suspected scheme.  The indictment suggests Mr. Lipukhin may have employed bulk-cash smuggling; multiple jurisdictions; shell companies; & other methods to conceal his alleged beneficial ownership of Swiss bank accounts. Mr. Lipukhin is thought to have initially formed shell companies in the Bahamas which he allegedly used to open the Swiss bank accounts. Mr. Lipukhin might have hired a nominee director for the shell companies, who could have acted as a bank signatory on the Swiss bank accounts.

If Mr. Lipukhin used a nominee director, it would have helped hide his suspected beneficial ownership of the Swiss accounts. According to the indictment, Mr. Lipukhin supposedly relied on real estate transactions; mortgages & a Canadian lawyer to hide assets.  Mr. Lipukhin also reportedly bought an automobile by paying approximately $24,539 in cash.  Although the seller of the automobile was required to notify the IRS by filing a Form 8300, Mr. Lipukhin allegedly tried to persuade the seller to keep quiet about the sale.  If this actually happened, it would have been a red flag that Mr. Lipukhin might have engaged in bulk-cash smuggling or money laundering.  The criminal case against Mr. Lipukhin is still pending at the prosecutor’s office, as the Court’s docket report reveals.

Image: Gorich/Shutterstock.com

Copyright 2016 Fred L. Abrams

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Favorite Asset Search Blog posts from 2015 include:

 

ERR Rembrandt111-SC-374664Recovering Art Assets & Cultural Heritage Propertycovers how divorcing spouses; terrorists & others may employ art to hide their assets.  This post was written by Leila A. Amineddoleh, Esq. who is an art and cultural heritage lawyer and an adjunct professor at Fordham University School of Law.

 

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 Private Investigators: A Surreptitious Search For Money Hidden In Divorce & Other Cases— discusses what might possibly go wrong during a search for hidden assets. It mentions searching for assets by using wiretaps; bank searches; law enforcement databases & physical surveillance.

 

FTC video sharing infoData Brokers Searching For Your Assets, Bank Accounts & Other Personal Information?explains that data brokers mine data & harvest your private information.  The information can consist of “where and when you open a bank account; estimated household income; the assets you own; loan history; credit card use and tax return transcripts.”

Screen Shot 2015-12-28 at 5.34.06 PMRed Flags & The IRS Search For Attorney Memmott’s Assets—analyzes a tax fraud prosecution.  In this case, prosecutors claimed Attorney Orion Douglas Memmott concealed assets through nominees (i.e. intermediaries), back-dated promissory notes & a business bank account.

 

First Image: macbrianmun/Shutterstock.com

Second Image: National Archives and Records Administration

Third Image courtesy of Flickr (Licensed) by Byung Kyu Park

Fourth Image: Courtesy of U.S. Department of Homeland Security/U.S. Immigration & Customs Enforcement

Fifth Image courtesy of Flickr (Licensed) by DonkeyHotey

Copyright 2015 Fred L. Abrams

Real Estate Leskovskiy
A divorcing spouse can hide marital assets by laundering them in a scheme to purchase real estate.

This 26th post in the “Divorce & Hidden Money” series describes one way assets may be laundered through the purchase of real estate.  It supplies the hypothetical situation of “Mark,” a high net worth businessman in the U.S. who hid assets during his divorce.

To hide assets from both his divorcing wife & the IRS, Mark secretly formed a shell company which he used to open an offshore bank account.  Mark hid his beneficial ownership of the shell company & bank account by hiring nominees (i.e.  intermediaries).  Mark employed the nominees as directors of his shell company & they acted as nominee bank signatories on Mark’s offshore bank account.

After Mark opened the offshore bank account, Mark relied on illicit cash couriers, (a.k.a “money mules”), to smuggle the undeclared revenue/cash Mark had accumulated from his business in the U.S.  After the illicit cash couriers smuggled Mark’s cash offshore, Mark deposited it into the offshore bank account he opened in the name of his shell company.  Through his lawyer, Mark then used the cash in this bank account to purchase real estate located in an offshore tax haven.  Mark’s lawyer titled Mark’s newly acquired real estate in the name of Mark’s shell company; and Mark successfully hid his beneficial ownership of the real estate from his wife & the IRS.

A search for assets hidden by a high net worth spouse like Mark, should try to determine whether real estate could have been used as a concealment tool.  When real estate transactions are used to launder or otherwise hide assets, red flags involving lawyers are usually present.  According to pp. 12-13 of a 2013 money laundering report by the Eastern and Southern African Anti-Money Laundering Group¹ these red flags can include the use of: large amounts of cash; intermediaries; money laundering havens; complex structures; business entities and trusts:

“a) Use of large amounts of cash to purchase property involving legal practitioners who do not report STRs [Suspicious Transaction Reports] giving the conclusion that they are either complacent in the money laundering or give a blind eye to circumstances relating to the payment where they could have asked more questions;

b) Distorting information on ownership by using intermediaries and false particulars during purchase of the property through a legal practitioner;

c) Legal practitioners facilitating quick money laundering havens through aborted property transactions where the initial deposited amount has to be paid back or transferred to another account from the legitimate client/trust account of the
lawyer;

d) Instances where legal practitioners have assisted with setting up complex structures to purchase real estate; and

e) Avoiding exposure of the beneficial owner by using the legal practitioner to purchase the property through a company or a trust.”

¹Typologies Report On Money Laundering Through The Real Estate Sector In The ESAAMLG Region Courtesy of: The Eastern and Southern African Anti-Money Laundering Group.

Image: Vycheslav Leskovskiy/Shutterstock.com

Copyright 2015 Fred L. Abrams

Talking Points Photo

The following is a list of Asset Search Blog posts which discuss data brokers; private investigators; bankers; suspected tax fraudsters; etc.  As these posts show, asset searches & asset recoveries sometimes raise privacy &/or criminal law issues.

A)  Data Brokers, Data Mining & Your Privacy

  1. Data Brokers Searching For Your Assets, Bank Accounts & Other Personal Information?
  2. Government Data Mining & An Asset Search

B) Possible Illegal Asset Searches

  1. Private Investigators & Their Clients Facing Criminal Prosecution Over Illegal Asset Searches
  2. Private Investigators: A Surreptitious Search For Money Hidden In Divorce & Other Cases
  3. Private Investigators: 5 Things To Be Aware Of When Hiring A PI For A Bank Account Search
  4. Searching For Assets By Using Insiders At A Bank
  5. Searching Law Enforcement Data Bases For Your Personal Information?

C)  Criminal Prosecution For Hiding Assets

  1. An Asset Search, Tax Fraud & Divorce
  2. Prosecuting Offshore Bankers Who Allegedly Help Tax Evaders Hide Assets From The IRS
  3. Red Flags & The IRS Search For Attorney Memmott’s Assets
  4. Concealing Assets In More Than $150 Trusts?

Image: zsirosistvan/Shutterstock.com

Copyright 2015 Fred L. Abrams

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If you are a divorcing spouse, judgment creditor or anyone else who believes they may need to do a bank search to locate hidden assets parked offshore, read this post to see how individuals sometimes hide their assets.  It covers the legal remedies that may be available to you in your asset search for offshore bank accounts.  This post was first published in 2013 and was called “Hidden Assets Offshore & A Bank Search To Find Them.”

Beneficial owners around the world are able to secretly transfer assets across international borders into offshore bank accounts.  The beneficial owners sometimes do this by money laundering through multiple jurisdictions; bulk-cash smuggling; back-to-back loans; shell companies; nominee incorporation services & gatekeepers like lawyers.  Legal remedies are however, usually available for finding hidden assets transferred offshore.  These remedies may even include seeking a court order directing a Swiss or other offshore bank to perform a bank search and disclose bank customer information.

MONEY LAUNDERING

The link chart below describes how one divorcing husband concealed both undeclared revenue and marital assets via multiple jurisdictions.¹  The husband laundered millions from the U.S., through a Swiss bank and a German one.  Prior to the equitable distribution hearing in his divorce, 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.  As this link chart reveals, the supposed arm’s length loan was back-to-back , (i.e. a fully collateralized loan in which the borrower and the lender are one and the same):

(Click On The Link Chart To Enlarge)

Continue Reading An Asset Search To Find Secret Offshore Bank Accounts

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If someone is hiding assets, you might detect the assets by reviewing: corporate records; patents & trademarks; court papers; U.C.C. filings; real estate documents; or through additional basic research.  “A Low-Cost Asset Search” gives information about how to perform basic research.  Although basic research can lead to a good result, it may not help you identify assets hidden through a complex concealment scheme.

The complex schemes might be facilitated by gatekeepers such as lawyers, accountants, officers, directors, etc.  The following details how a lawyer concealed assets with his organized crime client “Mr. M”, in a money laundering scheme:¹

Complex concealment schemes can among other things, also involve fraudulent asset transfers to third-parties & the placement of assets offshore.  To try to locate assets concealed by such schemes, it may be necessary for you to pursue your legal remedies & retain private investigators.  Legal remedies range from civil proceedings brought to attach bank accounts to employing criminal law tools. “An Asset Search In Geneva” lists these remedies for locating & recovering assets hidden at Swiss banks.  These remedies are not just limited to seeking assets at Swiss banks, as similar remedies are available in many countries around the world.

In addition to the use of legal remedies, private investigators can have an important role in asset search or recovery cases.  An investigator in one asset recovery case is described at the article “Private Investigators: An Asset Search By Pursuing Interviews & Tips.”  It highlights an effort to gather human intelligence about a divorcing husband thought to have hidden marital assets and committed tax fraud.  More articles featuring private investigators are: “An Asset Search In Switzerland”, “Following The Money Trail In Zurich” & “Fighting Financial Fraud At UK Banks.”

¹Case 08012, Courtesy of The Egmont Group

First Image: Davi Sales Batista/Shutterstock.com

Copyright 2015 Fred L. Abrams