To cheat you out of your fair share, your divorcing spouse, a business partner, an executor handling a decedent’s estate or someone else may hide assets from you. As a result of an asset search or other investigation you might uncover a money trail for these hidden assets.
If you follow the money trail &
If a divorcing spouse hides marital assets there usually are red flags. Red flags are also often found when assets have been hidden by tax fraudsters, Ponzi schemers, bankruptcy debtors, money launderers & narco-traffickers. This 16th post in the “Divorce & Hidden Money ” series examines the red flags.
Red flags indicating assets might have
This post describes a case in which illicit drug monies were concealed offshore and laundered via a Cayman Island bank account. The case is also about tax fraud; identity theft and a murder. I published the post earlier at the Asset Search Blog and have used the post as a handout at many of my speaking engagements. It is an example of how financial fraudsters can operate. Some of the facts below have been changed/sanitized for privacy reasons. The following occurred over a four month period during 2002:
As part of his tax fraud, “Mr. Wallace” contacted a Cayman Island bank by mail in order to open a personal account with it. He mailed account opening documents to it which included a copy of his U.S. passport and also supplied the names of references. According to these documents, Mr. Wallace lived in Miami and was a real estate developer. Based upon all of the foregoing, the Cayman Island bank opened Mr. Wallace’s personal account with a “O” balance. Just six days later however, bank “X” in Panama wired $6.3 million to Mr. Wallace’s Cayman account without any mention of the remitter.
Mr. Wallace then went on a business trip to Central America for several months; so he rented his Miami home to “Chuck”. Although Mr. Wallace hadn’t known at the time, Chuck was a small-time crook. In fact, soon after Chuck took possession of Mr. Wallace’s home, Chuck started stealing Mr. Wallace’s mail. One of the letters Chuck had stolen was written by “Bob”, a personal banker from the Cayman Island bank where Mr. Wallace maintained his account. Bob had written to Mr. Wallace about a lucrative investment opportunity.
Surmising from Bob’s letter that Mr. Wallace had a sizable bank account, Chuck wrote to Bob pretending to be Mr. Wallace. As the sanitized copy of Chuck’s First Letter partly demonstrates, Chuck had assumed Mr. Wallace’s identity in that particular letter by forging Mr. Wallace’s signature. To comfort Bob, Chuck’s First Letter had also asked Bob for the minimum balance required to keep Mr. Wallace’s account open. Chuck’s “softening up” letter further suggested to Bob that Mr. Wallace’s funds might soon be needed “at very short notice” for an alleged real estate deal in Mexico. In the sanitized copy of Chuck’s Second Letter, Chuck again pretended to be Mr. Wallace as he wrote to Bob at the Cayman Island bank. In his Second Letter, Chuck directed the wire transfer of Mr. Wallace’s funds from the Cayman Island bank to Chuck’s own bank account in Mexico.
Continue Reading A Case of Tax Fraud, Identity Theft & Murder
The International Consortium of Investigative Journalists’ Swiss Leaks project, (“the Project”), arises out of whistleblower tips from Mr. Hervé Falciani who worked as a software technician at HSBC in Geneva. During 2008, Mr. Falciani reportedly supplied the French government with the Swiss bank account information of more than 100,000 HSBC customers from over 200 countries. The true beneficial owners of these accounts range from foreign dictators to American actors.
The Project is outlined by the article “HSBC Scandal Heightens Calls for Tougher Bank Oversight.” The article mentions “[t]he use of secret accounts and shell corporations to hide cash and its account holders is hardly confined to HSBC. Another banking giant caught engaging in this was Switzerland’s UBS. And there have been others.” According to reports published today by the Guardian, CNN &/or the BBC, Swiss police raided HSBC offices in Geneva, Switzerland. The police raids could be based on suspected violations of Art. 305bis Swiss Criminal Code: Money Laundering (English Translation) & other anti-money laundering laws.
The police raids and the Project bring to the fore the problem of money laundering through Swiss bank accounts. There are however, some Swiss reforms in this area. The reforms are outlined at an e-mail Swiss counsel sent me last week. The e-mail emphasizes there are “fundamental changes affecting the Swiss financial markets” and says “the business model of the banks is changing towards more transparency on tax matters.” Part of the e-mail is reproduced below and its key points are:
Continue Reading Swiss Leaks Project & Police Raids Raise The Issue Of Swiss Reform
My January 13th post notes that divorcing spouses can employ nominees, (i.e. intermediaries), to secretly purchase property, conceal bank accounts, etc. Prosecutors claimed Attorney Orion Douglas Memmott similarly used nominees to hide assets from the IRS. Mr. Memmott’s 2010 superseding indictment asserted Mr. Memmott hid assets from the IRS by “placing real property in the names of nominees…” It charged him with attempted tax evasion (26 U.S.C. § 7201) and perjury/false statements (26 U.S.C. § 7206 (1). Prosecutors alleged Mr. Memmott hid real estate titled in the name of Mr. Memmott’s nominee, his ex-wife Sheila Enos-Boyd. Mr. Memmott was found guilty of these charges and on December 15, 2014, the Court sentenced him to 18 months of prison.
In addition to hiding real estate through his nominee, prosecutors accused Mr. Memmott of embezzling hundreds of thousands of dollars from law firm clients and friends. One of Mr. Memmott’s victims was Merrill Osmond, lead singer of the world famous Osmond family. Mr. Memmott is believed to have embezzled $60,000 from Mr. Osmond. Another victim was Ms. Ranelle Wallace, who was left homeless by Mr. Memmott because he reportedly embezzled $37,000 from her. Prosecutors claimed Mr. Memmott hid these and other funds he embezzled, in business bank accounts belonging to his nominees. Mr. Memmott’s suspected use of nominees to conceal assets, was just one red flag of fraud in his case. Other red flags were: Mr. Memmott’s claim at his June 9, 2005 IRS Form 433-A, that he had no bank accounts; Mr. Memmott’s alleged use of back-dated promissory notes; and Mr. Memmott’s suspected use of a business bank account instead of a trust account.
When the IRS determined that Mr. Memmott owed about $655,555 in unpaid personal federal income taxes for years 1993-1999, it assigned IRS Revenue Officer Miller to search for Mr. Memmott’s assets. On June 9, 2005 Officer Miller had Mr. Memmott execute an IRS Form 433-A, Collection Information Statement. At this June 9th Form, Mr. Memmott indicated he had no personal bank accounts. This was a red flag for Officer Miller who testified at Mr. Memmott’s trial that: “I just found it very odd that the defendant was an attorney, a businessman, he was receiving Social Security, but he had no personal bank accounts. So that was kind of an indicator of fraud for me because it just was so out of the ordinary to have someone of that stature not have a personal bank account.”
Continue Reading Red Flags & The IRS Search For Attorney Memmott’s Assets
I first published this post on December 14, 2007 and it is now the 12th post in the “Divorce & Hidden Money” series. As shown below, a divorcing spouse’s effort to valuate marital assets occasionally raises tax fraud or other criminal law issues. Furthermore, assets and income can be concealed by pocketing cash
In the Breaking Bad television series, Walter White hid profits from his illegal manufacture of methamphetamine. He hid illicit drug profits in a crawl space under his house, as the video above partly reveals. Walter and his wife Skyler also laundered money through the A1A Car Wash. Walter’s partner in crime, (Breaking Bad’s Jesse Pinkman),
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.
This is the eighth post in the “Divorce & Hidden Money” series. Like “Four Asset Concealment Tools” and “Four Ways Assets Can Be Secretly Transferred”, the post reveals methods a spouse may use to hide marital assets and keep more than his/her fair share of the marital estate.
Credit/Debit Cards- Using a credit or debit card which draws from a secret foreign bank account is one way divorcing spouses can secrete and/or launder assets. This method is so common that the IRS established its Offshore Credit Card Program to detect tax cheats maintaining undeclared foreign accounts.
A ‘Zebra’ Strategy (a.k.a Commingling)- A divorcing spouse may conceal marital assets by commingling them with business or other assets. This ‘zebra’ strategy of mixing assets, is mentioned by the article Cayman Bank Records Seized. The article discusses Germany’s recent seizure of records and says that some Coutts Trust Company customers “followed a ‘zebra’ strategy of mixing legally declared and taxed accounts containing smaller amounts with undeclared accounts containing larger sums.”
Asset Protection Services- One promotor of these services is Capital Asset, Inc. Its website claims that forming companies in Nevada, or Wyoming, or Delaware is preferable because: “Do you know that partnerships, corporations, LLCs in most states make you completely visible? If a judge can see your assets, he can seize them.” Divorcing spouses may hire a promotor of asset protection services to establish such companies which can then be used to open bank accounts or maintain assets with anonymity.
Continue Reading Divorce & Hidden Money: Four Methods Spouses Sometimes Use To Conceal Assets
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
.png){kind=link}
