White-Collar Crime Generally

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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

Hidden Money SearchMy tips for finding hidden money are at Seven Tools For A Successful Asset Search. Hiring a private investigator is also usually a good idea. For additional help in your search for hidden money, you may need some of the following.

A) HANDWRITING EXPERTS

If forged documents were used to hide or steal money, you may need handwriting experts/forensic document examiners to conduct a questioned document examination.  “A Case of Tax Fraud, Identity Theft & Murder” showed how forged letters were used by “Chuck” to steal money from “Mr. Wallace’s” Cayman Island bank account. Chuck forged Mr. Wallace’s signature in 2 letters Chuck sent to “Bob,” a  banker at the Cayman Island bank. By impersonating Mr. Wallace at the 2 forged letters, Chuck was able to drain Mr. Wallace’s Cayman Island bank account. Although I partly sanitized it for privacy reasons, one of the letters Chuck forged is available here.

B) LINK CHARTS

Link charting software enables one to visualize relationships and associations between people and/or things. This visualization can assist you or your private investigators in following a money trail/tracking assets. You may similarly use link charts in court to support your claim that money was hidden from you. A link chart of a money laundering circuit is discussed at the webpage How FINTRAC Builds A Case. Link charts for analyzing telephone toll calls, methamphetamine and cocaine distribution and various crimes are published by RFF Electronics.

C) FORENSIC COMPUTER EXPERTS

Forensic computer experts can assist you if you give them physical access to items thought to store digital evidence. These items can be a computer, mobile phone, flash card from a digital camera, etc. At a forensic computer examination, the experts can use keywords to search for hidden assets; look for databases like Quickbooks; search for logins at banks; and seek data which was supposedly deleted.

Image: Zenzen/Shutterstock.com

Copyright 2018 Fred L. Abrams

An Asset Search For Tax FraudA scheme to hide assets may start out with the primary goal of placing assets beyond your reach. The scheme may then develop the secondary goal of hiding assets from tax authorities/committing a tax fraud. To increase your chances of a successful asset search, you should therefore look for indicators of tax fraud. A good list of the indicators is published by the IRS at IRM 25.1.2.3, Fraud Handbook – Indicators of Fraud.

Just one indicator listed at the Fraud Handbook is “deposits into bank accounts under nominee names.” This means secretly depositing money into bank accounts titled in the names of  intermediaries (i.e. nominees).  “Red Flags & The IRS Search For Attorney Memmott’s Assets” analyzes the tax fraud case against the now-disbarred California attorney Orion Memmott. Prosecutors accused Mr. Memmott of hiding assets from the IRS by titling real estate & bank accounts in the names of nominees.

In USA v. Beverely, Docket No 17−cr−60093, prosecutors similarly accused Timothy J. Beverley of hiding assets from the IRS.  Prosecutors claimed Mr. Beverley of Pompano Beach, Florida failed to report to the IRS $2.2 million he allegedly stole from his employer.  Page 4 ¶14 (b) of Mr. Beverley’s superseding indictment said Mr. Beverley hid his stolen money in bank accounts titled in the names of nominees. Mr. Beverley supposedly committed the theft & alleged tax fraud while on supervised release from his earlier money laundering case.  In the laundering case, prosecutors accused Mr. Beverley of hiding the illicit proceeds of a bank fraud. Mr. Beverley apparently hid the proceeds of the bank fraud by washing them through bank accounts belonging to the NASCAR team Mr. Beverley once owned—Tyler Jet Motorsports.

Copyright 2018 Fred L. Abrams

Today’s post mentions how a tip collected from Colombian authorities revealed a bribery scheme thought to involve drug kingpin Jose Bayron Piedrahita-Ceballos.

During your asset search gather tips from witnesses who not only know about your adversary’s assets but are also at odds with your adversary. If you are litigating against your adversary you might collect tips from these witnesses by deposing them. Additionally, you should consider hiring a private investigator to conduct witness interviews to sniff out tips concerning your adversary’s assets. A witness interview I attended alongside an investigator is described at my post: “An Asset Search By Pursuing Interviews & Tips.”

The public corruption case brought against former Homeland Security Investigations Special Agent Christopher V. Ciccione, II (“Ciccione”), could show the importance of gathering tips when searching for assets. U.S. law enforcement officials collected a tip which led them to discover illicit assets or bribes given to Ciccione: about $20,000 in cash; a Rolex watch worth approximately $12,000; a hotel stay at the Marriott in Bogota, Colombia; a party; a dinner; liquor; & the services of prostitutes. The tip originated from governmental authorities in Colombia who had tapped phones & detected the apparent bribery scheme between Ciccione & Colombian narcotics kingpin Jose Bayron Piedrahita Ceballos (“Piedrahita”). At his 11/30/17 Factual Basis For Plea, Ciccione admitted taking the bribe payments, except for the Rolex watch.

Ciccione admitted that while a Special Agent, he took the bribes to orchestrate the dismissal of Piedrahita’s drug trafficking indictment filed in federal court in Florida. Ciccione’s 11/30/17 Factual Basis For Plea Agreement explained Ciccione had improperly obtained official authorization for Piedrahita & Piedrahita’s family to enter into the U.S. It also said Ciccione leaked the names of 2 DEA confidential informants to Mr. Juan Carlos Velasco Cano, who was Piedrahita’s associate. On 9/21/17 Ciccione was indicted for his role in the alleged scheme & on 2/9/18 Ciccione was sentenced to serve 3 years in prison. Two more Asset Search Blog posts mentioning tips include “Mr. Benjamin’s Divorce & His White Collar Crimes” & “Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street.”

Image: Courtesy of U.S. Treasury’s Office Of Foreign Assets Control

Copyright 2018 Fred L. Abrams

Asset Searches in the U.S.
This post says you can sometimes pursue asset searches in the U.S. because of your foreign lawsuit.

You may be able to use 28 U.S.C. § 1782 to perform asset searches connected to your foreign: divorce; dispute over a will; financial fraud claim; etc. This is true because pursuant to 28 U.S.C. § 1782, the U.S. District Court can allow you to serve subpoenas in the U.S. in furtherance of lawsuits in a foreign land.  You would serve these subpoenas on U.S.-based witnesses with knowledge of the assets. One subpoena based on 28 U.S.C. § 1782 is supplied at my October 18, 2017 post “Asset Searches In the U.S. Because of Lawsuits Outside The U.S.”  Based on 28 U.S.C. § 1782, the U.S. District Court also allowed service of a subpoena upon J.P. Morgan Chase Bank, N.A. in New York City.  On January 3, 2018 the U.S. District Court issued its Order authorizing issuance of this subpoena in the case known as In Re Application of Shanghai Xiaosheng Industrial Investment Co. LTD.

According to court filings, Shanghai Xiaosheng Industrial Investment Co. LTD., (“Shanghai”), needs evidence from J.P. Morgan Chase Bank, N.A. to frame a lawsuit it will file in China against 9th Base Investment Limited (“9th Base”).  Shanghai was reportedly defrauded out of more than $31 million US dollars by 9th Base.  On or about October 12, 2015 Shanghai allegedly transferred yen valued at $31 million US dollars out of China into 9th Base’s New York bank account at J.P. Morgan Chase Bank, N.A.  Shanghai apparently transferred the $31 million as part of a deal in which Shanghai was suppose to eventually acquire 28.57% of Kailai Oil & Gas Holdings, Ltd., which develops oil & gas in Papua, Indonesia. Shanghai alleged that 9th Base fraudulently induced Shanghai to transfer the $31 million &/or that 9th Base was unjustly enriched by the $31 million dollars. To learn more about Shanghai’s allegations against 9th Base, read the December 20, 2017 Declaration of Shen Jinrong available below.

First Image: Mattz90/Shutterstock.com

Copyright 2018 Fred L. Abrams

Searching for an adversary’s hidden assets can be like tracking a shell-game-operator.  In USA v. Khalili for instance, Mr. Dan Farhad Khalili was accused of hiding assets & undeclared revenue from the IRS for 15 years at 5 offshore banks. The offshore banks were located in Switzerland & Israel. Although on 4/27/11 Mr. Khalili applied for the IRS’ Voluntary Disclosure Program, the IRS found him ineligible for it. Mr. Khalili ultimately pleaded guilty to failing to file U.S. Department of Treasury Reports of Foreign Bank & Financial Accounts. On 4/25/17 Mr. Khalili was sentenced to 1 year & 1 day of prison. When you search for assets hidden through sophisticated schemes similar to the one Mr. Khalili was accused of, it may help to keep 3 goals in mind. These goals are to detect the paper trails, look for compartmentalization & seek transparency.

I. Detect The Paper Trails

One way your adversary may hide the paper trail of an offshore bank account is to open an offshore post office box. Your adversary could then have the offshore bank send monthly bank account statements & other documents to the offshore post office box. By maintaining these banking documents offshore, your adversary reduces the risk that you; domestic tax authorities; or anyone else; will detect the secret offshore bank account.

II. Look For Compartmentalization

A former intelligence officer I knew kept 1 cellular phone for incoming calls & another for outgoing calls. By compartmentalizing incoming & outgoing calls, the former intelligence officer was trying to hamper any investigation of his telephone toll records. Your adversary may compartmentalize his/her financial activities in a scheme to hide assets from you. For more information read my post “Compartmentalization & An Asset Search.”

III. Seek Transparency

By eliminating paper trails & compartmentalizing, your adversary can make his/her financial activities nontransparent. Your adversary can also make financial activities nontransparent via: fraudulent asset transfers; bulk-cash smuggling; art assets & cultural heritage property; diamonds or other portable valuable commodities; etc. These common concealment methods are outlined at “Red Flags For An Asset Search.”

Image: Brian A Jackson/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

Money Laundering Typology Post

One way to learn how to search for hidden assets is to read “A Laundry List For An Asset Search.” Another way is to study money laundering typologies. Money laundering typologies are used by law enforcement and regulators to develop countermeasures against emerging criminal trends. “100 Cases from the Egmont Group” contains a wide variety of money laundering typologies.¹ Although “100 Cases from the Egmont Group” arises from data collected during the 1990s, it is still relevant today. “100 Cases from the Egmont Group” describes these methods for concealing assets:

  • Concealment within existing business structures
  • Misuse of legitimate businesses
  • Use of false identities, documents or straw men
  • Exploiting international jurisdictional issues
  • Use of anonymous asset types

Below is the money laundering typology “Example B: Limited edition jewellery.”² It is about an agent who participated in an auction for a diamond necklace. The agent tried to conceal monies from suspected frauds by using multiple jurisdictions; offshore bank accounts & a portable valuable commodity—a diamond necklace.

Example B Limited editon jewellery

¹”100 Cases From The Egmont Group” courtesy of The Egmont Group of Financial Intelligence Units.

²“Example B: Limited edition jewellery” courtesy of The Guernsey Financial Services Commission.

First Image: studiostoks/Shutterstock.com

Copyright 2017 Fred L. Abrams

Back to Back Loan Image

Money Laundering, Marital Assets & Divorce was my first Asset Search Blog post highlighting back-to-back loans (i.e. a fully collateralized loan in which the borrower and the lender are one and the same). That post mentioned a divorcing husband who hid millions from his wife and the IRS, by claiming he was indebted because of an arm’s length business loan. The husband’s claim about owing money to an arm’s length lender was false, as the loan was back-to-back. In other words, the husband hid millions by secretly arranging to be both the borrower and lender of the loan; and by pretending to be in debt.

Federal prosecutors similarly discussed back–to-back loans in their tax fraud case against Los Angeles, California businessman Masud Sarshar. According to prosecutors, Mr. Sarshar hid tens of millions of dollars from the IRS by using two back-to-back loans and offshore bank accounts in Israel and Hong Kong. Mr. Sarshar supposedly maintained the offshore bank accounts in the names of intermediaries (i.e. nominees). Prosecutors also said an Israeli banker delivered offshore bank account statements to Mr. Sarshar by smuggling them into the U.S. on a USB drive hidden in a necklace.

To avoid being flagged as an American by the offshore banks, Mr. Sarshar is believed to have used Israeli and Iranian passports to open his offshore accounts. When Mr. Sarshar mentioned his offshore accounts during conversations with his Israeli bankers, Mr. Sarshar also reportedly spoke in code. On 3/13/17 Mr. Sarshar was sentenced to 24 months in prison for conspiring to defraud the U.S. and for seeking to impair/impede administration of internal revenue laws. Mr. Sarshar’s 8/1/16 plea agreement can be read here.

Image: Ionut Catalin Parvu/Shutterstock.com

Copyright 2017 Fred L. Abrams

11 27 16 Post

2/12/17 Update: It seems that after I published this post on 11/27/16, the Jamaican Major Organized Crime and Anti-Corruption Task Force, (“MOCA”), listed Mr. Peter Sangster as a fugitive. “The people on this list are wanted for serious and or violent crimes” MOCA’s website says. 

Forty-seven-year-old Peter Sangster of Cherry Gardens, Kingston 8, Jamaica, has been a local politician and businessman in Jamaica. After Jamaican authorities subjected telephone carrier Jamus Communications Ltd., (“Jamus”), to a levy, Mr. Sangster allegedly offered to help Jamus by procuring a “waiver” of payment. Mr. Sangster supposedly supplied Jamus with this waiver which was dated 1/9/2013. The waiver appeared to be signed by the then Prime Minister Portia Simpson Miller. The Prime Minister’s signature on the waiver is now however, thought to be a forgery.  It also appears that Jamaican law does not provide for a waiver of payment regarding the levy.

In exchange for allegedly supplying Jamus with the waiver, Mr. Sangster may have had Jamus transfer over $150,000 U.S. dollars to 2 bank accounts in the United States. One of the bank accounts is believed to be titled “Sangster Group LLC,” maintained at Bank of America, 515 Ocean Avenue, Brooklyn, New York. The other bank account was also at Bank of America and was thought to be titled “Peter and Tania Sangster.” Based on these allegations, MOCA investigated Mr. Sangster to determine whether he committed a forgery and larceny.

MOCA seemed to search for assets related to Mr. Sangster. MOCA sought corporate & banking records for “Sangster Group LLC.” MOCA similarly sought records for the “Peter and Tania Sangster” Bank of America account. On 10/6/16 a court in Delaware issued an order on behalf of MOCA, permitting a prosecutor to collect these records. The order authorized the prosecutor to gather the records listed on pp. 7-11 at the following letter rogatory/legal assistance request from Jamaica:¹

Letter Rogatory P Sangster
To Read The Letter Rogatory, Click On The Image Above

¹The letter rogatory/legal assistance request has been partly sanitized for privacy reasons.

First Image: Light And Dark Studio/Shutterstock.com

(Edited 2/12/17)

Copyright 2016 Fred L. Abrams