Following the money trail with a professional asset hunter | Articles

What are some common asset concealment methods?
They can include the use of multiple jurisdictions. That means essentially exploiting the jurisdictional differences between different locations, different geographical locations, in order to conceal an asset.

On a domestic level we see in some cases debtors, divorcing spouses, and other beneficial owners of assets sometimes take a measure as simple as going across state lines to try to hide assets to frustrate a collection effort. On a transnational basis we see those most determined to hide assets availing themselves or selecting jurisdictions offshore, or foreign jurisdictions abroad, to hide their assets.

When and how did the asset search blog come about?
It was launched September of 2007. I recognized that in these different kinds of cases I've seen throughout my legal career there were common elements when people hide assets. Following the money trail can sometimes be very similar in divorce cases or even bankruptcy fraud cases, much as it may be when law enforcement is following the money trail of a drug kingpin to seize his or her assets.

In some of these cases we see the use of nominees, meaning agents or representatives, who might open up a bank account to conceal assets on behalf of the true beneficial owner. We may see the use of multiple jurisdictions. We may see the use of high-risk geographical locations, which can be domestic or foreign.

How easy is it to form a shell corporation in some of these places, these high risk areas?
Very easy. Opening a corporation can be done by paying a nominal fee. There are nominee incorporation services domestic and foreign that will provide such a service. The problem is not forming shell companies per se, it's the lack of transparency. In some cases shell companies have legitimate proper business purposes. So all shell companies are not necessarily used for illicit purposes such as hiding assets. Of course some of them are.

The use of a shell company can be a red flag that assets are being hidden, just as the use of multiple jurisdictions might be, or the use of nominees.

Where do you think the Madoff investigation is going to go from here?
Complex financial frauds involving Ponzi schemers such as Madoff and alleged Ponzi schemer Allen Stanford often occur on the watch of accountants, and it raises the question at the very least of malpractice as to the various accountants. Whether they be located in the UK, or in the US, or where ever they may be located in the world, there usually are accountants that sign off on a variety of documents. And in all of these schemes the burning question in my mind is: where were these accountants? What were they doing? That's the first place I think investigators would look.

Obviously, looking for a nexus between other individuals, relatives, friends, gatekeepers like accountants, lawyers, anyone with a nexus to the financial goings on of such schemers are likely in the sights of investigators. I've raised the issue of Ruth Madoff in a recent article which focuses on whether she'll be able to keep her $2.5 million given the fact that her stipulation that was court approved in no way excludes any other party (other than the U.S. Attorney) from seizing assets.

The interesting issue from my perspective, or perhaps the most interesting issue from my perspective is the fact that there are competing interests in the asset forfeiture and or forced collection proceedings involving Bernard Madoff and I would suspect the same issues exist as to the alleged Ponzi schemer Allen Stanford.

What do you think of the media coverage of forfeiture and some of the complex financial crimes?
I think that the Bernard Madoff case, followed by the Allen Stanford case, have brought national and international attention on asset forfeiture. And I think the mainstream media is covering it more often. Though governmental authorities throughout the world have been using asset forfeiture as a tool for many years now.

How do you think forfeiture actions might change under the Obama administration?
I can only speculate. My speculation is that we will see a strengthening of asset forfeiture laws and an increase in asset forfeiture activity as the worldwide economy shrinks and tax revenues decrease and governments worldwide are seeking to get up from behind their deficits and from behind the curve. I think we will see a widening of the use of asset forfeiture as a possible revenue tool.

Asset forfeiture is simply a tool. It can be used properly to compensate victims and to deter crime on the one hand. However, if it is abused than obviously, like any tool, it takes a different color so to speak, it takes a different meaning, a bad meaning. So it depends on how it's used, how it's applied, by law enforcement and by regulators.

How do you go about doing what you do?
One way that we try to uncover fraudulently concealed assets, whether its assets that are part of a financial crime, assets that have been secreted by a divorcing spouse, or assets that are being hidden by a bankruptcy debtor, is by using red flags. Government agencies, private investigators, lawyers and others look for red flags as to whether assets are being concealed or not.

For example, a beneficial owner's transfer of funds through banks in multiple jurisdictions can be a red flag that assets have been hidden. Purchasing large amounts of portable valuable commodities, hording cash, forming a shell company can also be red flags. The weight that should be given to these, however, depends on the facts and circumstances in a particular case.

Other examples include the use of shell companies, sham trusts, nominees, bearer bonds, money orders, and informal banking systems such as hawalas or the black peso exchange. If an individual is using an informal banking system to transfer funds, perhaps offshore or elsewhere, well, that can be a red flag that assets are being hidden.