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This program has been approved by the Board of Continuing Legal Education of the Supreme Court of New Jersey for 3 hours of total CLE credit. Of these, 1 qualify as hours of credit for Ethics/Professionalism, and 0 qualify as hours of credittoward certification in civil trial law, criminal trial law, workers compensation law and/or matrimonial law.

SwiSS BankS, Smuggling and Other aSSet recOvery iSSueS

Prepared in connection with a Continuing Legal Education course presented at New York County Lawyers’ Association, 14 Vesey Street, New York, NY

presented on Thursday, April 18, 2013.

P r o g r A m C h A I r :

Fred Abrams, Esq.

P r o g r A m F A C u L t Y :

Fred Abrams, Esq.Jack Blum, Esq.

Robert Fiechter, Des Gouttes & Partners, Geneva Switzerland

3 TRANSITIONAL & NON-TRANSITIONAL MCLE CREDITS: This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 3 Transitional & Non-Transitional credit hours: 1 Ethics; 1 Skills; 1 PP

Information Regarding CLE Credits and Certification

Swiss Banks, Smuggling and Other Asset Recovery Issues April 18, 2013; 6:00 PM to 9:00 PM

The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution.

i. You must sign-in and note the time of arrival to receive your

course materials and receive MCLE credit. The time will be verified by the Program Assistant.

ii. You will receive your MCLE certificate as you exit the room at

the end of the course. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium.

iii. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate.

iv. Please note: We can only certify MCLE credit for the actual time

you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. Again, if it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week.

v. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly, unless you can provide verification of course completion. Your certificate will be mailed to you within one week.

Thank you for choosing NYCLA as your CLE provider!

New York County Lawyers’ Association

Continuing Legal Education Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646

Swiss Banks, Smuggling and Other Asset Recovery Issues

Thursday, April 18, 2013 6:00 PM to 9:00 PM

Program Chair & Faculty: Fred L. Abrams, Esq.

Faculty: Jack Blum, Esq. and Robert Fiechter, Partner, Des Gouttes & Partners, Geneva, Switzerland

AGENDA

5:30 PM – 6:00 PM Registration 6:00 PM – 6:10 PM Introductions and Opening Remarks

Fred L. Abrams, Esq 6:10 PM – 7:00 PM The Ubiquitous Problem Of Hidden Assets Fred L. Abrams

• How Ponzi schemers, tax cheats, divorcing spouses, etc., may hide assets from domestic authorities and everyone else

• Following A Money Trail o U.S. Bank Secrecy Laws o Contaminated or Spurious Tips

• Recovering assets by using whistleblowers / tipsters in

your client’s court case

7:00 PM – 7:05 PM BREAK 7:05 PM – 7:55 PM Tipping The IRS Via Its Whistleblower Program Jack Blum

• Swiss Bank Julius Baer whistleblower, Rudolf Elmer

• LGT Group’s former Liechtenstein computer technician, Heinrich Kieber

7:55 PM – 8:00 PM BREAK 8:00 PM – 8:50 PM Interdicting Assets Hidden Across U.S.-Swiss Borders

Robert Fiechter

• Bringing Forced Collection Proceedings In Switzerland & Other Countries

o Swiss Professional Secrecy Laws

• Recovering Assets By Using Criminal & Civil Law Tools

o Seeking Mutual Legal Assistance Treaty & Related Relief

8:50 PM – 9:00 PM Questions and Answers

New York County Lawyers’ Association

Continuing Legal Education Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646

Swiss Banks, Smuggling and Other Asset Recovery Issues

Thursday, April 18, 2013 6:00 PM to 9:00 PM

Program Chair & Faculty: Fred L. Abrams, Esq.

Faculty: Jack Blum, Esq. and Robert Fiechter, Partner, Des Gouttes & Partners, Geneva, Switzerland

Table of Contents

Articles from the Asset Search Blog By Fred L. Abrams, Esq. Application for Reward for Original Information Submitted By Jack Blum, Esq. Interdicting Assets Hidden Across U.S.-Swiss Borders Materials Submitted By Robert Fiechter

• Business News, Swiss-American Chamber of Commerce, March 2013, No. 362, at p.2

• Checklist For Foreign Requests For Mutual Assistance In Criminal Matters, Courtesy of the Swiss Federal Office of Justice

• The Different Areas Of Competence Of The Federal Office Of Justice, Courtesy of the Swiss Federal Office of Justice

• Conditions For A Commissioner Or Diplomatic Or Consular Official To Obtain Evidence In Switzerland, Courtesy of the Swiss Federal Office of Justice

• Court Decisions Help Clarify Issue Of Liability In Deferred Letter Of Credit Fraud Cases, article from ICC Commercial Crime International, November 2004 issue, volume 22, No. 6 at pp. 1-2, reprinted with permission

Faculty Biographies

Fred L. Abrams located tens of millions of dollars hidden in offshore tax havens and filed legal proceedings in Zurich, Geneva, Tel Aviv, Amsterdam and San Juan, Puerto Rico, to seek discovery from foreign bank witnesses. A member of the New York bar since 1990, he handled a wide variety of legal matters in which assets were hidden, such as RICO, money laundering, identity theft and tax fraud. Practicing in the asset recovery areas of financial intelligence, financial fraud investigations and forced collection proceedings, Fred L. Abrams has been cited by Forbes Magazine, The New York Times, Reuters, MoneyLaundering.com and FoxBusiness News. He received a J.D. Benjamin Cardozo School of Law-Yeshiva University and a B.A. with Departmental Honors, Harpur College S.U.N.Y Binghamton. As a guest of the New York City Bar Association, the New York County Lawyers' Association, the Queens County Bar Association, the Brooklyn Bar Association, the Nassau County Bar Association, the Suffolk County Bar Association, the Massachusetts' Chapter of the American Academy of Matrimonial Lawyers and the 8th Annual OffshoreAlert Financial Due Diligence Conference, he lectured about how assets may be fraudulently concealed both domestically and abroad. Fred L. Abrams also publishes “The Asset Search Blog”, (www.assetsearchblog.com), where he writes about interdicting assets which have been fraudulently concealed by politically exposed persons; securities fraudsters; post-judgment debtors; divorcing spouses and others.

SWISS BANKS, SMUGGLING & OTHER ASSET RECOVERY ISSUES

NEW YORK COUNTY LAWYERS’ ASSOCIATION Thursday, April 18, 2013

© 2013 Fred L. Abrams. No part of this publication may be reproduced, distributed, or transmitted in any

form or by any means without the prior written permission of the publisher.

TABLE OF CONTENTS

A. SOME COMMON ASSET CONCEALMENT METHODS i) Nominees, Multiple Jurisdictions, Shell Companies, etc.

1. Money Laundering, Marital Assets & Divorce 2. Bearer Shares & An Asset Search 3. "If A Judge Can Seize Your Assets, He Can Seize Them" 4. Could Former Premier Misick Face U.S. Forced Collection Proceedings? 5. The Actress, An Ex-Premier & Hip Hop Weekly Magazine 6. Domestic Shell Companies & An Asset Search 7. Nominees & Hidden Assets 8. Using Multiple Jurisdictions To Launder Money

ii) Portable Valuable Commodities

1. Secreting Assets Without A Border Trace 2. Hiding Assets Through Portable Valuable Commodities 3. Recovering Art Illicitly Transferred To New York City

iii) Bulk-Cash Smuggling

1. A Doctor, A Lawyer & Bricks Of Cash In Switzerland 2. Offering Offshore Bank Accounts In Liechtenstein 3. Forfeiture & The DEA's Asset Search

iv) Gatekeepers & Trusts

1. Hiding Assets Through Gatekeepers With Accounts Across The Globe

2. Concealing Assets In More Than 150 Trusts? 3. Red Flags In One Of Washington State's Largest Bankruptcies 4. Seattle's Ubiquitous Asset Protection Lawyer, Ms. Mary Simon 5. Mr. Mastro's Bankruptcy Estate & His Self-Settled Trusts

v) Wire Transfers

1. A Tax Fraud & Identity Theft From Miami

• Chuck's First Letter • Chuck's Second Letter

2. Money Laundering By Minneapolis Money Managers? 3. Interdicting A Ponzi Schemer's Assets 4. Tracking Trevor Cook's Assets Across U.S.-Swiss Borders

B. USING TIPSTERS TO RECOVER ASSETS

1. An Asset Search Via Whistleblowers & Other Tipsters 2. Human Intelligence & The SEC's Whistleblower Program 3. An Asset Search, Tax Fraud & Divorce 4. Mr. Benjamin's Divorce & His White Collar Crimes 5. Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street

C. FOLLOWING A TAINTED OR CONTAMINATED MONEY TRAIL

1. Lawsuit Claims PI's Could Have Illegally Accessed Bank Info

• Alleged April 6, 2009 E-Mail

• Alleged February 4, 2009 E-Mail 2. Revisiting A Lawsuit Against Two Private Investigators

• Purported Bank Account Opening Document 3. Asset Search Litigation To Stay In Puerto Rico

D. ASSET RECOVERY TOOLS

1. An Asset Search In Geneva 2. An Asset Search In Switzerland

3. Legal Memo: Is The Wrongful Indication Of Beneficial Ownership Of

Bank Accounts Punishable Under Swiss Law?

4. Foreign Bank Secrecy Laws & An Asset Search

5. Recovering Assets In Switzerland Hidden By Dictators

6. UBS & Its John Doe Summons

7. A Primer For Gathering Financial Intelligence

8. Letters Rogatory As An Asset Detection Tool

9. Turning To Financial Investigators During Asset Recoveries

10. Uncovering Assets By Using Compelled Consent Forms

11. Using Forensic Science To Fight Financial Fraud

12. Recognizing Hidden Assets The Red Flags

13. Asset Search Indicia For Divorce, Debt Collection & Bankruptcy

Money Laundering, Marital Assets & Divorce

By Fred Abrams on September 14th, 2007 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Laundering Marital Assets, Money Laundering, Swiss Banks, Tax Fraud

Money laundering circuits sometimes operate in the U.S. through domestic bank accounts used as “laundering links”. It is also true that money laundering circuits washing vast sums of money, will typically do so through offshore bank accounts located in tax havens like Switzerland, Luxembourg, the Cayman Islands, etc. Such was the case of one divorcing husband, (the depiction of whom is altered below for privacy reasons), who laundered martial assets / U.S. money between Switzerland and Germany.

Prior to the equitable distribution hearing in his divorce case, the husband alleged that he had a liability of $29 million owed to a prime bank in Germany because of an arm’s length business loan. An investigation however, revealed that his loan was back-to-back , (i.e. a fully collateralized loan in which the borrower and the lender are one and the same). The husband had first secretly deposited $30 million into a Swiss bank account and next used that same $30 million to collateralize a Swiss bank guarantee for $29 million. By then using that Swiss bank guarantee as full collateral, the husband persuaded a German bank to issue a personal bank loan to him for $29 million to be disbursed in Germany.

After the loan principal was disbursed to him in Germany, the husband intentionally failed to repay his $29 million debt due and owing to the German bank. The husband’s loan default meant that the German bank would collect $29 million transferred from Switzerland pursuant to the Swiss bank guarantee which had served as loan collateral. As the link chart below suggests, the loan default in Germany was actually the very means used to wash the money the husband had earlier deposited in Switzerland:

The husband’s financial transfers shown above had no economic benefit, as is usually the case where a back-to-back loan is used to hide assets. Back-to-back loans are however not only sometimes used to conceal marital assets during a divorce. They can also regrettably be used in a tax fraud to hide assets and income; by a debtor hiding assets from a creditor; or as a means to disguise monies which are the proceeds of a white-collar or other crime.

(Edited January 22, 2010)

Copyright 2007-2013 Fred L. Abrams

Bearer Shares & An Asset Search

By Fred Abrams on January 23rd, 2008 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Money Laundering, Tax Fraud

In the recent past, bearer shares especially allowed for anonymous corporate ownership. A corporation that issued bearer shares had no central registry of the bearer share ownership. As a glossary from the The Financial Action Task Force explains, “[b]earer shares refers to negotiable instruments that accord ownership in a legal person to the person who possesses the bearer share certificate”. Via its 24th Recommendation, the Financial Action Task Force also warns that bearer shares can be used to launder money.

I too have seen how bearer shares had likely been used to conceal marital assets and evade U.S. taxes. In that particular case, (the facts of which have been changed herein for privacy reasons), the divorcing husband and his business partners accumulated $18 million in suspected undeclared revenue in the U.S. The husband and his partners then secretly formed a shell corporation in the Republic of Panama. They jointly owned and controlled this corporation through the issuance of bearer shares.

To prevent the interdiction of their bearer shares by domestic authorities, the husband and his partners retained a lawyer in Panama to hold the bearer shares in a trust. As their trustee, the Panamanian lawyer deposited the bearer shares into a stock custody account at a bank in Panama. As the following diagram demonstrates, the husband and his partners finally deposited their $18 million in suspected undeclared revenue, in a Cayman Island bank account in the name of their Panamanian shell company:

As described above, the husband and his partners hid their $18 million from the United States by employing multiple jurisdictions including Panama and the Cayman Islands. They concealed their beneficial ownership of the $18 million through their use of protective layers consisting of: bearer shares; a nominee shell company established in Panama; a trust formed by a foreign gatekeeper (i.e. the Panamanian lawyer); and an offshore bank account in the Cayman Islands.

Such layering is characteristic of money laundering and sometimes ends in the kind of tax fraud case filed by the U.S. Department of Justice against Mr. Walter Anderson, who is discussed at my post “A $365 Million Dollar Tax Fraud“. As that post mentioned, Mr. Anderson used bearer share stock certificates and shell companies to conceal the undeclared revenue he had parked offshore.

(Updated August 28, 2012)

Copyright 2012 Fred L. Abrams

“If A Judge Can See Your Assets, He Can Seize Them”

By Fred Abrams on May 9th, 2010 Posted in Financial Institutions, Forming Shell Companies To Conceal Assets, Money Laundering

The website of Capital Asset, Inc. at www.bulletproofasset.com, 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.”

Capital Asset, Inc. presumably recommends forming companies in Nevada, Wyoming or Delaware because in these states there are little or no reporting requirements about a company’s shareholders, managers, etc. As many prosecutors and financial investigators already know, the kind of corporate formation services offered by Capital Asset, Inc. can easily be used by criminals determined to hide their illicit assets.

This lack of transparency in Nevada, Wyoming and Delaware can be an enormous money laundering risk, as these states may be a haven for those who would form a shell company and then use the same to open a nominee bank account. Once such a nominee bank account is opened, beneficially owned funds can be maintained in it with complete anonymity. Wyomingcorporations.us is one of the countless corporate formation businesses that seem to be trying to cash in on this lack of corporate transparency.

It advises that a Wyoming company’s “Members are not reported!” and also offers the Wyoming “virtual office”, where for $400 dollars one can easily establish a supposed Wyoming office address, with a virtual office phone and fax number. Perhaps even worse is the comment at the Wyomingcorporatons.us Web site that: “Now accounts for Wyoming corporations can be formed anywhere, and the brick-and-mortar type bank isn’t a necessity. Internet banks are a fine solution.”

(Last Edited May 13, 2012)

Copyright 2010 Fred L. Abrams

Could Former Premier Misick Face U.S. Forced Collection Proceedings?

By Fred Abrams on January 5th, 2010 Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Money Laundering, Public Corruption, White-Collar Crime Generally

At first glance, there was nothing unusual about the lawsuit filed in New Jersey involving Former Premier Michael Misick of the Turks and Caicos Islands. The complaint in the lawsuit executed by the Former Premier, claimed that Hip Hop Weekly Magazine founders David Mays and Raymond Scott had misappropriated the magazine’s cash.

Mr. Mays and Mr. Scott separately alleged in their answer, counterclaim and third-party complaint, that the Former Premier had been an investor in the magazine and was basically one of its owners. On March 23, 2010, there was a status and settlement conference scheduled in the lawsuit, as mentioned by the Court’s docket entry:

“Target Of Corruption Probe Sues Hip-Hoppers For Supposed Fraud” meanwhile, explained that the Former Premier had been the subject of a public corruption probe by the Turks and

Caicos Islands Commission of Inquiry. The Inquiry issued its Redacted Final Report, which had once been available here. This Final Report asserted that the Former Premier was known to have enjoyed a “Hollywood lifestyle” beyond his salary and allowances as a politician. It also raised the critical questions: Had the Former Premier been a party to public corruption and

could he have taken illicit monies?

If a politically exposed person like the Former Premier, actually has engaged in a public corruption scheme, then the scheme’s illicit proceeds could become the target of forced collection proceedings. This result might especially occur if a foreign politically exposed person laundered the illicit proceeds by making investments in the U.S. or otherwise parked assets there.

Foreign governmental authorities might then use a letter rogatory under 28 U.S.C. §1782 (Assistance to foreign and international tribunals and to litigants before such tribunals), to gather evidence from U.S. witnesses about the illicit proceeds. Governmental authorities could also try to interdict these illicit proceeds in the U.S., through the following federal statutes:

• 18 U.S.C. §981 (a) (1) (A), (B) & (C)– Asset forfeiture because of money laundering; • 18 U.S.C. §984— Asset forfeiture of identical property within one year of a laundering

offense, etc;

• 18 U.S.C. §1956– Money Laundering; • 18 U.S.C. §1957– Money Laundering of property from specified unlawful activity; • 18 U.S.C. §2314– Interstate or foreign transfer of property obtained by fraud; • 28 U.S.C. §1345– U.S. District Court jurisdiction where the Government is plaintiff; • 28 U.S.C. §1355 (a)– U.S. District Court jurisdiction over forfeiture proceedings.

Note: On March 3, 2010 Forbes.com mentioned The Asset Search Blog and some of the foregoing at “The Premier And The Hip-Hop Magazine“.

(Last Edited May 6, 2010)

Copyright 2010 Fred L. Abrams

The Actress, An Ex-Premier & Hip Hop Weekly Magazine

By Fred Abrams on June 13th, 2010 Posted in Asset Search/Fraud Investigation, Public Corruption, White-Collar Crime Generally

During his marriage to actress LisaRaye McCoy, ex-Turks and Caicos premier Michael Misick was investigated for public corruption by the Turks and Caicos Islands Commission of Inquiry. The ex-premier’s suspicious activities were believed to be so harmful, they contributed to the UK Government decision to suspend parts of the 2006 Turks Caicos Island Constitution.++

With this August 14, 2009 constitutional suspension, the right to a jury trial was revoked, the Cabinet abolished and the House of Assembly dissolved. As my article “The Former Premier’s Nexus To Hip Hop Weekly Magazine” reported, the ex-premier’s suspicious activities had included his possible transfer of funds through the My Way Productions 2 company to the U.S. based Hip Hop Weekly Magazine.

Not covered by my article, was how Ms. McCoy might possess probative evidence regarding the ex-premier’s relationship to Hip Hop Weekly and My Way Productions 2. Perhaps as a director of My Way Productions 2, Ms. McCoy may even have executed a March 30, 2007 “Unanimous Written Consent” agreement about Hip Hop Weekly:

(FIRST EXCERPT MARCH 30th CONSENT AGREEMENT)

(SECOND EXCERPT MARCH 30th CONSENT AGREEMENT)

A March 30, 2007 operating agreement concerning Hip Hop Weekly seems to have also been executed by Ms. McCoy. Although Ms. McCoy was publicly examined about My Way Productions 2 by the Turks and Caicos Islands Commission of Inquiry on January 30, 2009, there was never any discussion of Hip Weekly Magazine, according to pages 73 to 205 of the January 30th hearing transcript.

The Turks and Caicos Islands Constitution ©Crown Copyright 2006 and January 30, 2009 Hearing Transcript ©Crown Copyright 2009, are reproduced under the terms of Crown Copyright Policy Guidance issued by HMSO.

Copyright 2010-2011 Fred L. Abrams

Domestic Shell Companies & An Asset Search

By Fred Abrams on September 30th, 2007 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Money Laundering

An asset search covering a number of countries is sometimes necessary if monies the subject of a divorce, bankruptcy, or debt collection proceeding are hidden in a money laundering circuit. This can be true because "Large-scale money laundering schemes invariably contain cross-border elements", as is recognized by the Financial Action Task Force– an international organization against money laundering and terrorist financing.

Domestic companies without active business or significant assets, ("shell companies"), however should also be considered part of the money laundering landscape. According to a Financial Action Task Force June 23, 2006 summary at page 9, the beneficial ownership of these kinds of companies in Nevada and Delaware "…may not, in most instances, be adequate, accurate or available on a timely basis. This is a vulnerability for the U.S. AML/CFT [anti-money laundering/counter-terrorist financing] system."

The Internal Revenue Service also recognizes in its 2007 Dirty Dozen Tax Scams, that: " Domestic shell corporations and other entities are being formed and operated in certain states for the purpose of disguising the ownership of the business or financial activity." Meanwhile, a Financial Crimes Enforcement Network November 9, 2006 advisory demonstrates that it too is aware of the misuse of shell companies to hide assets/launder money. Besides its November advisory, the Financial Crimes Enforcement Network issued a November 2006 report explaining that Delaware, Nevada, Oregon, and Wyoming may be "…attractive to those persons seeking to hide illicit activity within the framework of shell corporations."

That same report also mentions that only Alabama, Alaska, Arizona, and Kansas require a limited liability company to supply ownership information while, (depending on the structure of a limited liability company), 47 other U.S. jurisdictions do not. The misuse of shell companies is however not just confined to money laundering. To cite just one example, in Dempster v. Overview Equities, Inc., 2004 slip op. 01149 ; 4 A.D.3d 495; 773 N.Y.S.2d 71 (2d Dept 2004) a divorcing husband fraudulently transferred the title of a residence to his newly created company in Delaware, which was most likely a shell corporation. The husband made the property transfer to his Delaware corporation without valid consideration within weeks of the equitable distribution hearing in his divorce.

(Last Edited August 18, 2011) Copyright 2007-2011 Fred L. Abrams

Nominees & Hidden Assets

By Fred Abrams on November 7th, 2007 Posted in Asset Search/Fraud Investigation, Financial Institutions, Money Laundering, Tax Fraud

A beneficial owner can try to use a nominee, (i.e. intermediary), to hide money with complete anonymity in a bank account. As the website of www.offshoresimple.com essentially explains, a beneficial owner may hire a nominee incorporation service to supply a bank signatory for a nominee bank account. This suggests that a beneficial owner may use a nominee to circumvent the know your customer / customer identification procedures at a bank. For example, through the bank signatory service offered by www.offshoresimple.com, a beneficial owner might use a nominee to:

• Open / manage an offshore bank account. • Act as an account’s bank signatory. • Supply a bank with the necessary customer identification documents. • Execute the incorporation documents needed to form an offshore corporation.

The above-described use of nominee incorporation services is widespread. As page 64 of the 2007 National Money Laundering Strategy mentions, nominee incorporation services that arrange U.S. bank accounts and shell companies are believed to annually launder as much as $36 billion just from the former Soviet Union.

Instead of retaining a nominee incorporation service, some beneficial owners hide assets by using friends or relatives as nominees. According to his twenty-one count forty-four page July 26, 2005 indictment, Mr. Edwards for example, had stolen insurance premiums and then concealed them in nominee financial accounts in the names of his wife and two shell companies. Mr. Edwards had also used his wife as the nominee purchaser of his mountain chalet and a “palatial” home– both of which were bought with stolen insurance premiums.

All of the foregoing had been part of Mr. Edward’s insurance and tax fraud scheme which lasted from about January, 1999 through April 30, 2001. Via his indictment, Mr. Edwards was charged with: mail fraud (18 U.S.C. § 1341 & 18 U.S.C. § 1342); wire fraud ( 18 U.S.C. § 1343); making false statements to a financial institution (18 U.S.C. § 1014); theft from a health care benefit program (18 U.S.C. § 669); money laundering (18 U.S.C.§ 1957 [a] & [b]); and tax evasion (26 U.S.C. § 7201).

Mr. Edwards was specifically accused of collecting insurance premiums from various employers while unlicensed to do so. Instead of providing thousands of employees with workers’ compensation insurance, he converted their insurance premiums for his own use. Between January 1, 2000 and April 30, 2001 Mr. Edwards also allegedly stole $2.5 million from his company Fidelity Group, Inc., which was a health care benefit group as mentioned by 18 U.S.C. § 24 (b). Furthermore, when Mr. Edwards actually did apply for some workers’ compensation insurance coverage, he allegedly understated payroll and the type / number of employees to fraudulently secure lower insurance premiums.

When Mr. Edwards administered an employer’s self-insured health insurance plan, he also allegedly delayed or wrongfully denied medical benefits the employees were entitled to. Mr. Edwards indictment additionally alleged that he had filed a false joint Income tax return for 1999, by underreporting taxable income. In 2000, Mr. Edwards had supposedly underreported income in a false joint tax return and paid just $724 in taxes. He was similarly accused of failing to file any tax return for the year 2001.

As the Court’s June 26, 2006 Judgment demonstrates, Mr. Edwards ultimately pleaded guilty to four of the twenty-one counts mentioned by his indictment: two counts of mail fraud; one count of theft from a health care benefit program; and one count of tax fraud. Pursuant to his plea agreement, Mr. Edwards was sentenced to serve 150 months in prison and ordered to pay fines, make restitution, etc. As Mr. Edwards’ motion executed on August 13, 2007 however

indicates, he seeks to vacate his guilty plea / sentence pursuant to 28 U.S.C. § 2255 by alleging ineffective assistance of counsel among other things.

(Edited March 28, 2010) Copyright 2007-2010 Fred L. Abrams

Using Multiple Jurisdictions To Launder Money

By Fred Abrams on December 21st, 2007 Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Financial Institutions, Money Laundering, Public Corruption, Swiss Banks

Parking assets offshore in one jurisdiction and then exercising control over them through another, sometimes indicates money laundering. One example of how multiple jurisdictions may have been used to facilitate money laundering, is the case of United States v. Proceeds of Crime Transferred to Certain Domestic Financial Accounts, U.S. District Court for the Southern District of Florida, Index # 07-CV-21791. As mentioned by a July 16, 2007 press release, the Government commenced a forfeiture case in order to interdict $110 million thought to have been part of a tainted $400 million court award in Italy. According to both the foregoing press release and Reuters, the $400 million was believed to be tainted because it was awarded by the Italian court after an interested party, (Mr. Angelo “Nino” Rovelli), had supposedly bribed judges.

A forfeiture complaint alleged that Mr. Rovelli’s wife Primarosa Battistella, had used Swiss bank accounts and three prominent lawyers, (Attilio Pacifico, Giovanni Acampora and Cesare Previti), to pay the bribes. After Mr. Rovelli died in 1990, Ms. Battistella finally inherited the supposed tainted $400 million in January 1994. According to the forfeiture complaint, Ms. Battistella then had accountant Pierfrancesco Munari, launder a substantial amount of it. Mr. Munari had allegedly placed the tainted money in financial institutions and /or business entities which acted as laundering links in: the United States; the British Virgin Islands; the Cayman Islands; Guernsey; Jersey; Switzerland; Luxembourg; Liechtenstein; Singapore; the Cook Islands and Costa Rica.

Some of the money thought to be laundered by Mr. Munari, had allegedly been hidden in Florida via nineteen financial accounts. The government therefore asserted that forfeiture was appropriate pursuant to the following:

• 18 U.S.C. §981 (a) (1) (A), (B) & (C)– Asset forfeiture because of money laundering;

• 18 U.S.C. §984– Asset forfeiture of identical property within one year of a laundering offense, etc;

• 18 U.S.C. §1956– Money Laundering;

• 18 U.S.C. §1957– Money Laundering of property from specified unlawful activity;

• 18 U.S.C. §2314– Interstate or foreign transfer of property obtained by fraud;

• 28 U.S.C. §1345– U.S. District Court jurisdiction where the Government is plaintiff;

• 28 U.S.C. §1355 (a)– U.S. District Court jurisdiction over forfeiture proceedings;

• Italian Criminal Code Articles 319ter and 321, Bribery in judicial acts.

After the court froze / restrained numerous financial accounts in July 2007, Ms. Battistella and other Rovelli family members executed a settlement agreement consenting to the forfeiture of thirteen accounts. As Mr. Munari’s own settlement agreement demonstrates, he too consented to forfeit four accounts. Although on November 21, 2007 the Court issued a Final Judgment of Forfeiture regarding a total of seventeen financial accounts, there may still be some unresolved issues. According to Forbes.Com, a grand jury has been convened in Florida to examine whether Mr. Munari’s suspected money laundering scheme criminally involved: Wachovia; Citigroup; Merrill Lynch; Morgan Stanley; Lazard and others.

(Last Edited May 28, 2012)

Copyright 2007-2012 Fred L. Abrams

Secreting Assets Without A Border Trace

By Fred Abrams on December 8th, 2010 Posted in Asset Search/Fraud Investigation, Financial Institutions, Money Laundering, Secreting Assets Without A Border Trace, Securities Fraud, Swiss Banks

Asset Search Blog articles quoting “Roger” the former foreign intelligence officer are “Following The Money Trail In Zurich” and “Offshore Bank Accounts In Liechtenstein“. The end of this article also features “Roger”, although its facts have been sanitized / changed for privacy reasons.

As a consequence of his U.S.-based Ponzi scheme, Bill the investment adviser was indicted for alleged violations of 18 U.S.C. § 1956 (money laundering); 26 U.S.C. § 7201 (tax fraud); 18 U.S.C. §§ 1341 and 2 (mail fraud); 15 U.S.C. §§ 78j(b) and 78ff(a) (securities fraud); and 15 U.S.C. §§ 80b-6 and 80b-17 (investment adviser fraud).

The critical question now was: What had happened to the $35 million dollars lost by the damaged investors in Bill’s Ponzi scheme? After Bill insisted he dissipated this $35 million by gambling and on cocaine, prostitutes, etc., federal agents interdicted $1 million U.S. dollars hidden in a bedroom wall at Bill’s California home.

Among the other items the agents seized during their search of Bill’s home, were Bill’s passport, desktop computer, cell phone, bank statements and jewelry store receipts. Some of these items revealed that Bill laundered $7.5 million of the damaged investors’ money through a nominee bank account opened in the name of a Nevada shell company.

Bill had eventually withdrawn this $7.5 million to purchase diamonds and other portable valuable commodities at Nevada jewelry stores He next traveled as an airline passenger to Zurich, Switzerland, according to his passport. To date, the only recovery from Bill’s Ponzi scheme has been the $1 million once hidden in his bedroom wall. Given all of the above, “Roger” explained how investigators could try to determine whether Bill had secreted any of the $35 million in a foreign bank account:

“Bill’s purchase of the diamonds in Nevada and his travel to Zurich are money laundering red flags. Bill might have smuggled the diamonds into Zurich flying across U.S.-Swiss borders. Assuming Bill had flown to Zurich with the diamonds, he may have hired a driver with a car to pick him up at the airport. They might have then driven together through Northern France into Luxembourg.

In this possible scenario, Bill could have easily sold the diamonds in Zurich, (which is a major diamond centre), using the illicit proceeds to open a Luxembourg bank account. Alternatively, he may have opened an account at a Swiss bank which provides a service of security boxes (safes). In a security box he could leave the diamonds until such time as the pressure from the authorities had lifted.

Whatever happens, today Bill needs to produce a credit card for car-hire or a hotel stay. The credit card has to be issued by a bank, usually the bank where he maintains his security box and / or account with funds. The credit card expenses could also show the monthly debit for a security box and direct debit details if Bill has bought or rented property abroad.

By driving or taking a train into Luxembourg to open the foreign bank account, Bill could have traveled without leaving a border trace. Bill however, would still have likely committed at least some detectable errors. Bill for instance, may have left an electronic trace if he used a credit card to pay the driver and to buy gas for his car trip to Luxembourg.

If Bill stayed at hotels in Switzerland, France, or Luxembourg, he could have also paid his hotel bills with a credit card connected to a Swiss or other foreign bank account. If Bill used his hotel room telephone to communicate with a foreign bank witness, there would similarly be a record. These kinds of leads are reasons why money laundering investigations concentrate on foreign hotels, payment information, telephone records and on credit card expenses for details of physical movements and lifestyle.”

Copyright 2010 Fred L. Abrams

Hiding Assets Through Portable Valuable Commodities

By Fred Abrams on January 6th, 2009 Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Money Laundering, Swiss Banks, Tax Fraud

The Asia / Pacific Group on Money Laundering explains on its typologies webpage, that one way to hide assets is by purchasing portable valuable commodities like diamonds. The typologies webpage further gives the example of a beneficial owner concealing assets by transferring diamonds to another jurisdiction. One man who may have tried this kind of asset concealment method is Bernard L. Madoff. As reported in “U.S. Government to New York Judge: Jail Madoff Without Bail“, Mr. Madoff is alleged to have dissipated assets by mailing $1million dollars in jewelry to relatives and friends vacationing in Florida.

Another man believed to have hidden assets by using portable valuable commodities was recently discovered upon his arrival at N.Y.C’s J.F.K. Airport from Tel Aviv. A press release states that the 54-year-old U.S. resident employed by the jewelry industry, had concealed three diamonds worth more than $1.2 million in his pocket. U.S. authorities had first found jewelry receipts in the man’s baggage, then interviewed him and finally interdicted the concealed diamonds during a pat-down. These diamonds pictured below, were seized pursuant to 19 U.S.C. §1497, (Penalties for failure to declare) and 19 U.S.C. §1595a (c) (1) (A), (Merchandise introduced contrary to law):

My October 15, 2008 “Asset Search News Roundup” similarly mentioned that UBS banker Stanley Birkenfeld had hidden diamonds in a tube of toothpaste while an airline passenger at Swiss-U.S. border crossings. As more fully set forth by “UBS and the Diamond Smuggler“, Mr. Birkenfeld had assisted UBS bank customers like billionaire Igor Olenicoff hide assets and / or evade U.S. taxes. Besides using diamonds, Mr. Birkenfeld hid assets by using phony loans and purchasing artwork with secret Swiss funds.

Photo Courtesy of U.S. Customs and Border Protection

Copyright 2009 Fred L. Abrams

Recovering Art Illicitly Transferred To New York City

By Fred Abrams on June 10th, 2009 Posted in Asset Search/Fraud Investigation

Like diamonds, art can be used as a portable valuable commodity to illicitly transfer value to another jurisdiction. The following seven Egyptian artifacts were for instance, stolen from the

Bijbels Museum in Amsterdam on July 29, 2007 and then ultimately transferred to a New York City auction house:

The seven artifacts depicted above were however, recovered by U.S. Immigration and Customs Enforcement (“ICE”), according to a May 27 press release. ICE recovered them by working with the New York office of the Art Loss Register. ICE similarly worked with the Art Loss Register to interdict a Pompeii wall panel fresco on June 1. In another case resolved by ICE on June 1, Corinthian pottery was recovered. The fresco and pottery had been separately stolen in Italy and were then transferred to New York City. Both items are respectively pictured below:

Images: U.S. Immigration and Customs Enforcement

Copyright 2009 Fred L. Abrams

A Doctor, A Lawyer & Bricks Of Cash In Switzerland

By Fred Abrams on February 27th, 2010 Posted in Asset Search/Fraud Investigation, Financial Institutions, Swiss Banks, Tax Fraud, White-Collar Crime Generally

“Smuggling Cash Across Iraq’s Borders” mentioned Donnie the former DEA agent who had trained Iraqi border personnel to interdict bulk-cash smugglers. To help detect these smugglers, governmental authorities also use declaration forms to track the cross-border movement of cash and monetary instruments.

As mentioned by my April 13, 2009 “Asset Search News Roundup“, one such declaration form is the “FinCen 105″. It generally requires disclosure to the Bureau of Customs and Border Protection, when individuals physically transport, mail or ship more than $10,000 in cash or monetary instruments into the U.S.:

To avoid triggering the mandatory filing of a FinCen 105, Virginia medical doctor Andrew Silva had illegally structured cash by smuggling it in packages containing less than $10,000. During an abusive offshore tax avoidance scheme, Dr. Silva mailed these packages of cash from Switzerland into the U.S., as outlined by his “statement of facts” filed in U.S.A. v. Andrew B. Silva.

Dr. Silva’s tax fraud scheme is alleged to have been facilitated through an attorney working at a law firm located in Zurich, Switzerland. Dr. Silva’s criminal information identified the attorney as an “unindicted co-conspirator” who was a member of the New York bar and had earned law degrees from the University of Zurich and New York University.

Court documents and “Case Is Said to Link HSBC to U.S. Tax Evasion Inquiry“, mentioned that Dr. Silva had inherited $250,000 in 1997. Dr. Silva hid this money from the IRS by maintaining it in Switzerland in a nominee bank account held by a sham trust. The sham trust was allegedly formed in Liechtenstein by the attorney in Zurich, who also reportedly managed the Swiss bank account.

Said attorney is believed to have disbursed cash from the Swiss account by providing Dr. Silva with a wrapped brick of $100,000 in cash and a separate bundle of $20,000.00 in cash. A

Swiss banker may have similarly provided Dr. Silva with monies from the Swiss account via a brick of $100,000 in cash and a bundle with $15,000 in cash.

Dr. Silva smuggled about $210,000 of the above-described cash by mailing it in approximately 25 packages from Switzerland into the U.S. He is also believed to have smuggled about $18, 000 in cash while an airline passenger at Swiss-U.S. border crossings. As Dr. Silva’s plea agreement explained, he was convicted of violating 18 U.S.C §371 (Conspiracy) and 18 U.S.C. §1001 (False Statement). His sentencing is scheduled for May 7, 2010 in Virginia before U.S. District Judge Liam O’Grady.

Copyright 2010 Fred L. Abrams

Offshore Bank Accounts In Liechtenstein

By Fred Abrams on April 11th, 2008 Posted in Asset Search/Fraud Investigation, Financial Institutions

The Organisation for Economic Co-operation and Development has disseminated a list with about 1400 suspected tax cheats on it, all of whom maintained offshore bank accounts through Liechtenstein’s LGT Group. As the CNBC article “Europe Tax Evasion Probe Going Global” mentioned, an LGT employee stole the list in 2002 and eventually sold it to Germany’s foreign intelligence agency.

“Europe Tax Evasion Probe Going Global” also indicates that the 1400 on the list may have hidden assets and / or income from the domestic tax authorities of Germany, the U.S., Britain, Australia, Italy, France, Sweden, Canada and others. Although LGT’s February 24, 2008 press release, refuted the idea that all 1400 on the list were tax cheats, some of them may soon find themselves indicted for tax fraud in the U.S. This could be true because the IRS announced in its February 26, 2008 press release, that it was “initiating enforcement action involving more than 100 U.S. taxpayers” on the list.

Last week a national newspaper telephoned me about the list of 1400 suspected tax cheats. The newspaper wondered if it could retain me to somehow acquire a copy of the list. Although I was unable to assist the newspaper, I contacted “Roger”, the former intelligence officer mentioned in my post “Following The Money Trail In Zürich”.

“I have no interest in helping reporters, but if you want, maybe I could make a few calls“, Roger said during our conversation about the list. When I told Roger that as many as 600 on the list may have been Germans, he added: “Because the German border is next to Liechtenstein, people would sometimes try to smuggle cash across it in the trunks of their cars. Once in Liechtenstein, a suitcase full of cash could easily be deposited. That’s one reason Liechtenstein was a haven for hiding organized crime monies. Liechtenstein has been the back pocket of Germany for years.“

(Edited June 1, 2009)

Copyright Fred L. Abrams 2008

Forfeiture & The DEA’s Asset Search

By Fred Abrams on November 1st, 2007 Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Drug-Related Assets, Money Laundering

“I’m out of the asset forfeiture business and Title-III wiretaps too”, Donnie remarked as we discussed the Drug Enforcement Administration’s on-going effort to find hidden assets related to drug trafficking and other crime. Donnie had retired from the DEA after serving twenty-one years as a Special Agent. Now he was deployed to the Green Zone in Iraq to teach Iraqi police through the International Criminal Investigative Training Assistance Program of the Department of Justice.

Special Agents like Donnie often develop a great deal of expertise in conducting an asset search since asset forfeiture allows them to seize the proceeds of drug trafficking, money laundering, or organized crime. For example, while Donnie had been stationed in El Paso Texas in 1988, (and also worked in Bolivia), he, another Special Agent, and the Mexican Federal Police seized $6-8 million in drug money. By following the money trail, Donnie and his co-agent forfeited the $6-8 million because of its relation to their earlier seizure of 21 tons of cocaine in Sylmar, California.

My discussion with Donnie quickly drifted toward Zhenli Ye Gon’s arrest in Maryland on July 23, 2007 on methamphetamine drug and money laundering charges. Ye Gon was accused of supplying chemicals used to manufacture methamphetamine through his pharmaceutical wholesale business based in Mexico City, Mexico. According to a Special Agent’s affidavit, the more than $207 million seized from Ye Gon’s Mexico City residence was “hidden in various compartments, false walls, suitcases, and closets.” Also seized from Ye Gon’s Mexico City corporate headquarters were $111,000 dollars; documents regarding domestic and offshore bank accounts; and wire transfer confirmations from Mexican money exchange houses to various banks. As Ye Gon’s criminal indictment In the U.S. District Court for the District of Columbia further indicated, the government sought to forfeit his money and other assets pursuant to 21 U.S.C. §§ 853 and 970.

Given all of the above, Donnie finally said: “Because of its impact on organized crime, asset forfeiture is one of the things that can stop those who supply pseudophedrine to the meth super labs and Mexican cartels. Asset forfeiture works so well that it has even become a kind of gold rush”. I then thought about the $ 1,143,341,308 in net deposits for 2006 made into the Department of Justice’s Assets Forfeiture Fund– which is a repository for just some of the federal agencies that forfeit assets.

Copyright 2007 Fred L. Abrams

Hiding Assets Through Gatekeepers With Accounts Across The Globe

By Fred Abrams on May 28th, 2012 Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Money Laundering

A statement from The Wolfsberg Group of global banks recognizes that money laundering risks consist of financial “[a]ccounts for ‘gatekeepers’ such as accountants, lawyers, or other professionals for their clients where the identity of the underlying client is not disclosed to the financial institution.”

It is therefore no surprise that assets hidden through laundering or otherwise, can end up in a gatekeeper’s account across the globe. For example, a 2007 forfeiture complaint filed in United States, v. Proceeds of Crime Transferred to Certain Domestic Financial Accounts, U.S. District Court for the Southern District of Florida, Index # 07-CV-21791, implicated gatekeeper / accountant Mr. Pierfrancesco Munari in an alleged conspiracy to launder hundreds of millions of dollars.

Although the hundreds of millions of dollars had reportedly originated from a judicial bribery scheme in Italy, these monies were allegedly washed by way of business entities and / or financial accounts in the United States; the British Virgin Islands; the Cayman Islands; Guernsey; Jersey; Switzerland; Luxembourg; Liechtenstein; Singapore; the Cook Islands and Costa Rica.

A November 16, 2007 settlement agreement indicated that Mr. Munari consented to the forfeiture of four of these financial accounts which were respectively maintained at Merrill Lynch and Citibank. Blog posts which additionally mention gatekeepers are:

1. A Doctor, A Lawyer & Bricks Of Cash In Switzerland 2. An Ex-Watch Manufacturer & His Nominee Bank Accounts 3. Concealing Assets In More Than 150 Trusts? 4. Asset Search News Roundup: February 6, 2012 5. Asset Search News Roundup: February 19, 2012 6. Red Flags In One Of Washington State’s Largest Bankruptcies 7. Seattle’s Ubiquitous Asset Protection Lawyer, Ms. Mary Simon

Copyright 2012 Fred L. Abrams

Concealing Assets In More Than 150 Trusts?

By Fred Abrams on May 1st, 2011 Posted in Asset Search/Fraud Investigation, Tax Fraud, White-Collar Crime Generally

“A Doctor, A Lawyer & Bricks Of Cash” revealed the role a Liechtenstein trust had in maintaining a secret Swiss bank account. The February 3, 2010 superseding indictment of former attorney Micaela Renee Dutson and her husband Tony Dutson, too raised the issue of trusts and hidden assets. This indictment depicted below, accused the Dutsons of selling more than 150 trusts in order to conceal millions from the IRS. Page 2, paragraph 4 of the indictment alleged the Dutsons sold these trusts to their clients as part of fraudulent asset protection schemes:

“Defendants falsely advised clients that they could legally avoid paying taxes by putting their assets and income into the so-called ‘trusts’ that they sold. Defendants also falsely told clients that by putting their assets and income into the so-called ‘trusts,’ they could legally protect assets from seizure by creditors, including the IRS.”

Among other things, the indictment claimed that the Dutsons counseled clients to transfer title of real estate and vehicles to the names of trusts. By doing this, the clients supposedly concealed their beneficial ownership of assets; and the clients could then lease their assets from the trusts. On June 11, 2010 the Dutsons were convicted of several federal charges, including violations of 26 U.S.C. §7206 {2}), (assisting the filing of false tax returns). As the March 9, 2011 entries at the Dutson’s docket report show, the Dutsons were each sentenced to 120 months in prison.

(Edited January 30, 2012)

Copyright 2011 Fred L. Abrams

Red Flags In One Of Washington State’s Largest Bankruptcies

By Fred Abrams on October 17th, 2011 Posted in Asset Search/Fraud Investigation, Bankruptcy

In one of the largest bankruptcies in Washington state history, Chapter 7 trustee James F. Rigby Jr. is searching for assets that belong to Michael R. Mastro’s bankruptcy estate. The bankruptcy estate assets could include everything from life insurance polices to expensive jewelry and other portable valuable commodities. During the March 24, 2010 deposition of Mr. Mastro’s wife Linda, trustee Rigby asserted that Mr. Masto concealed estate assets by utilizing bogus trusts and fraudulent transfers.

At a January 29, 2010 court proceeding, trustee Rigby had also proclaimed there were many “red flag transactions” in Mr. Mastro’s bankruptcy case. The Belizean “LCY Trust”, (with its Belizean “Compass Trust Corporation” trustee), was especially replete with red flags. Trustee Rigy alleged that via LCY Trust and its related companies, Mr. Mastro possessed a $400,000 dollar Rolls Royce, $2 million in jewelry and an $18 million dollar mansion. Mr. Mastro had established LCY Trust in 2008 with the help of the now inactive Seattle-based Vigal & Simon, Inc.

By way of Vigal & Simon, Inc., attorney Mary Simon seemed to supply asset protection services to Mr. Mastro. Furthermore, Ms. Simon might have provided legal advice about LCY Trust and / or Compass Trust Corporation even after three creditors forced Mr. Mastro into bankruptcy on July 10, 2009. A December 5, 2009 e- mail supposedly sent by Ms. Simon, states: “Compass Trust– could resign as trustee and another trust company could be named. That would throw a monkey wrench at them!“:

Copyright 2011 Fred L. Abrams

Seattle’s Ubiquitous Asset Protection Lawyer, Ms. Mary Simon

By Fred Abrams on April 29th, 2012 Posted in Asset Search/Fraud Investigation, Bankruptcy, White-Collar Crime Generally

The U.S. Senate Permanent Subcommittee on Investigations August 1, 2006 report on offshore tax haven abuses explains that assets can be hidden with the assistance of “lawyers, brokers, bankers, offshore service providers, and others” offering offshore asset protection. Seattle lawyer Mary Simon appears to have especially provided offshore asset protection services that featured Belizean trusts.

As revealed by “Red Flags In One of Washington State’s Largest Bankruptcies”, Ms. Simon may have aided bankruptcy debtor Michael Mastro’s effort to protect assets by way of a Belizean trust. Mr. Mastro had seemingly hidden assets in said Belizean trust and the Court ultimately deemed the Belizean trust assets, (and his assets at two other trusts), to be bankruptcy estate property.

This meant Mr. Mastro’s trust assets were subject to liquidation for the benefit of his unsecured creditors, as discussed by Mr. Mastro’s Bankruptcy Estate & His Self-Settled Trusts. Besides surfacing at Mr. Mastro’s bankruptcy, Ms. Simon’s name popped up during U.S.A. v. Berg, the largest Ponzi scheme / fraud prosecution in Washington state history. A November 30, 2010 sworn declaration filed in Berg, averred that Mr. Berg had conferred with Ms. Simon on the subject of an asset protection plan.

Although an August 3, 2010 letter purportedly signed by Ms. Simon, suggests the plan was never fully realized, Ms. Simon might have participated in the plans initial phase by allegedly starting the process for forming the “DB517″ Belizean trust and the “DB517″ Delaware company. Documents reportedly linked to this Belizean trust and the Delaware company, were seized by FBI agents executing a search warrant on August 30, 2010 at Mr. Berg’s Seattle business office.

Copyright 2012 Fred L. Abrams

Mr. Mastro’s Bankruptcy Estate & His Self-Settled Trusts

By Fred Abrams on October 1st, 2011 Posted in Asset Search/Fraud Investigation, Bankruptcy

Although real estate developer Michael R. Mastro tried to protect assets by forming three trusts, the Court in Mr. Mastro’s bankruptcy case still found these trusts to be void. According to the Court’s May 28, 2010 order, the trusts were void as to Mr. Mastro’s creditors because the trusts were “self-settled” (i.e. created and funded by Mr. Mastro for his own benefit). The Court therefore treated Mr. Mastro’s trust assets as bankruptcy estate property which could be liquidated for the benefit of Mr. Mastro’s unsecured creditors.

A June 6th report filed by Mastro trustee James F. Rigby, Jr. reveals that these creditors may get a penny on the dollar this year. Page 7 of the report additionally says that the creditors’ overall recovery from the Mastro bankruptcy estate might be just a 2% payout more or less. Equally disturbing is that Mr. Mastro and his wife Linda also disappeared in June. This caused the Court to issue bench warrants for the Mastros, who are believed to have recently stayed in Canada as fugitives.

Valuable jewelry which could be bankruptcy estate property, has too gone missing along with the Mastros. Missing for example, are one platinum ring with a 27.80 carat pear shape diamond and one 14 karat white gold ring with a 15.93 carat round diamond. On June 22, 2005, West Coast Diamond & Gem reportedly appraised the white gold ring’s total retail replacement value at $835,000.00. On June 21, 2007, West Coast may have similarly appraised the platinum ring’s total retail replacement value at $1,300,000.00:

Copyright 2011 Fred L. Abrams

A Tax Fraud & Identity Theft From Miami

By Fred Abrams on April 21st, 2008 Posted in Asset Search/Fraud Investigation, Drug-Related Assets, Financial Institutions, Identity Theft, Money Laundering, Tax Fraud, Tax Fraud & ID Theft From Miami

The following occurred over a four month period during 2002, and has been supplied by an investigator I have worked with. Some of it has been changed / sanitized for privacy reasons:

The Tax Fraud

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.

The Identity Theft

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 can only partly demonstrate, 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.

When Mr. Wallace next unexpectedly arrived at the Cayman Island Bank to make a cash withdrawal, he was shocked to learn that his account had been drained. The Bank then showed Mr. Wallace “his” letters and explained that it had remitted his funds to Mexico just two days earlier because of “his” instructions. Concluding that his identity had been taken over by Chuck, Mr. Wallace apologized for his error and immediately booked a flight bound for Miami. Shortly thereafter, Mr. Wallace was arrested while fleeing from his Miami home after having killed Chuck there.

The Investigation

Investigators from the U.S. next paid a visit to the Cayman Island Bank. Although they had first thought that Chuck had been the true beneficial owner of the Cayman Island account, they discovered that Mr. Wallace was. Investigators also learned that Mr. Wallace was not just simply a real estate developer involved in a tax fraud / abusive offshore tax avoidance scheme. Instead, Mr. Wallace was actually a major illegal narcotics trafficker hiding the proceeds of his drug crimes through money laundering. Investigators finally concluded that much of the foregoing had happened because the Cayman Island Bank had among many other things:

1. Inadequate bank customer identification procedures / know your customer rules; 2. Permitted Mr. Wallace’s account to be opened by mail & also with a “0″ balance; 3. Neglected to contact a single reference mentioned in Mr. Wallace’s account

opening documents; 4. Failed to recognize suspicious activities like the wire transfer of the $6.3 million

from Panama or Chuck’s “softening up” letter.

Copyright 2008-2011 Fred L. Abrams

Money Laundering By Minneapolis Money Managers?

By Fred Abrams on September 20th, 2009 Posted in Asset Search/Fraud Investigation, Financial Institutions, Money Laundering, Securities Fraud, White-Collar Crime Generally

Minnesota money managers Trevor Cook, Patrick Kiley, Christopher Pettengill, Jason Bo-Alan Beckman and Gerald Durand, have been sued by 57 investors for alleged securities fraud. The Minneapolis Star Tribune wrote about the lawsuit in “Investment fraud suit grows more complex” and earlier on July 12, 2009.

The investors’ second amended complaint at part 1 and part 2 herein, pleaded causes of action for: fraud, conversion, civil theft, negligent misrepresentation, civil conspiracy, deceptive trade practices, breach of contract, and breach of fiduciary duty. It asserted that the money managers had converted about $16 million belonging to the investors by inducing the investors to place monies in a foreign currency arbitrage program.

This second amended complaint specifically claimed that some of the money managers had aired radio broadcasts to solicit investments for the foreign currency arbitrage program. Money manager Christopher Pettengill reportedly described this arbitrage program to two investors, by drawing what might be nothing more than a meaningless link chart:

The second amended complaint also specifically identifies three bank accounts through which $190 million was allegedly transferred to the money managers over the last two years. (Second Amended Complaint, at pp.132-133 ¶¶ 615-616). One of these accounts is alleged to have been maintained in the name of Crown Forex LLC at Associated Bank, which has more than one million bank customers in Wisconsin, Illinois and Minnesota.

As a July 23, 2009 letter partly reveals, the bank signatories for the Crown Forex LLC account at Associated Bank, are believed to be money manager Patrick Kiley and his assistant Julia A. Smith:

The second amended complaint meanwhile alleges that Crown Forex LLC is a “non-existent, non-registered entity” located in Minneapolis at 5413 Nicollet Avenue, Suite 14– which is a supposed fictitious address. (Second Amended Complaint, at p. 135 ¶ 635 & p. 18 ¶ 61).

If true, these allegations could raise the question: Whether Associated Bank followed a written Customer Identification Program and the customer verification procedures mandated by 31 CFR 103.121 ¶ (b) (2) (i), when Crown Forex LLC opened its bank account? Such allegations might too raise another question: Whether the Crown Forex LLC account was a nominee bank account at Associated Bank, used by the money managers for money laundering?

Images: U.S. District Court File

(Last Edited July 13, 2011)

Copyright 2009-2011 Fred L. Abrams

Interdicting A Ponzi Schemer’s Assets

By Fred Abrams on April 18th, 2010 Posted in Asset Search/Fraud Investigation, Money Laundering, Securities Fraud, Tax Fraud, White-Collar Crime Generally

My most recent “Asset Search News Roundup” reported about the April 13, 2010 plea agreement executed by securities fraudster and Ponzi schemer Trevor Cook. In this plea deal, Mr. Cook pleaded guilty to tax and mail fraud charges, agreed to make restitution and is supposed to fully disclose his assets to prosecutors.

Mr. Cook must also cooperate with Receiver R.J. Zayed, who seeks to recover Receivership assets for the benefit of Mr. Cook’s Ponzi scheme victims. Before the plea agreement happened, the Receiver made his March 29th statement. It expressed “shared concern & frustration” over the asset recovery effort launched against Mr. Cook. In this statement, the Receiver acknowledged that his efforts targeting Mr. Cook, have been criticized:

According to the March 29th statement, the Receiver had used his resources judiciously. He diligently tried to garner financial intelligence about Receivership assets believed to be hidden by Mr. Cook. A few of the steps taken by the Receiver have included:

• conducting over 50 interviews of “individuals with information”; • the forensic examination of numerous computers; • issuing more than 250 subpoenas of domestic individuals and entities; • using domestic private investigators who had formerly been a Postal Inspector or FBI or

IRS agents; • and a physical inspection of Trevor and Gina Cook’s residence at 12735 Dover Drive in

Apple Valley, Minnesota.

To date, the Receiver seems to have seized only domestic Receivership assets. If Mr. Cook hid most of his assets in foreign states by laundering through multiple jurisdictions, then seizing domestic assets would be picking just the “low-hanging fruit”. The Receiver has however, announced that he identified and / or seeks to interdict foreign assets consisting of: Canadian property worth up to $500,000, $1 million in a foreign bank account and $13 million in Panamanian real property.

Given the fact of Mr. Cook’s April 13th plea agreement, there are two critical questions remaining in Mr. Cook’s case: Will Mr. Cook finally disclose to prosecutors and the Receiver, what happened to the bulk of the Receivership assets? Even assuming that Mr. Cook does

make full asset disclosure, will his 1000+ plus Ponzi scheme victims see a meaningful recovery of their estimated $190 million in losses?

Copyright 2010 Fred L. Abrams

Tracking Trevor Cook’s Assets Across U.S.-Swiss Borders

By Fred Abrams on July 2nd, 2010 Posted in Asset Search/Fraud Investigation, Money Laundering, Securities Fraud, Swiss Banks

A frequently asked questions Web page published by the Financial Action Task Force discusses multilateral initiatives and states: “Large-scale money laundering schemes invariably contain cross-border elements.” The Trevor Cook receiver undoubtedly recognizes the foregoing because he is tracking receivership estate assets across international borders, on behalf of investors damaged by Ponzi schemer and securities fraudster Trevor Cook.

Among other things, the Cook receiver is trying to interdict assets which may have been laundered through Mr. Cook’s purchase of real property in Canada and Panama and by Mr. Cook’s transfer of funds into Swiss bank accounts. Swiss authorities have already frozen a one million dollar bank account at UBS AG connected to Mr. Cook, on the ground of suspected money laundering.

Swiss authorities probably froze this bank account by relying on anti-money laundering legislation including Art. 305bis of the Swiss Criminal Code. Art. 305bis says in part:

“Whoever commits an act suited to frustrate the determination of the origin, the discovery or the confiscation of assets that he knows or should know derive from a crime, shall be punished with imprisonment or a fine“

The Cook receiver is also using local Swiss counsel to provide Swiss banks with authorization forms, releases and powers of attorney executed by Mr. Cook. These forms might persuade the Swiss banks to turnover any assets they maintain for Mr. Cook. They might too be used to convince the Swiss banks to release Mr. Cook’s banking information, which would ordinarily be kept confidential under Swiss professional secrecy laws.

A sanitized / changed copy of one of these types of forms, is reproduced below. It was prepared with the assistance of counsel from Zurich during one of my efforts to elicit evidence from bank witness residing in Switzerland. Finally, “An Asset Search In Geneva“, lists additional Swiss legal remedies available to the victims of a securities fraud.

Copyright 2010 Fred L. Abrams

An Asset Search Via Whistleblowers & Other Tipsters

By Fred Abrams on January 1st, 2012 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Money Laundering, Securities Fraud, Tax Fraud

“Human Intelligence & The SEC’s Whistleblower Program” examines the government’s handling of tips in its search for assets concealed by securities fraudsters. The IRS Whistleblower Program too seeks tips from informants who help the IRS detect assets concealed in tax frauds.

Besides these whistleblower programs, tips can often be generated in a variety of ways. “Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street” highlights a tip supplied through an anonymous letter. This tip letter caused Polish prosecutors to launch a money laundering investigation and search for funds connected to a suspected shell company in Delaware.

“An Asset Search, Tax Fraud & Divorce” meanwhile, describes how a prospective tipster was interviewed by Brian, an ex-IRS special agent and former high-ranking official at FinCEN. Brian conducted this interview to locate marital assets believed to have been hidden by a divorcing husband suspected of tax fraud.

“Mr. Benjamin’s Divorce & His White-Collar Crimes” gives the related example of a wife searching for marital assets hidden by her husband. During her divorce, the wife gathered the husband’s business records linking him to a tax fraud. She then provided these records to the IRS’s Criminal Investigation Division, as a tip.

Courts can also end up tipping domestic tax authorities about suspected crimes. When the divorcing husband admitted in his affidavit that he had not paid taxes, the Court in Hashimoto v. De La Rosa, 2004 slip op. 51081 (Sup. Ct. N.Y. County, June 23, 2004) reported him to the IRS.

In Beth M. v. Joseph M., 2006 slip op. 51490 (Sup. Ct. Nassau County, July 25, 2006), the Court also tipped the IRS about a divorcing husband who testified he had not filed tax returns for the years 1997 through 2001 and other times. Under certain circumstances, this kind of testimony could possibly lead to tax evasion charges pursuant to 26 U.S.C. § 7201.

Human Intelligence & The SEC’s Whistleblower Program

By Fred Abrams on November 17th, 2011 Posted in Asset Search/Fraud Investigation, Securities Fraud

A Primer For Gathering Financial Intelligence pronounces “Human intelligence can be the only practical way to uncover some sophisticated asset concealment schemes.” The SEC Whistleblower Program sniffs out human intelligence by offering rewards for tips regarding securities fraudsters. A November 2011 report shows the Whistleblower Program generated 334 tips during the seven week period from August 12, 2011 to September 30, 2011.

Jordan A. Thomas, (once an assistant director and senior attorney at the SEC), had a leadership role in developing this program. Mr. Thomas drafted the proposed whistleblower legislation and briefed House and Senate staffs on it. He is a partner at Labaton Sucharow LLP and chairs its Whistleblower Representation Practice.

His guest post featured below, notes that financial incentives and retaliation protections will cause the whistleblowers to come forward. It also recognizes “the locating of hidden assets will play a major role in these whistleblower actions.”

The SEC Whistleblower Program: A Revolution in Law Enforcement? Jordan A. Thomas

While the Securities and Exchange Commission (SEC) has just released its 2011 annual report touting a record number of enforcement actions, the $2.8 billion in monetary sanctions recovered seems a drop in the bucket against what the serial schemers have stolen. But the game is changing, and the recovery of concealed assets will play a role in this revolution.

Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established a new and, in many ways, revolutionary whistleblower program, which was finalized and implemented in August. With the specter of major financial awards and protection from workplace retaliation, individuals now have powerful incentives to speak out against misconduct and report possible violations of the US securities laws. The eligibility requirements are broad and relatively straightforward.

The program offers a material financial bounty, 10-30% of monetary sanctions collected, to a whistleblower who provides original information that leads to a successful enforcement action by the SEC. Significantly, one of the factors considered by the SEC in determining the size of the award is the whistleblower’s efforts to assist the authorities in recovering the fruits and instrumentalities of the violations. Thus, a whistleblower with both the knowledge of the violation and the ability to help locate hidden assets will be in a position to maximize his or her recovery.

In addition, for employee whistleblowers, the program’s anti-retaliation provisions are compelling, protecting a qualified whistleblower for up to 10 years, regardless of whether the information is ultimately verified, if it was provided in good faith. Moreover, if represented by counsel, a whistleblower may maintain anonymity until he or she claims a reward.

But a whistleblower need not be an employee of an alleged violator. With few exceptions, any individual, or group of individuals, with original information derived from independent knowledge and not already known to the SEC or solely derived from public sources, qualifies. In addition, this intelligence must either (i) cause the SEC to commence a new investigation, which leads to a successful enforcement action, or (ii) significantly contribute to the success of an existing action. Any violation of the U.S. federal securities laws qualifies, and any international organization (public or private) or individual that does business in or has personal contacts with the US can be subject to the program’s jurisdiction.

Considering that the SEC secured almost $3 billion in sanctions last year alone, including several cases in which sanctions exceeded $100 million, the financial incentive to a potential whistleblower is great. Awards are likely to be even greater when reported conduct becomes the subject of a parallel proceeding by another law enforcement or regulatory body, such as the Department of Justice or a state Attorney General. In that case, the whistleblower would receive, subject to agency discretion, a percentage of the sanctions collected in both actions. To illustrate the significance of the multi-agency bounty, consider the April 2011 FCPA settlement with Johnson & Johnson. Under the terms of the settlement, the company agreed to pay more than $48.6 million to the SEC and an additional $21.4 million to the Department of Justice to settle criminal charges. A qualified whistleblower in such a case, meeting the various eligibility requirements, and subject to the agencies’ discretion, could have received up to $21 million under the new whistleblower program.

Companies are on notice. A November 2011 survey by Littler Mendelson reported that 96% of executives, many from S&P 500 companies, are concerned about whistleblower claims; 73% identified whistleblowing and retaliation as emerging risk areas; 45% said their companies had received a whistleblower claim in the last 12-24 months; and 67% anticipate whistleblower reports will increase in the next 12-24 months.

But are they ready? That remains to be seen. Given the duration of an SEC investigation, we likely will not see the program’s results for a few years. Nevertheless, in light of the major financial incentives and significant retaliation protections offered by this new program, whistleblowers will come forward in increasing numbers to report potential violations. Already the SEC has disclosed a significant increase in high-quality tips, and in my law practice, I am seeing a great deal of activity from potential whistleblowers, both domestic and internationally. And with the consideration given to asset recovery in determining financial rewards, the locating of hidden assets will play a major role in these whistleblower actions. In the coming years, many of the SEC’s most significant cases will involve whistleblowers. Corporate entities must reckon with this new enforcement reality by, among other things, encouraging the detection of misconduct, protecting whistleblowers who come forward, shoring up their compliance frameworks and creating a paradigm for commercial integrity.

Copyright 2011 Fred L. Abrams

An Asset Search, Tax Fraud & Divorce

By Fred Abrams on January 16th, 2008 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Tax Fraud

The information supplied by foreign financial investigators suggested that the divorcing husband had hidden marital assets offshore. Other evidence elicited during the divorce, also suggested that the husband might have committed a tax fraud in hiding the marital assets.

As part of my asset search of the husband, (and to learn even more about this suspected tax fraud), I contacted Brian. Brian was a former high-ranking official at the Treasury Department’s Financial Crimes Enforcement Network and had earlier been an IRS Special Agent. Brian was going to lead our interview of the husband’s business associate, who we were about to meet for the very first time. Right before the interview, Brian identified some of the federal statutes relevant to many tax fraud investigations:

• 26 U.S.C. § 6050I, large cash reporting requirements for trades & businesses (including attorneys).

• 26 U.S.C. § 7201, most commonly applied tax evasion statute (however requires proof of a tax liability).

• 26 U.S.C. § 7203, failure to file a timely tax return. • 26 U.S.C. § 7206 (1), perjury on a return / false statements, (unlike 26 U.S.C. §

7201, proof of a tax liability is unnecessary). • 26 U.S.C. § 7206 (2), perjury on a return / false statements, but primarily used against

tax return preparers such as accountants and attorneys. • 18 U.S.C. § 371, conspiracy to commit offense / defraud the United States. • 18 U.S.C. § 1001, false statements made to the federal government (can apply to any

material verbal or written statement, even if unsworn). • 18 U.S.C. § 1956, money laundering. • 18 U.S.C. § 1957, money laundering involving property derived from specified unlawful

activity. • 18 U.S.C. § 1961, Racketeer Influenced & Corrupt Organizations (“RICO”). • 31 U.S.C. § 5311 et. seq., the Bank Secrecy Act.

I hoped that Brian and I would learn what the business associate knew about the divorcing husband’s hidden assets / suspected tax fraud. As Brian started the business associate’s interview he warned: “Once a tax fraud investigation starts rolling along, nobody knows where it may end up”.

Copyright 2008-2012 Fred L. Abrams

Mr. Benjamin’s Divorce & His White-Collar Crimes

By Fred Abrams on December 14th, 2007 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Tax Fraud, White-Collar Crime Generally

As my post "Divorce, Child Support & Reporting Tax Fraud" mentioned, divorcing spouses sometimes tip the IRS about a suspected tax fraud. Mrs. Benjamin for example, tipped the IRS because she thought that her divorcing husband had underreported revenue from his commercial maintenance and landscaping business. She specifically provided the IRS with the business documents Mr. Benjamin had produced during the pre-trial discovery phase of their divorce case. These documents included payment summary records from Mr. Benjamin’s customers like Wal-Mart. As part of her tip to the IRS, Mrs. Benjamin also turned over joint tax returns which Mr. Benjamin had supposedly filed for the years 1998 and 1999.

A records check at the IRS however demonstrated that the 1998 and 1999 joint tax returns had never actually been filed by Mr. Benjamin. The IRS also learned that from 1997 through 2001, Mr. Benjamin had neither paid income tax nor filed state or federal income tax returns. IRS Special Agents then received false information from Mr. Benjamin when they interviewed him at his home on June 26, 2002. The IRS also reviewed Mr. Benjamin’s bank accounts and conferred with Wal-Mart along with Mr. Benjamin’s other customers. As a consequence of its asset search and tax fraud investigation, the IRS finally determined that Mr. Benjamin’s total gross receipts or sales between 1998 and 2001 had actually been about $1,139,470.18; and that Mr. Benjamin had a $129,396.91 tax liability.

The IRS further recognized that Mr. Benjamin had hidden assets and income by: pocketing cash payments from customers; paying personal expenses from a business bank account; and cashing customers’ checks instead of depositing them into his bank account. During its investigation, the IRS additionally discovered that Mr. Benjamin had defrauded Wal-Mart through a false invoicing scheme. By seeking payment for services he had never performed, (and faxing Wal-Mart twenty-two phony invoices between February 2001 and January 2002), Mr. Benjamin had duped Wal-Mart out of $417,583.

The IRS criminal investigation started by Mrs. Benjamin’s tax fraud tip eventually led to Mr. Benjamin’s fifty eight count indictment on July 27, 2005 in U.S.A. v. Benjamin, Index # 05-Cr-00348, U.S. District Court, District of Colorado. Pursuant to his January 5, 2006 plea agreement, Mr. Benjamin pleaded guilty to violating 26 U.S.C. § 7201 (tax evasion) and 18 U.S.C. § 1343 (wire fraud). Because of his white-collar crimes, Mr. Benjamin was sentenced on June 16, 2006 to serve two years in prison followed by three years of supervised release. As Mr. Benjamin’s sentence and criminal judgment both mentioned, he was also directed to pay a $200 special assessment and to start making restitution payments to Wal-Mart after his release from prison.

Copyright 2007-2011 Fred L. Abrams

Warsaw Prosecutors Eye Possible Money Laundering At 50 Platowcowa Street

By Fred Abrams on November 25th, 2009 Posted in Asset Search/Fraud Investigation, Money Laundering

The General Inspector of Financial Control in Poland received an anonymous tip letter about alleged suspicious activity. This tip ultimately related to Ukraine resident Sergly Savchuk; Prime Invest L.L.C. of Florida and the Sesa Polska & Tecza Mazur limited liability companies of 50 Platowcowa Street, Warsaw:

The Warsaw Circuit Prosecutor’s Office next started their financial fraud investigation of Sesa Polska and Tecza Mazur at 50 Platowcowa Street. These Warsaw prosecutors presumably wanted to determine whether the Platowcowa Street companies, Prime Invest LLC and Mr. Savchuk, had laundered money in violation of Article 299 of Poland’s penal law.

It soon became apparent that Prime Invest L.L.C was a suspected shell company that had maintained a bank account in Poland. Mr. Savchuk might have also beneficially owned Prime Invest L.L.C. and had possibly used it in 2004 for the nominee purchase of the former “Evita” mineral water plant in Biskupiec.

Prime Invest L.L.C. additionally had an agent in Delaware. To elicit evidence about Prime Invest L.L.C., the Warsaw prosecutors decided on using a letter rogatory (a.k.a. request for legal assistance) in Delaware.

The Warsaw prosecutors pursued their letter rogatory through the U.S. Attorney’s Office in Delaware on October 14, 2009, pursuant to 28 U.S.C. §1782 (Assistance to foreign and international tribunals and to litigants before such tribunals). On October 22, 2009 the U.S. District Court issued its Order permitting disclosure about Prime Invest L.L.C. via the Warsaw prosecutor’s letter rogatory:

(Edited November 27, 2009)

Satellite Image: Google Maps

Copyright 2009-2012 Fred L. Abrams

Lawsuit Claims PI’s Could Have Illegally Accessed Bank Info

By Fred Abrams on December 4th, 2011 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Privacy Laws

On January 12, 2011, my local counsel commenced a civil lawsuit in Puerto Rico against two private investigators. One of the defendants in the January 12th lawsuit* was Mr. Terry L. Gilbeau of Rocklin, California. Mr. Gilbeau is a newly admitted attorney, a Certified Fraud Examiner and president of the Checkmate Investigative Services Inc. private investigation firm.

Another defendant in the January 12th lawsuit was private investigator Nicole Bocra of the Virginia-based Infinity Investigative Solutions company. The January 12th lawsuit alleged that the two private investigators might have conspired to illegally access bank customer information at Banco Popular of Puerto Rico. According to this lawsuit, the investigators could have participated in the possible conspiracy while researching whether some bank accounts were connected to plaintiff Victoria Florea’s divorce.

Upon plaintiff Florea’s application, the Court eventually dismissed the January 12th lawsuit without prejudice. On October 17, 2011, plaintiff Florea then filed a new lawsuit against these private investigators. The October 17th lawsuit alleges defendant Bocra first executed a December 5, 2007 agreement to search for bank accounts on behalf of plaintiff Florea. This lawsuit claims that defendants Bocra and / or Gilbeau might have next conspired to illegally access a bank account opening document and other banking information.

An alleged April 6, 2009 e-mail attached to the lawsuit, seems to describe one supposed attempt to access banking information. The alleged e-mail is addressed to plaintiff Florea and is believed to have been written by defendant Bocra. It refers to a so-called “information purveyor” and says “but the bank management is watching the file like a hawk, and they are just waiting for their opportunity to make a copy”:

An alleged February 4th 2009 e-mail is thought to have similarly been written by defendant Bocra. It too is attached to the October 17th lawsuit and mentions both a “Puerto [R]ico pi” and a prospective meeting “to get the signature card“:

The above-described October 17th lawsuit was initially filed in the Court of First Instance for the Commonwealth of Puerto Rico, San Juan Part. It was removed on November 11, 2011, to the U.S. District Court for the District of Puerto Rico. A copy of the October 17th lawsuit with an English translation, is available here:

*Lawsuits supplied w/o exhibits; plaintiff’s address redacted for privacy reasons.

Copyright 2011 Fred L. Abrams

Revisiting A Lawsuit Against Two Private Investigators

By Fred Abrams on January 15th, 2012 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Privacy Laws

Lawsuit Claims PI’s Could Have Illegally Accessed Bank Info, explained that plaintiff Victoria Florea had filed two lawsuits against private investigators Nicole Bocra and Terry L. Gilbeau, president of Checkmate Investigative Services, Inc. The first of these lawsuits was voluntarily discontinued by plaintiff Florea and her lawsuit filed October 17, 2011, then took its place.

The lawsuits apparently claimed that investigators Bocra and Gilbeau were researching whether Francis Driscoll during his divorce with plaintiff Florea, could have hidden assets at banks in Puerto Rico. According to allegations in one or more of the lawsuits, these investigators might have illegally conspired to access supposed bank customer information at Banco Popular of Puerto Rico, Western Bank and elsewhere.

One of the lawsuits indicated, for instance, that the alleged conspiracy could have involved the acquisition of this supposed Banco Popular bank account opening document:

The lawsuits claimed that more of Francis Driscoll’s alleged bank customer information could possibly have been illegally obtained. This additional purported banking information consisted of the supposed financial data mentioned at defendant Bocra’s October 16, 2008 affidavit:

Bank customer information is, of course, ordinarily protected across the globe, by bank secrecy and other laws. A law which safeguards bank customer information in the U.S., is the Gramm-Leach-Bliley Act, at 15 U.S.C. § 6801 (b). As is set forth by Illegally Accessing Customer Information At U.S. Banks, this statute especially requires financial institutions to safeguard bank customer information:

(b) Financial institutions safeguards

In furtherance of the policy in subsection (a) of this section, each agency or authority described in section 6805(a) of this title shall establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguards -

(1) to insure the security and confidentiality of customer records and information;

(2) to protect against any anticipated threats or hazards to the security or integrity of such records; and

(3) to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer. (15 U.S.C. § 6801 {b}).

*The alleged Banco Popular document & the affidavit reproduced above, have been sanitized for privacy reasons.

Copyright 2012 Fred L. Abrams

Asset Search Litigation To Stay In Puerto Rico

By Fred Abrams on April 15th, 2012 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Privacy Laws

The complaint filed in Puerto Rico at Florea v. Bocra, U.S. District Court, District of Puerto Rico, Index No. 11-02102, basically alleges that private investigator Terry L. Gilbeau of Checkmate Investigative Services, Inc. and / or Virginia-based private investigator Nicole Bocra, had improperly searched for assets thought to be connected to a divorce.

As more fully set forth at “Lawsuit Claims PI’s Could Have Illegally Accessed Bank Info” and “Revisiting A Lawsuit Against Two Private Investigators”, the complaint accuses the investigators of possibly participating in a conspiracy to elicit bank account information illegally. On November 11, 2011, Mr. Gilbeau and Checkmate Investigative Services Inc. filed papers asking the Court to change the venue of the litigation from Puerto Rico to California.

In support of the requested venue change, Mr. Gilbeau’s supplemental declaration seemed to argue that work related to the asset search(es) had been performed in California. Supplemental Declaraton of Terry Gilbeau In Support Of Remoal Notice And Motion To Transfer Venue, dated February 10, 2012 at p. 2, ¶¶2-4. This supplemental declaration also asserted California was the most convenient forum for the litigation. On April 5, 2012, the Court however, ruled the litigation would remain in Puerto Rico:

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Copyright 2012 Fred L. Abrams

An Asset Search In Geneva

By Fred Abrams on November 23rd, 2008 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Money Laundering, Recovering Assets Hidden Offshore, Securities Fraud, Swiss Banks

The victims of a securities fraud, divorcing spouses, post-judgment creditors, etc. can have several remedies available to them if they need to recover assets hidden offshore. One might even pursue an asset search or recovery in the various offshore tax havens. This is particularly true when a bank is used as a laundering “link” to hide funds in a money laundering circuit or assets have otherwise been hidden during a financial fraud.

To cite just one example, I have previously filed letters rogatory / legal assistance requests with the Court in Geneva, (“the “Parquet du Procureuer général), because of suspected money laundering at two Swiss banks. As mentioned at “An Asset Search With Letters Rogatory“, these kinds of legal remedies can sometimes be used to elicit financial information from bank witnesses.

Other forms of relief for those seeking to recover funds hidden offshore, can range from attaching a bank account to alerting a financial intelligence unit. Local counsel in Geneva has analyzed these legal remedies which are available in Switzerland and in many other jurisdictions across the globe:

“As you probably know, Switzerland does not follow the common law doctrine. We do not adhere to the institution of discovery. The usual tools available to a claimant are therefore the filing of a criminal complaint, which is actually the most efficient way to get past the banking secrecy. Access to the information will be granted only if someone can be indicted. In exceptional circumstances a broader access to the information collected within the frame of the criminal investigation can be granted on a discretionary basis.

If the claimant does not wish to resort to the criminal law tools, he has the option to file an attachment. In order to obtain an attachment, the claimant must show that his case presents a close enough connection to Switzerland. He must establish that the assets are located in Switzerland and he must make a summary statement of his claim.

It is usually required that a guarantee equivalent to 10% of the claim be filed; in certain circumstances, the payment of a guarantee requirement may be avoided especially where the claimant initially filed a criminal complaint under which the same assets have been attached by the criminal judge. The combination of a criminal and civil attachment is recommended in some instances.

The administrative tools relate to money laundering regulations. A financial intermediary knowing or having reason to suspect that any assets entrusted to his custody or management are of criminal origin has a duty to report his suspicion to MROS, which is the competent authority that launches investigations in matters of money laundering. If MROS finds that there is enough evidence of criminal activity, it usually refers the matter to the competent criminal authorities who will investigate the case.

If your client already holds judgements against the defendants, he may seek to enforce the judgement on assets located in Switzerland. Furthermore, if criminal investigations have been conducted in a foreign jurisdiction, the foreign investigating magistrate can seek judicial assistance from Switzerland. This is granted very liberally.

Finally, I wish to draw your attention to the possibility of obtaining evidence [via legal assistance requests / letters rogatory] from the Hague Convention of 1970 on the obtaining of evidence in civil and commercial matters abroad, which enables to a limited extent the enforcement of pre-trial discovery requests in Switzerland. All these remedies briefly outlined may be combined depending on each particular case.”

(Edited October 21, 2011)

Copyright 2008-2012 Fred L. Abrams

An Asset Search In Switzerland

By Fred Abrams on October 25th, 2007 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Money Laundering, Swiss Banks, White-Collar Crime Generally

A former Criminal Intelligence Specialist at Scotland Yard confirmed that the divorcing husband was hiding millions from his wife by using bank accounts in Switzerland. The husband’s true beneficial ownership of these funds had been concealed by a nominee (i.e. intermediary). This nominee had opened the Swiss bank accounts in the names of shell corporations. The evidence suggested that the nominee had additionally engaged in money laundering for the husband, maybe on behalf of organized crime.

The above information could possibly be used during the divorce to impeach the husband at a deposition about his alleged net worth and assets. The Swiss bank information could also be used to frame a line of questions at a subpoenaed deposition of the nominee. As partly demonstrated by the example of a changed / sanitized letter rogatory to Obergericht des Kantons Zürich, evidence might too be elicited from bank witnesses in Switzerland. Such letters rogatory / legal assistance requests can sometimes play an important role in an asset search, as mentioned at "Asset Search Tips For Divorce & Child Support Cases".

As my local Swiss counsel advises, making a business of parking assets in Switzerland and concealing their beneficial ownership could possibly violate Art. 305bis Swiss Criminal Code: Money Laundering (English Translation). In addition to 305bis, some of the Swiss laws relevant to money laundering and / or hiding assets include:

• the Federal Act on Combating Money Laundering in the Financial Sector: Anti-Money Laundering Act, AMLA (English Translation).

• Art. 305ter Swiss Criminal Code: Insufficient Diligence In Financial Transactions and Right to Report (English Translation).

• Art. 260ter Swiss Criminal Code: Criminal Organizations (English Translation).

• Art. 260quinquies Swiss Criminal Code: Financing Terrorism (English Translation).

• Art. 69 to 72 Swiss Criminal Code: Confiscation (English Translation).

• Art. 102 and 102a Swiss Criminal Code: Corporate Criminal Responsibility (English Translation).

Given all of the foregoing, there are a number of legal strategies that might be used in connection with the divorcing husband’s assets hidden in Switzerland. Among other things these strategies could include: enlisting the help of foreign financial investigators like the above-mentioned former Criminal Intelligence Specialist; retaining local counsel in Switzerland; and prosecuting letters rogatory / legal assistance requests.

(Edited February 1, 2010) Copyright 2007-2010 Fred L. Abrams

Is the wrongful Indication of Beneficial Ownership of Bank Accounts

Punishable under Swiss Law? The purpose of this overview is to describe how the wrongful1 declaration of bene-ficial ownership of a bank account in Switzerland is to be assessed under Swiss criminal law. In the following remarks I do not seek to provide a complete and abso-lute rendering of this subject but merely to give a basic outline. As will be apparent, a fuller treatment is only meaningful in the context of a specific set of circumstances.

(I) General Remarks a) The Recording of Beneficial Ownership 1. When a bank account is opened in Switzerland it is a legal requirement that

the beneficial ownership of the funds held in that bank account be recorded by the bank. The legislative aim is to enable money flows through bank ac-counts to be traced and to ensure that the economic entitlement to assets in banks is attributable to known (named) individuals2.

2. While there are various provisions dealing with this subject it can be said as

a generalisation that in Switzerland today a duty of care for bankers and finan-cial intermediaries has been established, compliance to which has to a large degree become ritualised in practice. The salient requirements are to obtain exact and useable identification of the client, to record this (which generally means file a passport copy) and to get the same information about the “bene-ficial owner” of the assets. This, of course, implies being aware of who the beneficial owner is, which the banker learns by asking his client.

b) Shell Corporations 3. The impact of these requirements on the banker/client relationship depends

on the specific circumstances of the individual case. It is, however, possible to group cases according to certain criteria, and one such group are accounts opened by shell corporations. In the following I shall concentrate exclusively on this group of cases.

4. “Shell corporations”3 as the term is used here refers to corporations with no

business activity of their own, set up in jurisdictions that under their laws neither require corporations to have substantial equity, nor to file tax returns

1 In the sense of „knowingly false and/or misleading“. 2 This requirement more or less corresponds to legal requirements in other Western countries that for the sake of convenience can be called the “know your customer rules”. 3 Otherwise also known as „Offshore Corporations“. The term is misleading because it is al-ways relative, a Delaware corporation would be „offshore“ in Switzerland, a Swiss corporation in the US. The important criterion is whether the corporation has business activity of its own or whether it merely serves as a shell or vehicle to hold an account.

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requiring audited accounts. Such corporations lend themselves particularly to open and hold bank accounts because they are cheap to get and to main-tain and because given that they have no formalised financials, money can easily pass through their accounts without having to be reflected in their books. It is, therefore, hardly surprising that large numbers of Swiss bank accounts are held by such corporations, and that in many cases the holding of a bank account is the only thing a shell corporation does.

5. In the case of a shell corporation holding a bank account the actual “client”

of the bank in the sense of the bank’s contractual partner, is the corporation itself4. Under the “know your customer rules” the bank will thus have to ob-tain identification for the corporation, its directors and for the persons em-powered to sign on its behalf towards the bank. However, given the nature of a shell corporation this information is largely meaningless and the issue arises whose assets are being held on the account5. It is conceivable for a shell corporation to have various accounts6 and banks will seek information regarding beneficial ownership for each account.

From the above it is apparent that the declaration by the “client”, i.e. the per-

son(s) running the shell corporation (signing over its account), regarding the beneficial ownership of funds placed with a bank is of crucial importance in allowing the bank and its staff to comply with their duties under the anti money laundering provisions. There is a certain duty of bankers and finan-cial intermediaries to check any information given, especially regarding the commercial background of funds deposited and the whether the profile7 of the beneficial owner is compatible with the sums involved, but the extent of these duties is ill-defined and the real possibilities of research for bankers very limited. Baring obvious discrepancies between what the banker is told and the facts as they appear, the bank relies and must rely on what it is told by the client.

If the declaration of beneficial ownership by the client is “wrongful” this has

the consequence that the bank is unable to fulfil its duties of identification properly.

4 This means that the account opening forms are signed and submitted by persons (the directors of the corporation) the bank subsequently has little if any contact with and who in turn have little or nothing to do with the money held on the corporation’s account. The vast majority of all shell or „off-shore“ companies are managed by professional trust companies with professional directors serving in a nominee capacity on very many boards. 5 The term “account” is used here for the sake of brevity to mean all and every kind of account or deposit with a bank. 6 Unusual because the scant inner organisation of the typical shell corporation would not nor-mally suffice to safeguard one account holder from the risk of having some other account holder bankrupting the corporation (as the legal holder of the funds on its account). Such corporations are thus normally “dedicated” to one client/account holder. 7 Used here to mean the sum of all known characteristics of a person or entity.

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(II) False Declarations a) Money Laundering 6. Historically, the law in this field has developed as an onus on bankers and

financial intermediaries, who are duty bound to obtain and record the iden-tity of their clients. One result of this is that the “client” himself is not fo-cussed on in the law and the various anti-money laundering provisions do not contain a general obligation of the “client” to identify the beneficial owner of the funds correctly. If a generally vigilant banker is mislead by a wrongful declaration, he is not in breach of the law. Swiss law does not know the concept of “conspiracy” but only of inciting and of aiding others to commit unlawful acts. Thus, if the banker himself has not committed any such act, the client is also not guilty of inciting or abetting.8 There is thus no general provision rendering the mere false declaration by a client punishable under money laundering rules.

7. Two provisos must be made: 7.1 It is not clear who is to be deemed a banker or a financial intermediary in

connection with the opening and operation of a bank account by a shell cor-poration in Switzerland. I tend to believe that a professional routinely han-dling other people’s money in Switzerland would fall into the category of fi-nancial intermediary for the purposes of Swiss anti-money laundering legis-lation even if he is not based in Switzerland and comes here only to open an account. If this is true, this person would be in breach of the law if he sub-mits a false declaration, because he would have the same duties to identify and record the beneficial owner as the banker himself has9 10.

7.2 The law explicitly provides11 that any act which will render more difficult

the tracing of the origins of assets or which would render it more difficult for

8 The reverse is also true, if a client gets his banker to accept a false declaration knowingly, both the client and the banker are in breach of the law. Here obvious issues of proof arise. 9 Art. 305 ter of the Swiss Penal Code (“SPC”) provides for a jail sentence or a fine for any per-son who accepts or helps invest assets of others on a professional basis and who neglects to identify the beneficial ownership of these assets with the appropriate degree of care. Applying this provision to the declaring of beneficial ownership of assets held by a shell corporations raises two questions: Does the mere fact that substantial assets are being held through a shell corporation trigger a require-ment for a higher degree of care? Probably not, see para. 4 above. Does it suffice for the purposes of this provision if the FI himself knows the true beneficial ownership of the assets, or is he bound to share this knowledge with the bank? While it is clear that the bank has a duty to record the true bene-ficial ownership, it is less clear that the FI is obliged to assist this. Art. 305 ter SPC is in force since 1990. There are only few reported cases, one BGE 125 IV 139 et seq. concerns the liability of a banker who accepted a wrongful declaration of beneficial ownership though he had doubts how true it was. There is no record of the person actually submitting the wrongful declaration being prosecuted. . 10 Note that being found to be a (non admitted) FI in Switzerland would trigger a heavy fine for the person concerned, irrespective of whether or not he falsified declarations of beneficial ownership. 11 Art. 305 bis SPC (in force since 1990)

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them to be found or confiscated, is punishable if the person concerned knew or must have known that the assets are derived from a crime. Note that this is addressed to all persons, and not just to bankers and financial intermedi-aries. In cases where the perpetrator is acting professionally as a money launderer or in conjunction with organised crime the punishment is more severe.

However, tax evasion may well not constitute a crime for these purposes.

The simple non-payment of taxes per se is not a crime under Swiss law, but ancillary acts committed in furtherance thereof (such as falsifying bills or ac-counts etc.) may make it into a crime.

Arguably, making a wrongful declaration regarding beneficial ownership

will fulfil the requirements of this provision, provided the person so doing knew or had to know that he was hiding the proceeds of a crime.

b) Falsifying Documents 8. It is a crime in Switzerland to falsify documents12. Under “falsification” the

law expressly includes the false recording of a substantive fact. It is clear that the identity of the beneficial owner is a ”substantive fact” in

connection with the opening of a bank account. I am not aware that this question has been tested in the courts and it could

be that a court might find this provision as not being applicable to a false declaration of beneficial ownership. The main point at issue is that a mere “written lie” is not punishable as such. At the heart of the crime of “false declaration” is the misuse of trust by using a (more or less formal) document to create a misleading impression. Arguably, the form on which the benefi-cial ownership has to be declared (the so-called “Form A”) is a “document” as the term is understood in connection with this provision. It is my belief that submitting a wrongful declaration of beneficial ownership constitutes a false declaration in the meaning of this provision.

The penalty for false declaration is severe, up to five years penal servitude or

some other jail sentence13. “False Declaration” is on the list of crimes in the US Swiss Legal Assistance Treaty defining for the prosecution of which crimes legal assistance will be granted14.

c) Complex Circumstances

12 Art. 251 SPC This provision dates from 1974 but was in the law in similar form even before then. 13 The SPC distinguishes between normal jail sentences, which unless the law expressly provides are for a maximum of three years, and a harsher form of incarceration which I have called „penal ser-vitude“ with potentially longer sentences. 14 The 1973 Treaty for Mutual Legal Assistance, Annex no. 23 a)

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9. I have until now considered the legal effect of a false declaration of beneficial ownership per se. In fact such a false declaration may be given not as a mere stand alone act but as part of a wider scheme, quite possibly a fraud or em-bezzlement. In these circumstances the false declaration may well be pun-ishable in Switzerland in conjunction with this wider scheme. Thus, falsify-ing documents to secret assets away from creditors could well be punishable in this context.

(III) Prosecution 10. It may as a practical matter be difficult to get the authorities in Switzerland

to prosecute cases involving false declarations and money laundering, at least if there is no obvious victim. The application of the law to any specific case can be complex, especially with regard to Art. 251 SPC where there is a large body of case law with many differentiations. An obvious additional difficulty is that the bank at which the account is opened is hardly likely to be forthcoming with any help, because a finding of money laundering or even of falsification would affect the bank staff as well and might give rise to damage claims.

What could render prosecution more likely is a showing of systematic false

declaration by a perpetrator making a business out of illegally “parking” as-sets in Swiss banks under false declarations. This is likely to be picked up as a manifestation of “organised crime” and because it is to some extent also a security risk.

Foreign Bank Secrecy Laws & An Asset Search

By Fred Abrams on December 9th, 2008 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Swiss Banks

Assets hidden in an offshore tax haven which are the subject of a divorce, forced collection proceeding, etc., can sometimes be uncovered by eliciting evidence from a bank witness residing in that offshore tax haven. This is true because letters rogatory or other legal proceedings can usually be brought against an offshore bank witness in tax havens like Switzerland, as mentioned by "An Asset Search In Geneva".

The success of these kinds of "offshore asset searches" however, often depends on whether exceptions to bank secrecy, (a.k.a. professional secrecy), laws are applicable to the particular situation. To cite just one example, a Swiss bank witness can be compelled in Swiss court to disclose marital assets hidden by a U.S. or other divorcing spouse. This critical point is emphasized by local Swiss counsel, who wrote to me the following:

"I notice that you are also active in divorce matters. It sometimes happens that spouses try to hide their assets in Switzerland. This is to no avail since article 170 of the Swiss Civil Code provides that each spouse may request from the other information on his or her income, assets and debts. Upon request, the Judge may obligate the other spouse or third parties (including banks) to provide the required information and produce the necessary documents. This provision is enforceable even if the divorce takes place in the US or any other foreign jurisdiction in application of article 10 of the Swiss Code on Conflict of Laws which provides that the Swiss judicial or administrative authorities may order provisional measures even if they have no jurisdiction to render a decision on the merits.

These provisions often ignored by foreign lawyers provide efficient tools to obtain information, which in other circumstances would be strictly covered by the Swiss banking secrecy"

Recovering Assets In Switzerland Hidden By Dictators

By Fred Abrams on August 26th, 2010 Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Money Laundering, Public Corruption

"The Americans & Swiss Target The Kleptocrats" contains an article discussing the Swiss Restitution Of Illicit Assets Act ("RIAA"). This act could be passed next month by the Swiss Parliament. It would be used to freeze the proceeds of public corruption schemes which some dictators and other politically exposed persons might transfer from a foreign state into Swiss bank accounts.

Even if a foreign state fails to make a mutual legal assistance treaty request to forfeit any illicit assets owned by a politically exposed person, said assets could still be frozen pursuant to the act. As local Swiss counsel practicing in Zurich recently advised, "Basically the act provides that if, in the context of a failed state, the country in question can no longer make proper legal assistance requests, money seized in Switzerland from former rulers of that country can be returned anyway, if necessary by being given to some relief organisation."

The act’s sixth article creates a presumption that a politically exposed person possesses illicit assets based on the assertion that the same has sudden unexplained wealth and lives in a state believed to be corrupt:

Art. 6 Presumption of unlawful origin

The presumption that assets are of unlawful origin applies where

a. the wealth of the person who holds powers of disposal over the assets has been subject to an extraordinary increase that is connected with the exercise of a public office by the politically exposed person; and

b. the level of corruption in the country of origin or surrounding the politically exposed person in question during their term of office is or was acknowledged as high.

The presumption ceases to apply if it can be demonstrated that in all probability the assets were acquired by lawful means.The presumption is reversed if evidence of lawful acquisition of the assets is demonstrated with preponderant plausibility.

The act was proposed after Swiss authorities were forced to release assets which had belonged to former dictators such as Haiti’s Jean-Claude "Baby Doc" Duvalier andMobutu Sese Seko of Zaire, now known as the Democratic Republic of Congo. If passed, the act would supplement the existing laws below which can be asserted against dictators or other politically exposed persons suspected of hiding illicit assets in Switzerland.

I. The Federal Law Pertaining to the Sharing of Confiscated Assets ("the Asset Sharing Act");

II. The Swiss Federal Money Laundering Act, effective April 1, 1998; III. The Swiss Federal Constitution, which at Article 184 paragraph 3 provides for the Swiss

government’s issuance of temporary ordinances and decrees to safeguard Swiss interests;

IV. The Swiss Penal Code which can be applied to cases involving a politically exposed person’s illicit assets, money laundering, corruption, etc.

V. The Swiss Federal Act on International Mutual Assistance in Criminal Matters, effective January 1, 1983. Permits the grant of legal assistance to foreign states not party to the April 20, 1959 European Convention on Mutual Assistance in Criminal Matters and under other circumstances.

Note: The RIAA was passed by the Swiss Parliament of October 1, 2010, as mentioned by The New York Times.

Translated Copy Of RIAA: Courtesy Federal Dep’t Of Foreign Affairs

Copyright 2010 Fred L. Abrams

(Last edited October 20, 2010)

UBS & Its “John Doe” Summons

By Fred Abrams on July 9th, 2009 Posted in Asset Search/Fraud Investigation, Financial Institutions, Swiss Banks, Tax Fraud

“A Domestic Subpoena / Summons In An Offshore Asset Search” describes how the IRS and U.S. Department of Justice were granted court permission to serve a “John Doe” summons on UBS AG. This summons was supposed to help the IRS identify assets and / or undeclared revenue hidden by any U.S. taxpayers who were maintaining offshore bank accounts at UBS.

A July 1, 2008 Order had specifically permitted the IRS to serve UBS with the “John Doe” summons which is reproduced below without its attachments:

The IRS has however, argued in U.S.A. v. UBS AG, 1:09-cv-20423, that UBS has not fully complied with the summons. In UBS AG, the IRS claims that UBS has disclosed under the summons, just 300 bank accounts out of an estimated 52,000 belonging to U.S. taxpayers who could be tax cheats.

As I stated in my February 27, 2009 “Asset Search News Roundup“, UBS must consider Swiss bank secrecy laws, (a.k.a. professional secrecy laws), when supplying the IRS with account information pursuant to the summons. UBS highlighted the very issue of bank secrecy laws just yesterday, when it filed its “Supplemental Declaration of Professor Isabelle Romy On Swiss Law“. It had also earlier raised this issue via the “Declaration of Professor Isabelle Romy On Swiss Law“, filed April 30, 2009.

Through these declarations, UBS argued that it would be violating Swiss bank secrecy laws if it fully complied with the summons. The IRS meanwhile, claimed that UBS should be compelled to fully comply with the summons because UBS allegedly violated its Qualified Intermediary Agreement with the IRS, for the withholding of taxes. (Declaration of Barry B. Shott, filed February 19, 2009). U.S.A. v. UBS AG, is next scheduled for hearings on July 13, 2009.

Copyright 2009 Fred L. Abrams

A Primer For Gathering Financial Intelligence

By Fred Abrams on June 6th, 2010 Posted in Asset Search/Fraud Investigation, Assets & Financial Intelligence, Divorce & Child Support, Financial Institutions, Securities Fraud, Swiss Banks

A successful asset search often requires gathering financial intelligence. One financial investigator sought financial intelligence by doing “trash pulls”. This investigator did trash pulls at an attorney’s home to elicit intelligence about the attorney’s client. During one of these trash pulls, an envelope bearing the name of a climate-controlled art storage facility was discovered. This discovery then led to the interdiction of a valuable painting hidden by the attorney’s client at the art storage facility.

A second financial investigator gathered financial intelligence by searching for leads provided by an adversary’s: passport, airline frequent flyer statements, country club membership, credit cards, phone bills and other records. A third investigator was able to detect an adversary’s foreign bank account by acquiring financial intelligence from an offshore check printing company. In addition to the foregoing, eliciting financial intelligence can involve tools ranging from human intelligence to discovery devices.

Human Intelligence

Human intelligence can be the only practical way to uncover some sophisticated asset concealment schemes. The concealment scheme analyzed at “Money Laundering, Marital Assets & Divorce“, was in fact detected solely because of human intelligence. “An Asset Search, Tax Fraud & Divorce” meanwhile, described an effort to access financial information via human intelligence. It outlined how “Brian”, (a former high-ranking official at the Financial Crimes Enforcement Network, who had earlier been an IRS special agent), sought human intelligence about a divorcing husband. Brian did this by interviewing a cooperating witness / business associate of the divorcing husband.

Discovery Devices

Another way to try to elicit financial intelligence and locate assets is to utilize discovery devices like depositions, interrogatories, etc. Under limited circumstances, a court might even permit discovery via the physical inspection of an adversary’s home or place of business. The court for example, allowed the receiver in the case of Ponzi schemer Trevor Cook, to perform this type of physical inspection.

The Cook receiver had successfully argued in court, that Fed. R. Civ. P. 45(a)(1)(c) & Fed. R. Civ. P. 34(a)(2), provided for an inspection of Mr. Cook’s Apple Valley, Minnesota home. The receiver then seized receivership estate assets including three automobiles and 31 watches, at the Apple Valley inspection.

Likely more significant, was the receiver’s recovery of over sixty computers and other electronic media. These were eventually forensically examined in an attempt to access additional financial information. The receiver had also issued more than 250 domestic subpoenas, which too might have provided financial intelligence.

If cross-border elements / multiple jurisdictions are however used to conceal assets, then letters rogatory can be issued pursuant to the Hague Evidence Convention (20: Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters Hague Convention).

Letters rogatory, (a.k.a. “letters of request” or “legal assistance requests”), may help access financial intelligence possessed by foreign bank or other foreign witnesses, as explained at “An Asset Search With Letters Rogatory“. They are sometimes even available in jurisdictions where there are strong bank secrecy laws, as this sanitized / changed copy of a Swiss letter rogatory indicates:

(Last Edited November 15, 2011)

Copyright 2010-2012 Fred L. Abrams

Letters Rogatory As An Asset Detection Tool

By Fred Abrams on July 12th, 2012 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions

Letters rogatory can be an invaluable tool for detecting assets concealed in multiple jurisdictions. They may be utilized to gather competent evidence from foreign financial institutions and a variety of witnesses residing offshore. “Asset Search Tips For Divorce & Child Support Cases” talked about detecting assets by employing letters rogatory. That post said:

“Many times a letter rogatory is sought pursuant to The Hague Convention, Taking of Evidence (1970) No. 20, as a “letter of request”. Furthermore, a New York Court may issue such a request to a foreign court as mentioned by Fed. R. Civ. P. 28 (b); Fed. R. Civ. P. 4(f)(2)(B); and/or the N.Y. Civ. Prac. L & R:

Rule 3108. Written questions; when permitted. A deposition may be taken on written questions when the examining party and the deponent so stipulate or when the testimony is to be taken without the state. A commission or letters rogatory may be issued where necessary or convenient for the taking of a deposition outside of the state.”

28 U.S.C. § 1782 (a) too discusses letters rogatory and permits the Court to execute them in the U.S. on behalf of foreign or international tribunals. The letter rogatory reproduced below seeks evidence pursuant to 28 U.S.C. § 1782, from witnesses residing in Delaware. The letter rogatory originates from prosecutors in Hungary and was filed in Delaware Federal Court on April 2, 2012. It is geared toward tracking assets connected to a suspected embezzlement scheme with alleged elements in Hungary, Washington, D.C., New York and Delaware.

Copyright 2012 Fred L. Abrams

Turning To Financial Investigators During Asset Recoveries

By Fred Abrams on April 16th, 2011 Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Swiss Banks, Tax Fraud, Using Financial Investigators

"An Asset Search In Geneva" outlines the typical legal remedies for recovering assets secreted at banks in Switzerland. The legal remedies range from civil proceedings brought to attach bank accounts to employing criminal law tools. These remedies are not just limited to Switzerland as they are often available in many countries around the world.

Besides attaching assets, using criminal law tools, etc., financial investigators sometimes play a part in asset search or recovery cases. A financial investigator’s participation in one asset recovery case is described at the article "An Asset Search, Tax Fraud & Divorce". It quotes the ex-IRS special agent "Brian" who had once been a high-ranking official at the U.S. financial intelligence unit known as "FinCen".

"An Asset Search, Tax Fraud & Divorce" essentially demonstrates how Brian sought human intelligence about a divorcing husband thought to have hidden marital assets and committed tax fraud. More articles featuring financial investigators are: "An Asset Search In Switzerland", "Following The Money Trail In Zurich" and "Fighting Financial Fraud At UK Banks". They refer to a former Criminal Intelligence Specialist at Scotland Yard; and / or a former foreign intelligence officer; and / or a former bank vice president responsible for financial fraud investigations.

Copyright 2011 Fred L. Abrams

Uncovering Assets By Using Compelled Authorization Forms

By Fred Abrams on June 24th, 2012 Posted in Asset Search/Fraud Investigation, Divorce & Child Support

Prosecutors handling financial fraud cases have long known that a foreign bank supplied with a compelled authorization form, will sometimes release confidential bank records. The prosecutors first seek a judicial direction requiring the bank signatory of the foreign bank account to execute the authorization form.

After the bank signatory executes this form, the prosecutors send it to the foreign bank witness, who might then release the requested bank records. These forms can sometimes be used successfully as a countermeasure to bank secrecy or blocking laws in foreign jurisdictions.

Furthermore, the U.S. Supreme Court upheld the use of compelled authorization forms, as early as its decision in Doe v. U.S., 487 U.S. 201, 108 S. Ct. 2341, 101 L. Ed. 2d 184 (1988) (Fifth Amendment privilege against self-incrimination not violated by compelled authorization form).

Compelled authorization forms meanwhile, can be used in a variety of cases in which assets are hidden. Below is a basic example of such a form, (sanitized and changed for privacy reasons), from one particular divorce proceeding:

Copyright 2012 Fred L. Abrams

Using Forensic Science To Fight Financial Fraud

By Fred Abrams on June 19th, 2010 Posted in Asset Search/Fraud Investigation

Forensic scientist Richard T. Picciochi is a questioned document examiner who can establish genuineness by identifying handwriting, machine printing, paper, writing instruments and inks. As Mr. Picciochi’s website advises, he was formerly an NYPD detective. Mr. Picciochi learned questioned document examination through on-the-job apprenticeship at the NYPD and via training by the FBI and Secret Service.

Before retiring from the NYPD, he participated in cases which included the assassination of Rabbi Meir Kahane (the founder of the JDL); the terrorist attack on the World Trade Center in 1993; the abduction of Harvey Weinstein who was buried alive for almost two weeks; and the homicide of Manhattan socialite Irene Silverman. Mr. Piccochi additionally testified at the criminal trial of the Zodiac serial killer in NYC who left behind cryptic notes like this one:

I however, know him best from a financial fraud case we are currently both working on. In that case, forged signatures were used to illegally access funds in a securities account. As my expert witness, Mr. Picciochi separately examined the questioned and known writings for letter designs & formations, the relationship of one letter to another, the movement or manner of execution, etc.

He then conducted the kind of side-by-side comparison depicted by this chart:

(Chart Courtesy of Richard T. Picciochi)

In our financial fraud case, Mr. Picciochi might also analyze the physical or chemical properties of documents or determine that documents were altered. He sometimes similarly searches for latent evidence such as indented writing impressions, faded writing, watermarks or fingerprints. I have consolidated a few of Mr. Picciochi’s comments about handwriting / signature examinations and they are available below.

“Handwriting is the end result of a long process that starts with the imitation of a penmanship model when we first learn to write. Initially, these writings are very crude and require substantial conscious effort. Over time, we require less attention and exhibit increased proficiency and skill along with imparting personal changes to the copybook forms.

While handwriting tends to be alike to a degree that we can meaningfully read it, there are individualizing features that distinguish one person’s writing from that of another. Just as no two people are exactly alike, the handwritings of no two people are exactly alike in their combined writing characteristics.

In a mature writer the physical act of writing becomes an unconscious action or habit. That is, when a person writes, his or her mind is on the words being written and

not on the act of writing. So, during normal writing, while the writer’s conscious mind is dealing with the message he or she is trying to convey, it is his or her subconscious mind that controls the muscle movements needed to move the pen across the paper.

The characteristics of letter design and formation, the relationship of one letter to another, and the movement or manner of execution (such as skill, fluency, rhythm, shading, speed, pressure, variation, etc.) are unique products of an individual writer. Forensic Document Examiners study these unconscious writing habits.

If the questioned and known writings contain individualizing characteristics and they are naturally written, comparable, contemporaneous, and sufficient in quantity I should be able to form an opinion. Any limitations may result in a qualified opinion.”

Copyright 2010 Fred L. Abrams

Recognizing Hidden Assets, The Red Flags

By Fred Abrams on November 2nd, 2008 Posted in Asset Search/Fraud Investigation, Money Laundering, Red Flags For Finding Assets

A beneficial owner’s transfer of funds through banks in multiple jurisdictions, can be a red flag that assets have been secreted. Purchasing large amounts of portable valuable commodities, hoarding cash, forming a shell company, etc, can also be red flags as mentioned by “Asset Search Indicia for Divorce, Debt Collection & Bankruptcy“. The weight given to these red flags should meanwhile, depend on the facts and circumstances in a particular case.

It is also true that the ability to recognize red flags can be critical to a broad range of litigants searching for assets hidden via fraud or other illicit activity. Such a litigant could for example, use red flags at a deposition to develop a line of questions about assets, liabilities and net worth.

As the list below also indicates, Financial Intelligence Units, U.S. Trustees, the IRS and U.S. banks, all rely on red flags to help uncover / interdict hidden assets:

1. Financial Intelligence Units across the globe use red flags to detect assets hidden via money laundering, as more fully set forth by my above-mentioned post “Asset Search Indicia For Divorce, Debt Collection & Bankruptcy “.

2. U.S. Trustees look for red flags to detect a debtor’s bankruptcy fraud / the concealment of bankruptcy estate assets. These specific red flags are described in the U.S. Trustee Manual at 5-10.7.2 Red Flags/Common Characteristics in Cases of Concealment and False Statements.

3. The IRS uses red flags to search for undeclared revenue and hidden assets. The IRS Manual describes the same at 25.1.2.3 (01-01-2003), Indicators of Fraud.

4. U.S. Banks are required to look for red flags as part of their Bank Secrecy Act anti-money laundering programs, as mentioned by the Federal Financial Institutions Examination Council’s BSA / AML Examination Manual.

(Edited October 12, 2011)

Copyright 2008-2011 Fred L. Abrams

Asset Search Indicia For Divorce, Debt Collection & Bankruptcy

By Fred Abrams on October 14th, 2007 Posted in Asset Search/Fraud Investigation, Bankruptcy, Divorce & Child Support, Money Laundering

People don’t typically think of the common money laundering indicia when searching for hidden assets the subject of a: divorce; bankruptcy; commercial collection or other legal proceeding. Such indicia can be effectively used as part of an asset search / recovery effort even in situations where there is no money laundering. In the United States, the indicia or red flags of money laundering are described at Appendix "F" of the Bank Secrecy Act / Anti-Money Laundering Examination Manual. They are also described in Money Laundering Prevention, A Money Services Business Guide, at pages 16-24.

Money laundering indicia are sometimes used outside of the United States. For example, India’s Financial Intelligence Unit relies on "broad categories of reason for suspicion"; the Belgian Financial Intelligence Unit ("CTIF-CFI") uses Money Laundering Indicators; the Swiss Federal Banking Commission has the Schedule: Indicators of Money Laundering ; and the Asia / Pacific Group on Money Laundering also uses such a list. Recognizing the following money laundering indicia may however, lead to the discovery of assets concealed in a divorce, commercial collection, bankruptcy or other legal case:

• Asset Protection Via Nevada, Wyoming or Delaware. • Large Amounts Of Portable Valuable Commodities (Gold, Diamonds, etc.). • False Invoicing In A Trade Or Business. • Offshore Asset Protection Services. • Foreign / Offshore Bank Accounts. • Multiple Jurisdictions. • Fraudulent Asset Transfers / Conveyances. • Shell Companies. • Sham Trusts. • Nominees (i.e. Intermediaries). • High-Risk Geographical Locations. • Bearer Shares. • Informal Banking Systems, (Hawala, Hui Kuan, etc.). • Bulk-Cash Smuggling. • Internet Or Other Gambling Activities. • Offshore Credit Cards. • Misuse Of Businesses (i.e. Commingling Personal With Business Assets). • Structuring Bank Deposits, (a.k.a. "Smurfing").

(Last Edited 10/12/11)

Copyright 2007- 2011 Fred L. Abrams

CURRICULUM VITAE

Jack A. Blum

Mr. Blum resigned as "Of Counsel" to Baker & Hostetler at the end of 2008 where he was resident in its Washington office. He was a member of the firm's white collar defense and corporate investigations group. He is currently practicing part time for a select group of clients and working as an expert witness. His law practice is focused whistleblower representation, anti-money laundering compliance, international tax evasion, and the representation of victims of financial crime and fraud. He works as an expert witness and consultant on fraud and money laundering compliance for various private clients, governments, and government agencies. Mr. Blum has also been involved in a wide range of civic and charitable activities. He served for five years as the President of the National Consumers League, and is currently its Counsel. He was a Trustee of Bard College, and for two years as the Treasurer of the International Center, a Washington, D.C. foreign policy organization. He is presently the Board Chairman of the Violence Policy Center, and the Board Chair of the Tax Justice Network-USA. He presently serves on the Boards of The Fund for Constitutional Government, Global Financial Integrity, the Americans for Democratic Action. He is a graduate of Bard College and Columbia Law School and is admitted in the District of Columbia and the Federal Courts.

2 Curriculum Vitae

Jack A. Blum

EMPLOYMENT

2009-Present Part Time Private Practice 2007-2008 Of Counsel, Baker & Hostetler, Attorneys at Law, Washington, D.C. 1990-2006 Partner, Lobel, Novins & Lamont, Attorneys at Law, Washington, D.C., representing individuals, governments and corporations

on international business transactions, corporate fraud, recovery of losses for victims of international fraud schemes, tax and antitrust matters.

1989-1990 Consultant, to various government agencies on narcotics and money

laundering issues. 1987-1989 Special Counsel, Committee on Foreign Relations, United States Senate. Directed Committee investigation of the impact of

American Foreign policy on narcotics law enforcement. Located, interviewed, and deposed witnesses. Organized and planned hearings. Drafted final Committee report. Hearings covered the history and pattern of drug trafficking in Latin America and the Caribbean, the activities of General Noriega, money laundering, the relationship of trafficking to the war in Nicaragua, and the failures of United States Foreign policy in dealing with narcotics issues.

1977-1987 Senior Partner, Blum Nash & Railsback, Attorneys at Law,

Washington, D.C. Ten lawyer general practice with emphasis on energy, international trade, and non-profit organization law. Represented independent refiners, independent marketers, and state governments on energy, environmental and antitrust issues. Counseled a trade association on a round of international textile negotiations. Represented several high technology firms on export licensing issues. Represented more than 20 non-profit lobbying and charitable organizations on election law, tax and corporate matters. Represented a Fortune 50 company in a petroleum countertrade transaction. Acted as managing partner for three years.

1976-1987 President and General Counsel, Independent Gasoline Marketers Council, Inc. Represented this trade

association of non-branded independent gasoline marketers' interests to Congress and the regulatory agencies. Testified more than 100 times before House and Senate Committees, regulatory agencies and government departments on legislation, proposed regulations and industry issues. As the CEO of the trade association took responsibility for all administrative matters.

3 Curriculum Vitae

Jack A. Blum

EMPLOYMENT (cont.) 1972-1976 Associate Counsel, Committee on Foreign Relations, United States

Senate. Served as chief investigator for the Subcommittee on Multinational Corporations. Directed investigations of Lockheed Aircraft's overseas payments, third world loans by American banks, the international petroleum industry, and ITT's activities in Chile.

1965-1972 Assistant Counsel, Antitrust Subcommittee, Committee on the Judiciary, United States Senate. Responsible for

investigations of and hearings on housing fraud, communications competition, the newspaper publishing industry, banking, advertising, insurance and petroleum competition. Handled preparations for 130 days of hearings. In addition, supported Subcommittee Chairman Philip Hart in his legislative work on the Communications Subcommittee of the Commerce Committee.

1960-1962 Editor and Publisher, The Chronicle, Wappingers Falls and

Poughkeepsie, New York. Supervised a staff of ten, including correspondents, advertising salesmen and distribution personnel. Sold the newspaper before entering law school.

1959-1960 Local News Editor, WGHQ, Kingston, New York. Wrote, edited and

delivered local news for this 5,000 watt AM station. Worked full time summers and winter break, part time during the academic year.

Expert Witness Assignments For the Department of Justice - Northern District of California (Lazarenko Case), Southern District of New York. For the Internal Revenue Service - New Jersey, Philadelphia, Denver, Richmond. For the Insurance Commissioner of Mississippi (Frankel Case). For the Defense in the Khordorkovsky money laundering case.

4 Curriculum Vitae

Jack A. Blum

REPRESENTATIVE RECENT PRESENTATIONS

SHERPA, Experts Group on Asset Recovery, Civil Asset Recovery Efforts: Lessons Learned, Paris, June 2011 School of African and Oriental Studies, Managing Corporate Compliance: Illicit Payments and misuse of Information systems, London, January 2011. United Nations Leading Group, Confronting Corruption - The Best Way to Fund Development, Tokyo, December 2010. World Bank, International Cooperation in Tracing Criminal Funds, December 2010 Offshore Alert, Whistleblowers, IRS and the Impact on Offshore Banking, Miami, April 2010 Yale University, Corruption, Human rights and Development, New Haven, December 2009 Senate Homeland Security and Government Operations Committee, S. 569 Incorporation Transparency and Law Enforcement Assistance Act, November, 2009 World Bank, Recovering the Proceeds of Corrupt Payments, Washington, September 2009 Friedrich Ebert Stiftung, Bank Secrecy Havens, Capital Flight and Development, Berlin, June 2009 House Financial Services Committee, The Problem of Curbing Grand Scale Corruption, May, 2009 Senate Finance Committee, Offshore Tax Evasion, July 2008 School of African and Oriental Studies, Assuring Corporate Accountability, University of London, London, July 2007 House Foreign Affairs Committee, Subcommittee on Terrorism, Nonproliferation and Trade, Isolating proliferators and Sponsors of Terror: The Use of Sanctions and the International Financial System to Change Regime Behavior, April 2007. Johns Hopkins Applied Physics Laboratory, Using Money Flows to Detect Shipments of Precursor Chemicals, Columbia, Maryland. February, 2007 National Security Agency, Understanding FINCEN's Data, Ft. Meade, Maryland, October 2006

5 Curriculum Vitae

Jack A. Blum

Naval Postgraduate School, The Financing of Weapons of Mass Destruction; Detection and control. Monterey California, July 2006 Bard College, The Long History of Government Intrusion on Personal Privacy, February 2006. Practitioner in Residence, Institute for Global Leadership, Tufts University. Medford, Massachusetts, February, 2006. Curacao Chamber of Commerce, Addressing the New Money Laundering Controls, the role of the private sector. Curacao, September 2005 Fudan University, Controlling corruption and taxing effectively in a privatizing economy, Shanghai, June 2005 Shanghai Bankers Association, Controlling Money Laundering, Shanghai, September 2005 Economists for Peace and Justice, Professional Integrity and Social Justice, Philadelphia, December, 2004 University of Texas, Social Control of Enterprise Corruption, Austin, June 2004 Bard Globalization and International Affairs Program, Deterring Corruption, New York, December 2003. Leonard Silk Memorial Lecture, Economic Fantasies and Political Consequences, Mount Desert Island Biological Laboratory, Bar Harbor, August 2003. Boston Bar Association, An Approach to Controlling Corruption: Civil Asset Recovery, Boston, April 2003 Bard College, Conceptual Problems in the Development of International Criminal Law, New York, December 2002 International Tax Commissioners, Developments in the Control of Offshore Tax Evasion, San Diego, November 2002 Russian Finance Ministry, Illegal Flight Capital and the Control of Money Laundering, Moscow, October 2002 Freidrich Ebert Siftung, Controlling Illegal Financial Flows, New York, October 2002 French Senate, Money Laundering and the Control of Terrorism, Paris, September 2002 Institute for International Research, The New World of Money Laundering Detection

6 Curriculum Vitae

Jack A. Blum

and Enforcement, New York, September 2002 Inter American Bar Association, Ethical Issues for Lawyers When Money Laundering is Suspected, Cochabamba, Bolivia, July 2002 House Committee on Financial Services; Subcommittee on Financial Institutions, Recovering Dictators’ Stolen Plunder, Washington, May 2002 Senate Finance Committee, Tax Scams and Cons, Washington, April 2002 Confederation Europeenne des Syndicats Independents, Combating Money Laundering in Europe, Brussels, April 2002 Procuradora General de Mexico, Controlling Corruption; The International Dimension, Mexico City, November 2001 International Bar Association, Terrorist Funding; Some History and Some Remedies, Cancun 2001 International Money Laundering Conference, Financing Terrorism, Montreal, October 2001 Tyrolean Chamber of Commerce, Financial Crime and the Introduction of the Euro, Innsbruck, Austria, October 2001 Russian Federation/United Nations Conference on Financial Crime, The International Response to Trans-national Financial Crime, St. Petersburg, June 2001 Central Bank of the Bahamas, Control of Money Laundering and Bank Regulation, May 2001 Institut de Criminologie, Paris II (Pantheon-Assas) The Rule of Law and the Control of International Organized Crime, April 2001 World Bank/IMF Directors, The role of International Financial Institutions in Controlling Money Laundering, Washington, April 2001 Senate Permanent Investigations Subcommittee, Correspondent Banking and the control of Money Laundering, March 2001 CALP Anti- Money Laundering Program, Lessons for Small Offshore Centers, St. Vincent, January 2001 Council on Foreign Relations, Asset Recovery and Corruption Control, Washington, January 2001

7 Curriculum Vitae

Jack A. Blum

Anti-Money Laundering Program, The Vulnerabilities of Small Offshore Financial Centers, Grenada, November 2000 Pacific Rim Money Laundering Conference, Pacific Tax Havens: Can they be cleaned up?, Vancouver, October 2000 State of the World Forum, Globalism and the Rule of Law, New York, September 2000 CFATF Seminar on Money Laundering Prevention, Keeping Money Laundering Out of the Banking System, Castries, St. Lucia, July 2000 Gulf Cooperation Council Seminar on the Prevention of Money Laundering in the Financial Sector, The Structure of the Offshore Industry and the problem Fraud in Recovering Assets, Abu Dhabi, June 2000 Committee on Banking and Financial Services, House of Representatives, Recovery of Assets Belonging to the Nigerian Government, Washington, June 2000. Tenth United Nations Congress on the Prevention of Crime and the Treatment of Offenders, Controlling the Financial Crime Epidemic, Vienna, April, 2000 United Nations Offshore Forum, Cooperation in the Control of Financial Crime, Georgetown Grand Cayman, March, 2000 Royal Canadian Mounted Police, Recovery of Offshore Criminal Proceeds, Montreal, March, 2000 Caribbean Financial Action Task Force, Training program on Money laundering, Belize City, Belize, February 2000. United Nations Regional Program on Money Laundering Control, The structure of Offshore Finance, Santiago, Chile, November, 1999 Brookings Institution, Corruption and the Frustration of Economic Development. Washington, D.C. September, 1999 3rd Hemispheric Conference on Money Laundering, Regulating the Use of International Business Corporations, Panama, August, 1999 Committees on Finance and Budget, Mexican Chamber of Deputies, Revenue Loss Through Offshore Tax Evasion, June 1999 United Nations Seminar on Combating Money Laundering, The Offshore Financial Industry: Tools for Money Laundering, Boca Chica, Dominican Republic, June, 1999

8 Curriculum Vitae

Jack A. Blum

Ford Hall Forum, Recovering the Lost History of the Cold War: Its Importance for Democratic Governance, Boston March, 1999 Council on Foreign Relations, Controlling International Financial Crime, New York, October, 1998. Africa Subcommittee, Committee on International Relations, U.S. House of Representatives, Controlling Organized Crime in Africa, July, 1998. Committee on Banking and Financial Services, U.S. House of Representatives, The U.N. report and Legislative Recommendations on Controlling the use of Offshore Jurisdictions for Money Laundering, Washington, June 1998. U.N. General Assembly, Report on Financial Havens, Banking Secrecy and Money Laundering, New York, June 1998 Anti-Corruption Summit, Corruption, Offshore money, and Law Enforcement in the age of globalization, Miami, April 1998 Association of Internal Auditors, The Role of the Auditor in Stopping International Financial Fraud, Washington, March 1998 The German-American Institute, Controlling the New Face of Organized Crime in the U.S. and Europe, Heidelberg, February 1998. The Council of Europe, Fighting International Financial Fraud and Organized Crime: The Need for Global Thinking, Strasbourg, February 1998 Ecole des hautes etudes en sciences sociale, Developing the International Criminal Justice System, Paris, February 1998. International Conference on Corruption, Cyberfraud and Corruption, Lima, Peru, September 1997 University of Costa Rica, Controlling International Financial Crime, Heredia, Costa Rica, August, 1997. Universidad Iberoamericana, Money Laundering and Financial Crime as a Threat to Democratic Institutions in the United States and Mexico, Mexico City, Mexico, July 1997. Economic Club of Kenya, Controlling Government Corruption, Nairobi, May 1997. Committee on Banking and Financial Services, U.S. House of Representatives, Controlling the Mexican Money Laundering Problem, May 1997.

9 Curriculum Vitae

Jack A. Blum

Discovery Channel, Panel on Intelligence Reform, National Press Club, Washington, DC, March 1997 National Strategy Information Center, Financial Fraud in International "Interspace", Washington, DC, March 1997 American Society of Criminology, Controlling International Organized Crime, Chicago, November 1996 Senate Select Committee on Intelligence, CIA Drug Trafficking and the Contra War, October, 1996 Secretary's Open Forum, Department of State, Money Laundering and International Organized Crime, September 1996 House Banking Committee, Oversight and Investigations Subcommittee, Money Laundering in Mexico, September 1996 Ciudadiana Conference on Corruption, Sao Paulo, Brazil, International Issues in Corruption Control, June 1996 USIA, Amerika Haus, Vienna, Austria, Controlling Money Laundering, May 1996 Conference on Trans-National Criminal Law, University of Maastrict, Maastrict, Netherlands, Issues Raised by Cross border police undercover operations, May 1996 Anti-corruption Forum, World Bank, Washington, D.C. The impact of corruption on economic development. April 1996. House Banking Committee, Oversight and Investigations Subcommittee, The Counterfeiting of U.S. Currency Abroad, February, 1996 Congressional Research Service, Forum on Terrorism: International Legal Issues and Budget Considerations, November, 1995 Charles University, Prague, Czech Republic, Control of International Organized Crime: The International Legal Considerations , October, 1995 University of the Andes, Bogota, Colombia, Why control of money laundering is the key to controlling the drug trade, June 1995 Tufts University, Medford, MA, Chaired full day workshop on the impact of offshore financial transactions on taxation and law enforcement, March 1995 PBS, FRONTLINE, Featured in a television documentary on the life of Pablo Escobar,

10 Curriculum Vitae

Jack A. Blum

February, 1995 PBS, FRONTLINE, Featured in television documentary on money laundering and bank secrecy, November, 1994. University of Duesto, Bilbao Spain, Changing the international criminal justice system to control financial fraud, October 1994. Center for Strategic & International Studies, Washington, D.C. Conference on International Organized Crime, on money laundering and financial fraud, September 1994. Brookings Institution, Philadelphia, Pennsylvania, Workshop on Global Response to the Drug Challenge, May 1994. McGill University Graduate Business Conference, Montreal, Canada, The impact of corruption in the developing world on business opportunities, March 1994. Inter-American Bar Association, Caracas, Venezuela, Money laundering, January 1994. Temple University Law School, Philadelphia, Pennsylvania, BCCI, November 1993 International Conference on Corruption, Quito, Ecuador, Social and economic costs of government corruption. Sponsored by the Institute for Public Administration, October 1993. Venezuelan Bankers Association, Caracas, Venezuela, Money laundering, October 1993 Society for the Study of Social Problems, Miami Beach, Florida, BCCI, August 1993. New York State Banking Commission, New York City, Interagency working group of bank supervisory and law enforcement personnel: Detecting and preventing complex international bank fraud, New York, New York, July 1993. UNDCP and the Ecole National de Magistrure, Fort de France, Martinique, Training program for Eastern Caribbean law enforcement officials, on international law enforcement cooperation, Fort de France, Martinique, December 1992. Observatoire Geopolitique des Drouges, Paris, France, Conference on international narcotics trafficking, Paris, presented a paper with Professor Alan Block on money laundering in the Caribbean, December 1992. USIA Caribbean Regional Drug Experts Conference, Port of Spain, Trinidad, Money laundering. Ran a day long conference for the Trinidad and Tobago Bankers Association on money laundering. October 1992.

11 Curriculum Vitae

Jack A. Blum

Moscow State University, Moscow, Russia, The threat of international organized crime, at a conference of investigative journalists, September 1992. House Foreign Affairs Committee, Latin American Subcommittee: The resumption of assistance to Peru, October 1992. Congressional Research Service, Forum on Weapons Proliferation: Arms sales to Iraq and the export control system, September 1992. Columbia University School of Journalism, New York City, Reuter Forum: International financial regulation, April 1992. American Society for Industrial Security, Arlington, VA: Financing of terrorism, March 1992 Respondacon II, an International Teleconference sponsored by the World Bank and AID, on government corruption, February 1992. Senate Foreign Relations Committee, The scope of the BCCI scandal, August 1991.

TELEVISION AND RADIO Mr. Blum has been interviewed or been the subject of numerous radio and television programs. Some of the most notable of these include, ABC's Prime Time Live and Nightline; the PBS Mc Neill Lehrer News Hour, and the PBS documentary The Prize; NBC Nightly News, the Today Show, CBS's Evening News and West 57th Street, Canadian Broadcasting Corporation's The Fifth Estate, BBC television news, BBC Radio, Canal Plus's Transit (European Cable Channel), NHK Television (Japan), NPR's All Things Considered and Morning Edition, McLaughlin's, One on One, and Voice of America.

BOOKS MAGAZINES AND NEWSPAPERS In the course of his career, Mr. Blum has been quoted in or mentioned in thousands of newspaper and magazine articles around the world. These range from the New York Times, the Washington Post and The Wall Street Journal to the Times of Pakistan, The Toronto Globe and Mail, Vrij Nederland, and Pagnia Doce (Argentina). He is also discussed extensively in a number of books including False Profits, by Peter Truell and Larry Gurwin, Outlaw Bank, by Jonathan Beaty and Sam Gwynne, and Divorcing the Dictator by Frederick Kempe. More than twenty books have been published using materials generated in hearings Mr. Blum staffed. PUBLICATIONS Covert Operations: The Blowback Problem, in National Insecurity, Craig Eisedrath ed., Temple University Press, 2000

12 Curriculum Vitae

Jack A. Blum

Offshore Money, in Transnational Crime in the Americas, Tom Farrer, ed. Routledge, 1999 Financial Havens, Banking Secrecy and Money Laundering, with T. Naylor, M. Levi, and P.Williams, United Nations, 1998 Intelligence Services and Undercover Operations: The Case of Euromac, Passas N. and Blum J., and Controlling Cross Border Undercover Operations, Blum, J. and Passas,N. In: Invading the Private: Accountability and the New Policing in Europe , S Field and C. Pelser, eds. Aldershot, Dartmouth 1998 Algunas experiencias de lavado de dinero, in El rompecabezas de las drouges ilegales en Estados Unidos: Una Vision Eclectica, Thoumi and Guaqueta eds. Ediciones Uniandes, Santa fe de Bogota, 1997 Le Blanchiment de l’argent aux Antilles: Bahamas, Sint Maarten et iles Caimans, Blum and Block in La Planete des Drouges, Editions du Seuil, Paris, 1993

PROFESSIONAL BACKGROUND Education

1962 B. A. Bard College, Major: Psychology

1965 J. D. Columbia Law School Law School Honors: Lawrence S. Greenbaum Prize, best oral presentation Harlan Fiske Stone Honor Argument; best brief Northeastern Regional Round National Moot Court Competition. Editor Columbia Law School News; Founded Columbia Journal of Law and Social Problems. Bar Admissions: District of Columbia Bar U. S. Court of Appeals for the District of Columbia Circuit U.S. Supreme Court Memberships: American Bar Association; Sections on International Law, Tax, and Criminal Law.

13 Curriculum Vitae

Jack A. Blum

AWARDS Profiles in Courage Award, John F. Kennedy Lodge, B'Nai B'rith, 1992. John Dewey Medal for Public Service, Bard College, 1992. Florence Kelly Consumer Leadership Award, National Consumers League, 2000

14 Curriculum Vitae

Jack A. Blum

COMMUNITY SERVICE 1986-1990 President, National Consumers League, the nation's oldest consumer

organization. Preside over a 47 person board, including leaders of industry, labor and the public interest community. Served as a member of the Board of Directors since 1967. Presently, Board Member and General Counsel.

1981-1987 Board Member and Treasurer, The International Center, a and non-profit organization concerned with development issues in the third 1989- 1997 world and East-West relations. 1989 – present Board Chair, Violence Policy Center, Inc., a non-profit organization

engaged in research and education on gun control issues. 1985-1986 Member, National Research Council Committee on the Strategic

Petroleum Reserve. Contributed to Committee report on the long term policy issues facing the strategic petroleum reserve.

DEPARTMENT OF THE TREASURY[NTERNAL REVENUE SERVICE

WASHINGTON, DC 202.2.4

LARa!;: BUSINESS ANDINTw:RNATIONAI. D'VISION

April .2012

Reference: Applicarionfor Re~ardfor().!igin~)ntbrmation_~_Fonn 211DatedJulva .,°10

Dear Mr.---------------

This letter sets forth the ground rules pertaining to YOUTApplication tor Reward forOriginal lnfonnation submitted under the provisions of I.R.C. § 7623 (the "Application"). Theseground rules equally apply to the interview to be conducted on in connection with yourApplication.

1. An interview will be conducted in connection with your Application. The interview willprovide you ~e opportunity to provide further information regarding your Applicationand the Government the opportunity to ask you questions regarding your Application.

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3. You understand the importance of being truthful in the information that you arc providingto the Government, both in your Application and during the interview.

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6. The Whistleblower Office has authority with respect to any rewards, payments or oth.ercompensation. The individuals present at your interview cannot make any promises orguarantees with respect to any reward for the information you are providing.

7. To the extent that you receive a reward, you are liable for any taxes that may be owed.Any.such reward payment should not be construed as an employer-employee relationshipbetween you and the United States government.

8. The United States government will strive to protect your identity. but cannot guaranteethat it will not be divulged. Your identity will Dot be disclosed unless the United Statesgovernment deems it to be absolutely necessary. You may be asked to testify at a legalproceeding.

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Please aclcnowl. this agreement and acceptance of the foregoing ground rulespertaining to your Application by signing this letter and return it to me at the address below orfax to . If you have any questions, please call me at ~

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AGREED AND ACCEPTED:

Materials Submitted by Robert Fiechter

Business News, Swiss-American Chamber of Commerce, March 2013, No. 362, at p.2

Checklist For Foreign Requests For Mutual Assistance In Criminal Matters, Courtesy of the Swiss Federal Office of Justice

The Different Areas Of Competence Of The Federal Office Of Justice, Courtesy of the Swiss Federal Office of Justice

Conditions For A Commissioner Or Diplomatic Or Consular Official To Obtain Evidence In Switzerland, Courtesy of the Swiss Federal Office of Justice

Court Decisions Help Clarify Issue Of Liability In Deferred Letter Of Credit Fraud Cases, article from ICC Commercial Crime International, November 2004 issue, volume 22, No. 6 at pp. 1-2, reprinted with permission