The Divorce Asset Hunter

The Divorce Asset Hunter

Stashing Cash with Ammo: Convicted Fraudsters Hide Money Away in Ammunition Canisters

Posted in Finances, Uncommon

We’ve heard of people stowing money beneath the mattress and under floorboards before, but we recently came across this article about the family of convicted Ponzi-schemer Ron Wilson hiding Wilson’s money for him in ammunition canisters.  That’s a new hiding spot for us.

Wilson’s brother, Tim, and estranged wife, Cassie, pleaded guilty last month to conspiracy to obstruct justice in a South Carolina federal court.  This was no small offense, the charge carries up to five years in jail and a $250,000 fine.  According to the article, Ron Wilson handed over the canisters of cash to Tim and Cassie right before he was set to plead guilty to mail fraud, in case he were ever released from prison.   Cassie Wilson’s canister had $172,859 and Tim got $164,300.

We’re blogging about this story not because we think ammunition canisters are the first place you should look for assets, but because this story highlights two things that we come across regularly in asset searches:

  1. People tend to stash their money with close friends and family.  We’ve blogged about this here before.  If someone wants to appear cash/asset poor, friends and family are a good place to stow money or other assets because, chances are, they’ll give it back.  We always look at the full picture and have been successful at identifying transfers of assets from our debtor to a close friend or family member for our clients.
  2. People get creative when they hide their money.  It’s important to approach asset searches with an open mind.  Before we start any marital asset search, we ask our client to fill out a questionnaire about their spouse.  The more information we have about our subject, the more assets we are likely to find and the greater chance we’ll be attuned to something about our debtor that just might be the key to finding their assets.

So you may not have to go running to find ammunition canisters in the house, but when approaching an asset search, really think about your debtor.  Where or with whom might he/she hide assets?  You probably know more than you think.

Divorce Assets in Bankruptcy? Oh Yes!

Posted in Finances, Legal issues, Property

You wouldn’t think old bankruptcies are a place worth checking when hunting for assets. If someone’s bankrupt, it means they are essentially out of money, right?

Wrong, at least sometimes.

We have found all kinds of wonderful material when looking at bankruptcies. Some of it leads right to assets, and some leads to a non-financial asset known as leverage: good information you can use to extract a better settlement.

Financial assets and information. What kind of asset can you find in a bankruptcy? The exempt kind. When people go bankrupt they don’t have to hand everything over to their creditors. Some states allow an entire main residence to remain in the hands of the debtor after discharge. The other day, we found a large pension fund in an old bankruptcy. Just check the schedule of exempt property in the petition. Of course, the fact that someone had an asset ten years ago doesn’t mean they have it now, but what if that person turns out to have misled his wife about the kind of money he had access to during the marriage? Chances are that if the pension money is something an estranged spouse is just finding out about, that money could have been moved into other accounts, taken out, invested or used in some other way that could be reachable.

Suppose the married couple did all of their banking at Bank of America, and the accounts there are nearly empty. Then, it turns out that the husband had a large IRA on deposit at JPMorgan Chase just before marriage. Wouldn’t the records of that account be of interest during the time of the marriage? What happened to the money?

Leverage. Compare what the debtor presented as his financial situation with what you know about the debtor. Did he leave out assets you know that he owned at the time? Misleading a bankruptcy court is a serious offense. There is no statute of limitations on re-opening a bankruptcy, and knowledge that could get a spouse into major trouble with a court could help move negotiations along on a settlement.

The takeaway point about bankruptcies is the same for most other information in an asset search: Keep your search as broad and general as you can. You are searching for assets, but also information that will lead to assets. That could be anywhere, which is why a good asset search is not that different from a thorough background check.

Licenses and Trade Names

Posted in Common, Finances, Property, Real Estate

In a country in which people can form a company in minutes over the internet, it’s amazing to us how many asset searches proceed on the basis that you only need to look for property owned directly by a person.

So often, we find that someone can truthfully state at a deposition that he owns no real estate personally. But unless he’s asked about ownership beneficially or ownership of shares in companies or membership interests in limited liability companies, you could be missing out on lots of wonderful assets.

How to figure out the name of a person’s company, through which he may own all kinds of valuable property, is a good part of what our asset searches are for.

One place we always like to start is the search for licenses.  As The Economist highlighted earlier this year, U.S. businesses in many sectors face a blizzard of licensing requirements before they can get up and running.

Licenses can be a pain, but for asset hunters they are a gift: an on-line record of names, addresses, and often trade names that link the public name of a business with the name of the company behind that business.

Take the New York State Liquor Authority: If you enter the name of an establishment you know into the Authority’s website, chances are the name of the company that owns it won’t be the same as the name by which you know the establishment.

Because most bars and restaurants in New York don’t operate with their legal names on the outside, lit up in neon, any proper asset search will proceed based on the company’s real name.  As it is with restaurants, so it is with lots of retail establishments.

The other thing we love to do when we find the name of a new company is to look for other companies with closely similar names. That’s because many people just don’t put a lot of time into naming companies for the purposes of making them hard to find.

If someone who owns’ “Bill’s Tavern” names the holding company “Jeffersonville Restaurant LLC,” his next establishment could be owned by “Jeffersonville Restaurant II, LLC.”  What does company II own? Instead of starting with the business and finding the name of the owner, this time you find the owner and figure out the name of the business.

A little bit of playing around with name indexes kept by licensing authorities or the Secretary of State can pay big dividends.

Feuding Singapore Duo Settle Marital Asset Dissipation Claim

Posted in Business, Finances

According to Bloomberg, the co-founders of Ezra Holdings, Ltd., a Singapore-based offshore marine company, reached a confidential settlement resolving their lengthy legal battle over $164 million in marital assets.  Much of the dispute centered around ex- wife Goh Gaik Choo’s claim that ex-husband Lee Kian Soo had dissipated marital assets.

Goh alleged, that after she filed for divorce in 2008, Lee and the couple’s son Lionel colluded to dispose of Lee’s assets.  Lee transferred a sizable amount of Ezra stock for 45 Singapore cents per share to son Lionel.  The problem was that market value of the shares was nearly triple that at the time.  When called upon to explain the transfer, Lee told the court that he transferred the shares for 45 cents because he was born in 1945.  The court didn’t buy this rationale and ordered that Lee pay Goh a hefty sum but did not award her monthly maintenance as she had requested.  The settlement resolved both sides’ appeals.

We’ve blogged about transferring assets to friends and family here before. This case is an excellent example as to why every asset search should start with a look at the public record.  Many times this look should include a review of records on people close to the debtor.  This includes securities filings, litigation records, real property records, media reports and more.  Reviewing securities filings can be particularly enlightening in cases like this one.  Ezra Holdings is publicly listed on the Singapore Stock Exchange.  The Singapore Stock Exchange tells you the top 5 owners by shares held in a listed company.  Lee’s son Lionel is the top Ezra shareholder at nearly 23%.  A comparison of his ownership stake in given years would probably tip you off that Lionel had been amassing shares of the company, prompting a closer review of his securities transactions.  To the same effect, had Lee been listed as a top 5 owner in one year and disappeared off the list some time later, this would tend to indicate dissipation of assets.

In the US, directors of a public company and its beneficial owners of 5% or greater must file forms with the SEC indicating the number of shares they have and when their ownership stake changes.  We tend to find extremely valuable information in these forms which is why we always make sure to save plenty of time to dig through SEC records when we’re searching for assets.

Of course, not every company is a public company and private companies might require more digging.  But there is still a lot of value to be had in doing a public record search and uncovering all that you can before moving on to latter phase investigative techniques or bringing in forensic accountants to dissect financial records.

Why Email Accounts Should be on Every Divorce Inventory

Posted in Legal issues, Property

Although a no-brainer when it comes to contemplating divorce, it’s remarkable how often couples forget about old bank accounts they thought had been emptied and closed, but turn out to be active and full of money.

This happened recently to one of our clients, who discovered a major cash purchase made by his wife when the store mistakenly sent her some correspondence about the purchase to their home address.

Less well known by couples but increasingly important is the need to take an inventory of email accounts. Just as bank accounts contain money you may want to get at, email accounts can reveal the location of money you want to protect, as well as financial information you may not be ready to divulge.

This issue came up in a New York courtroom this month: the wife and major breadwinner thought she had closed her husband’s email account when he moved out, but the account remained open.

Worse for her, the husband had set up both email accounts so that the wife’s account forwarded all her outgoing email to the husband. That setting remained in place long after the husband moved out. The only way she discovered the forwarding setting was that after closing her husband’s account for good, she began receiving notices that messages she sent could not be delivered.

She first ignored these, but when they continued appearing week after week, she carefully read one of the notices and saw that her email account had been trying to forward her outgoing messages to her husband’s now-dead account.

The result was that the wife brought an action against the husband for violations of the Federal Wiretap Act and the Stored Communications Act. The lessons here are pretty clear:

  1. Getting access to someone else’s email is under most circumstances illegal without their knowledge. In the case above, the wife originally may have consented to the forwarding arrangement but the judge has ruled that under the Wiretap Act the scope of her consent (whether it extended to post-separation forwarding) is a question for the jury.
  2. Reading the fine print on the internet is well worth your time. We’ve written before on our companion blog, The Ethical Investigator, about email headers in Digital Assets: Worth Money, but Also Great Providers of Information. But here, the consistent attempts by her account to forward email to a place she had not specified were there for her to see as long as she didn’t just erase the relevant message from the service provider.
  3. Email accounts are things of value, not so much for what they cost to maintain but what kind of information is held in them. If your account is jointly owned, the other owner can claim he has the right to the messages you have sent but not copied that other owner on. It should be commonplace when asking about the other side’s assets in discovery to ask about ownership of electronic assets.

Heirs Look to Cash in on Stolen Oil Rights Hidden in Secret Company

Posted in Business, Finances, Legal issues, Property

Grandchildren of the late Judge Leander Perez, a segregationist political boss who ruled Plaquemines Parish, Louisiana from the twenties until his death in 1968, recently filed a so-called “legacy lawsuit” against several large oil companies for allegedly polluting land on which the family held mineral rights.  The glaring problem with the plaintiffs’ case is that Perez stole the mineral rights in question from the Parish he controlled for over 40 years.

Although it was no secret that Perez was crooked, exactly how Perez and his family amassed their $80 million fortune remained a mystery until 1987.   Suspecting Perez’s misdeeds, Plaquemines Parish later brought a lawsuit against him and his family.

The Parish could prove nothing until one of their lawyers decided to try sifting through the records from Perez’s son’s divorce.  In the file, the Parish lawyer found a scrap of paper that referred to a company called Delta Development Inc.  Delta Development Inc. turned out to be the company the Perez family had used to receive their oil royalties for decades.

Our big break in a case often comes from the unlikeliest of places.  We always tell our clients to try to think outside the box when developing an asset search strategy because you don’t know what you don’t know.  It just might be worth getting that old case out of archives or interviewing that former secretary.

In fact, much like in the Perez case, we rcently uncovered offshore companies holding assets at issue in a commercial litigation by reading through the public divorce filings of one of the defendant company’s executives.  Our clients, who previously had no reason to suspect that their adversaries were conducting business through offshore companies, can now craft discovery demands that could reveal what we suspect may be a much larger network of hidden offshore companies and assets.

Husband May Face Jail Time for Hiding Assets in Offshore Companies

Posted in Business, Common, Finances, Legal issues, Small Business

A London judge has ordered oil trader Michael Prest to pay his wife over $600,000 in support and alimony payments or face jail time.  Prest’s case gained attention last year for a landmark U.K. Supreme Court ruling permitting Yasmin Prest to pierce the corporate veil to reach assets that Michael had placed in trusts held by his various offshore companies.  The ruling represented the first time the British courts pierced the corporate veil in a divorce case, and ultimately led to Yasmin obtaining a 17.5 million pound divorce award.

Prest claims that he does not have sufficient funds to pay the award because his company, Petrodel Resources Ltd., is no longer operational.  Yasmin asserts that, despite his claims of poverty, Michael still lives a lavish lifestyle, spending hundreds of thousands of pounds per year on luxury travel.

As we wrote here, when conducting matrimonial asset investigations, especially those involving self-employed spouses like Michael Prest, our first step is to look for companies owned by the spouse, his family, and his close associates.  If the spouse makes no mention of income from these companies in his net worth statement or if he has not disclosed his interest in them during the discovery process, then their mere existence can be a sign that the spouse is using his companies to hide money.

Once we find the spouse’s companies, we can then search for assets owned by those companies, not just by the spouse.  We may find real property, stock holdings, aircraft, boats, or any of a wide range of assets that can be uncovered in a public record search.

We were once able to find a side company owned by a lawyer husband in which he had stashed an entire thoroughbred horse farm.  We also found the value of the horses, the trucks, the barns, and even the tractors on the property, all through searching the public record.  In addition to what we uncovered, our client was also able to request broad discovery of all of the husband’s hidden companies and their assets, including trusts and bank accounts.

Crooked Investigators Resurface in Divorce of Malaysian Millionaire

Posted in Celebrity Divorce, Ethics, Finances, Legal issues

Back in January, we posted a story about a Canadian investigative company whose owners, Michael Grontis, Cullen Johnson, and Elaine White, had fleeced their customers out of millions by promising to find assets hidden in offshore accounts.  Instead, they created fraudulent bank records and passed them off as real.  These crooked investigators’ work has surfaced once again, this time in the divorce of a Malaysian tycoon.

Shahnaz Abdul Majid claims that her husband Datuk Seri Mahmud Abu Bekir Abdul Taib, a prominent Malaysian businessman and government official, is worth hundreds of millions of dollars.  She says that much of his wealth is in the form of offshore accounts and investments in foreign companies in Australia, Canada, the U.K., and the U.S.

The problem with Majid’s assertions is that they are based on the “forensic accounting” work of convicted fraudsters Johnson and White.  Taib, of course, maintains that he has far less money than his wife thinks he does, and that Johnson and White fabricated records of fictitious overseas accounts and investments.  Given that Johnson and White are currently serving a five year prison term for doing just that, his allegations just may be true.

The problem is that he still may be hiding money, and he is more likely to get away with it because Majid used investigators who were willing to break the law to give her what she wanted.  Just assume for a moment that the bank records showing foreign accounts were real, she still went about getting them the wrong way.  We’re not experts in Malaysian evidence rules, but in the U.S., what reasonable judge would even glance at bank records that are unauthenticated and illegally obtained by an investigator?

Any investigator or forensic accountant worth their salt should have explained the dangers of illegally obtaining bank records and the advantages of doing things the right way.  As we tell our clients all the time, accessing someone’s bank records without their permission or a court order violates federal and state law, and can lead to criminal prosecution.  Even though we can’t get bank records, we can often find more than enough information through legal means to help you determine a spouse’s net worth.

We can identify real property, stocks, corporate holdings, deferred compensation, pensions, and countless other forms of assets through public record searches.  Interviews with former employees or business partners can also tell you where a debtor or his companies do their banking.  You can then issue appropriate discovery demands or subpoena records directly from the debtor’s bank.

In the end, following the rules will get you more and better information, and it will also ensure that the information you find can be used to your benefit in court.

Produce Company’s Owner Accused of Hiding Assets and Swindling Strawberry Company out of Millions

Posted in Banking and Investments, Business, Finances, Fine Living, Property, Small Business

Last week, Curtis Harold DeBerry, owner of the Texas-based Progreso Produce Company, was arrested and accused of cheating investors, business partners and banks out of millions of dollars over the past few years.  He now faces up to 30 years in prison.

According to the criminal complaint, DeBerry hid assets by transferring money to his children, and diverted assets meant for creditors to pay for his own luxury items (including a yacht).  One of the more egregious allegations in the complaint is that he bilked a fruit wholesaler out of over $8 million.

We regularly come across people that are hiding assets in their family members’ names or in secret companies.  We recently found that a debtor had placed all of his North Carolina companies in his nephew’s name, and then used those companies to buy up loads of property.  We always think outside of the box when we’re doing an asset search.  We’re well equipped to look for assets in the names of people close to the debtor using our proprietary commercial databases and by scouring the public record.

On the flip side, in many cases, our clients would not have needed an asset search if they’d done some more diligence prior to entering into the bad business deal.  This looks to be the situation here with the fruit wholesaler.  Sure, it costs money to do diligence, but a few thousand dollars to save $8 million seems more than worth it.

In this case, Fruit wholesaler, Eclipse Berry Farms, LLC, and Progreso entered an agreement to grow and sell strawberries together.  According to a civil complaint, to induce Eclipse to sign the agreement, Progreso showed Eclipse 42 leases with strawberry growers in Zamora, Mexico where the strawberries for the joint venture were to be harvested.  Eclipse then sent over $8 million to Progreso for growing, producing and packaging the strawberries.

According to the complaint, after the contract had been signed and money advanced, Eclipse sent a quality control person to Mexico to actually take a look at the strawberry harvesting land and operations.  It was then that Eclipse learned that Progreso did not have any leases with strawberry growers in Mexico and had instead been haggling with local strawberry growers to buy strawberries at a very low price.  Ultimately, Progreso used about $2 million of Eclipse’s funds to purchase strawberries in Mexico, but kept the balance of the $8 million for itself.

Though it was prudent for Eclipse to eventually send a quality control person to Mexico to check on the strawberries, it would have been wiser to send someone down prior to investing $8 million in the first place.  A few phone calls to the counterparties on the strawberry leases might have even been enough to put Eclipse on notice of Progreso’s alleged fraud.  Had they discovered that Progreso did not have any leased strawberry land, they would have never advanced the money, and wouldn’t now be stuck duking it out with other creditors to get pennies on their dollars back from Progreso.

Socialite Husband and Wife Accuse Each Other of Hiding Jewelry in Bitter Divorce

Posted in Celebrity, Celebrity Divorce, Chattel, Fine Living, Property, Vehicles

Whitney St. John and James B. Fairchild’s acrimonious divorce began in 2011, and the couple has been fighting over how to divide their fabulous collection of art and antiques ever since.  With no amicable resolution in sight, last week, a Suffolk County judge ordered the couple to liquidate their possessions and equally divide the proceeds.  The sale took place over Memorial Day weekend at the couple’s Hamptons home.

According to Fairchild, the sale brought in far less than it should have because St. John squirreled away over $300,000 worth of jewelry that she was required to sell.  The couple had purchased the jewels as inventory for a boutique they planned to open together before their marriage went off the rails.  St. John lobbed identical accusations at Fairchild.  Her lawyer told the press that Fairchild “intercept[ed] valuable store inventory.”  She also accused Fairchild of selling a 1955 Jaguar for $175,000 and keeping the proceeds of the sale for himself.

As we wrote here and here, valuables like jewelry and cash can be extremely difficult, but not impossible, to track down.  If we were conducting an investigation for either party in this case, we would first suggest subpoenaing the opposing side’s bank records.  Each side knows when and where the jewels were bought, so they would not look for a large cash purchase.  Instead, we would recommend looking for payments to jewelry appraisers, insurers, or payments to a bank for a safe deposit box.  They should also subpoena the other side’s insurance policies and look for an itemized schedule of the items covered or evidence that the coverage amount of the policy was recently increased.

Determining whether Fairchild sold his car is far easier than finding hidden jewelry.  As we wrote here, antique cars must be registered with the DMV just like any other vehicle.  A vehicle registration search would thus reveal whether Fairchild recently transferred the car’s title to another owner.  Some states’ DMV records are private, but we still might be able to find evidence of the sale in the form of a UCC filing if the buyer financed the purchase of the car.

To hunt down cash resulting from the sale, we would first look for companies, trusts, or other entities where Fairchild may have stashed the cash.  Then, we would recommend getting the bank records for those entities.  As we have written many times, this can only be done with a court order.  At that point, it is just a question of looking for suspicious deposits or cash purchases that correspond to the car’s value.