Asset Investigations: How “Intelligence” Can Be More Valuable than Evidence
A fascinating case study illustrates how inadmissible intelligence helped unravel a complicated and apparently bullet-proof scheme to hide assets.
March 2016 | More Articles
See Part 2 of this article: Converting Intelligence into Court-Admissible Evidence
The use of intelligence is essential in most asset
investigations. While often not admissible as evidence, as most human source
intelligence is obtained from individuals who will not agree to testify or whose
information will not survive challenges in court, human source intelligence
is often the only practical way to uncover sophisticated asset concealment
Following is an actual example of how such intelligence played a
key role solving a complicated and apparently unsolvable case.
A prominent international lawyer, skilled in opening offshore
companies and bank accounts for his clients, was divorcing his U.S. wife.
Although Wife believed that Husband had tens of millions of dollars, Husband
claimed to have lost his money in bad international investments and to be
bankrupt, a claim to which he swore in depositions and in court.
Clearly, Husband was an expert in concealing assets. Forensic
accountants had found nothing useful other than the fact that he had not filed
income tax returns in the U.S. for several years, instead allowing the IRS to
assess him for estimated income. In short, he did not perjure himself to the
U.S. government. Searches of the few documents that were found were also
unhelpful, as was a search for his U.S. bank accounts. Depositions and standard
investigations had proved fruitless.
Penniless, having borrowed money from friends to pay for her
lawyer and standard investigations and accountants, Wife came to Cachet
International as a last
In our investigation, first we found a human source who told us
about waiting for Husband to take some money out of his account in a foreign
country for traveling while the human source waited in a nearby cafe. That
eventually led us to a successful search for nearby banks in that foreign
country, where Husband was found to have an undeclared overseas account. That
account was then traced to other related offshore accounts.
We then found another human source who had inadvertently taken a
telephone call for Husband, in which the caller stated that his long
back-ordered custom luxury car would soon be available in a foreign country. We
eventually turned up exact information on the car that was ordered, and on yet
another of Husbands undeclared overseas accounts that had been charged for the
car. The car cost over $400,000 USD.
This intelligence gave Wife the critical information to obtain
the court-admissible proof of the overseas accounts and Husbands considerable
wealth. The latter also supported a perjury charge for claiming bankruptcy in
the U.S. and falsely answering during deposition.
Key Steps Before Initiating Asset Recovery Efforts
The preceding story is one of many cases in which intelligence
was the key to a successful asset tracing investigation and eventual recovery
action, when traditional investigative methods were unsuccessful.
However, sometimes the value of intelligence is rooted in its
ability to reveal the futility of costly legal action. (Some experts have
estimated that over 80% of judgments in the U.S., and even more worldwide, are
never collected.) In advance of launching a hidden asset investigation, it is
critical to know the following:
whether the assets of an opposing party justify the
costs of litigation;
what resources an opposing party has to spend on
whether to believe an opponents claims of poverty or
other representations made during negotiations;
whether an opponent is shielding assets by
transferring them to associates or associated companies; and
how to best enforce a monetary judgment, including
identifying the best jurisdictions to pursue assets.
We have become accustomed to gatekeepers, frequently profiting
from professional confidentiality (fiduciary companies and business formation
companies), that set up complex structures and shell corporations. On behalf of
their clients, these gatekeepers register corporations in secret
jurisdictions, where the company register is either not public or contains no
shred of relevant information about the actual beneficial owners. International
business corporations (IBCs) that are shell companies registered in offshore tax
havens are then used to open bank accounts at locations where customer due
diligence is not up to world standards, and where the likelihood of mutual legal
assistance is slim or outright absent. Such structures can create a dense smoke
screen and that is precisely their purpose.
Persons concealing assets, particularly in offshore locales,
have most of the advantages afforded to them by strict local business secrecy
laws. Starting off with little or no information will result in encountering
daunting and indeterminable legal and investigative fees. Further, if a claimant
is seeking financing of his recovery effort, approval is unlikely to come
without some specific advance intelligence about the financial resources of the
The first task is normally to confirm the existence of assets to
which the target can be linked or that the target owns or controls. If, for
example, the target has lost or spent the assets in question, can the cost of
the eventual legal action be recovered?
A second key element is to look for other assets (bank accounts,
real estate, investment accounts, safe deposit boxes, related persons, etc.)
and/or related businesses in which the target has equity. Piercing the veil to
find the ultimate beneficial owner (UBO) in an offshore locale is a formidable
but critical task to be accomplished before embarking on the asset recovery
Intelligence can provide a rather detailed roadmap as to where
to focus traditional investigations, depositions, forensic accountants,
seizures, letters rogatory, Mareva
injunctions, ex parte judgments, etc. Good intelligence will make the process much more efficient and
There is a place for traditional asset tracing techniques,
when obtaining relevant court orders is important.
Based on our experience, the speed of reaction often
necessitates an alternative approach and different techniques.
Intelligence can not only save time but cut costs by
determining whether legal action is worthwhile and, if so, how to make it more
efficient and cost effective.
In todays environment one thing is certain: An effective
asset identification strategy will provide a greater chance of success and allow
the claimant and his lawyers to make an educated decision of whether to move
forward on a case.
Good intelligence can be the key to this success.
 Requests from courts in one country to the courts
of another country to perform an act which, if done without the sanction
of the foreign court, could constitute a violation of that countrys
 A court order which freezes assets so that a
defendant to an action cannot dissipate their assets from beyond the
jurisdiction of a court so as to frustrate a judgment.
 The Latin term ex parte is used in law to
refer to court proceedings for the benefit of one party to a
controversy, without the other being present.
To discuss a corporate intelligence or financial
investigation matter, or to learn more about Cachet Internationals
investigative resources in your jurisdiction, contact
Michele Palmer by
email or at
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