To discuss a corporate intelligence or financial investigation matter, or to learn more about Cachet International’s investigative resources in your jurisdiction, contact Michele Palmer by email or at 602-899-3993.
In our first installment of this two-part article, “Asset Investigations: How ’Intelligence’ Can Be More Valuable than Evidence,” we stated that “The use of intelligence is essential in most asset investigations.” More often than not, however, intelligence is not admissible as evidence in court. Why? Most human source intelligence is obtained from individuals who will either not agree to testify or whose information will not survive challenges in court. However, human source intelligence is often the only practical way to uncover sophisticated asset concealment schemes and, once converted to evidence, to efficiently pursue a recovery action in court. (“Evidence” is generally defined as “proof of fact(s) presented at a judicial hearing such as a trial.”)
What then is the value of the intelligence? How can you convert non-admissible intelligence into court-admissible evidence, now that your investigator has delivered to you the intelligence about the location of a target’s secret bank accounts in offshore tax havens?
Untying that Gordian knot will primarily depend upon the skill set of a great asset recovery lawyer who specializes in asset recovery. He or she should be in charge of bringing your case. Asset recovery is a highly specialized and complex field, and it is for this reason that we recommend either choosing an experienced asset recovery lawyer from the very start or engaging the adjunct services of such a specialty lawyer.
To be clear, Cachet International and its two principals do NOT provide legal advice. We are asset investigators and not lawyers. However, below we would like to share with you some of the methodology that we have seen successfully employed by asset recovery lawyers.
Traditionally, gathering intelligence from human sources has been best employed to first provide an assessment of the target’s assets to determine whether a lawyer’s effort to prepare a contemplated recovery action is justified and economically viable. This is particularly true if third-party financing for the recovery effort is being sought. Also, by knowing the location of litigation targets and their assets, the cost versus expected recovery ratio can be more accurately estimated. Once this intelligence has been unearthed by the investigators, the lawyers — on behalf of their clients — can better determine whether going after a target’s assets is within the client’s time and budget constraints.
Second, intelligence provides the “road map” for planning and conducting investigative actions and legal discovery efforts.
Often, these additional investigative actions will uncover the first actual court-admissible evidence. For example, if you know that the target has accounts in a secret offshore jurisdiction such as in the Caribbean or a European tax haven, then you can begin looking for the target’s travels and connections to these geographic areas. Travel, accommodation and communication records can be subpoenaed and studied for further leads. Interviewing those who are privy to the target’s travels and connections can supplement and expand on such information, thus providing leads to different jurisdictions — information that can be vital to establish jurisdiction. It is hard to believe, but many individuals traveling to exotic islands in order to hide their money and beneficial ownership in shell companies, forget that their social media postings and pictures can place them in these locales and even provide dates and a time line. Needless to say, social media mining is a growth area in asset and beneficial ownership investigations.
Business and banking records can also be examined in a more focused and precise manner. If you know what you are looking for in advance, you can better focus your efforts to finding public records, former employees, counterparties, litigants and even participants in the concealment of these assets who in turn can provide court-admissible evidence.
The advantage here is that the legal discovery of documents and depositions can continue to focus on this information. As seen in our earlier article, once the target individual (husband) had given depositions, claiming to be bankrupt, the discovery of his overseas assets placed him in much greater legal jeopardy than before, increasing the pressure for him to settle.
This is not a good idea, and here is why. Asking the target directly in depositions about offshore accounts, located by investigators through intelligence but not yet confirmed with evidence, is a delicate and rather dangerous tactic that can fatally damage the entire case. After all, now knowing that his assets are being investigated, the deposed target can then notify his offshore bank to move and/or close his accounts. If that happens, there are a multitude of banks which, when subsequently served with seizure orders, will claim that the accounts had never existed. (If you do not believe that banks will lie to the courts and regulators, we suggest you do some simple Google searches of some famous international banks).
In other words, you absolutely need to gather the most powerful possible evidence in advance of directly approaching the target or the holder of his assets: the hosting bank.
There are, of course, many methods out there that can be employed for turning intelligence into evidence, but here are four rather new powerful tools for generating ironclad court-admissible evidence, and we like to call them the “Magnificent Four.”
The English common law Mareva ruling is not available in U.S. federal courts, due to the unique origin of the U.S. federal court system and the limit on remedies available in federal courts. However, U.S. state courts have the inherent power to grant remedies in the form of a global attachment order. It appears that some foreign plaintiffs may qualify to seek redress in New York courts using a global attachment order.
Note: A Mareva injunction is an English Court order preventing a defendant from transferring assets until the outcome of the associated law suit is decided. Named after a 1975 English case, Mareva Compania Naviera S.A. vs. International Bulk Carriers S.A., it is now called a freezing injunction or freezing order.
We hope our observations on additional concepts in pursuing effective asset investigations demonstrate how intelligence can be used effectively in order to take a case from investigation to the actual asset recovery. An experienced and highly skilled asset recovery lawyer will be the best ally in the process.
This short summary should not be considered to be all-inclusive of the methods available in converting intelligence into court-admissible evidence. We emphasize that there are many other effective methods available outside the U.S.
To discuss a corporate intelligence or financial investigation matter, or to learn more about Cachet International’s investigative resources in your jurisdiction, contact Michele Palmer by email or at 602-899-3993.
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