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Nabbing assets before they're eaten up.

You have gone through the full; legal process, won your clint's case, and obtained a substantial judgment. All you have to do is levy the assets of the other party and reap the rewards. But is it that easy?

You've perfected your judgment, the opposing party refuses to Pay the debt, and the sheriff or constable cannot find sufficient assets to satisfy the judgment. What happens next?

Most attorneys first try to depose the other parties in a postjudgment discovery action to determine their net worth and then locate the source of assets. You should require the opposing parties to present their financial statements, tax returns, and bank statements. Also, question subjects about their income and personal and business assets.

During this post judgment discovery, many attorneys find that the opposing parties have already hidden their assets. Subjects may have either taken the money offshore or transferred it to other entities, such as their children's or family trusts. Or they may have hidden it using another name, such as the spouse's maiden name. Assets will be there nine time s out of I 0.

In 20 years of investigation, I have heard almost every story about how people have lost their assets and now can't pay the judgment. Typical stories include: "I went to Las Vegas (or Atlantic City) and lost it all gambling."

"My wife and I used the money to live on and spent it all" ... .."My bookkeeper or accountant stole the money." "I lost it all on bad business deals trying to raise the money to pay this judgment."

You may have heard similar stories and found that the parties could not document their claims. Let me offer a few suggestions that may show you where the money has really gone. * Check to see if the subjects made large payments on their home mortgages during the period of your lawsuit, especially in the last year of the lawsuit. Many people try to hide their assets by paying on their mortgage and adding to the equity of their homes, which they believe to be "bullet-proof" in Texas because of the homestead law. * Examine the payments of their universal life or whole life insurance policies. A prepayment can accrue interest just like a savings account and doesn't show up on financial records except inside the insurance policy itself. * Loojk for savings bond purchases, either in the subjects' names, their childrens' names, or the spouses' maiden names. Until recently, these transactions were not registered centrally and were a favorite purchase of money launderers and drug dealers. * Look for chsher's check puchases in the bank accounts of your party. These checks can be purchased and turked away for the future just like cash. WHEN YOU BRING OPPOSING PARTIES TO depositions, instruct them to bring the kind of documents that will help you and your investigator trace their financial history. This is one of the most overlooked areas of discovery because attorneys frequently don't understand the process of investigation.

Where a person went and who they spoke to or dealt with is often more important than knowing about their business and where their money was when those last financial statements and tax returns were filed. Sometimes the most crucial evidence can be found by tracing certain activities. Timing of these activities may prove that financial transactions were made to protect personal assets.

The following key documents may reveal a person's hidden assets. They may also help prove the intent of hiding these assets from the court.

Passport. When you subpoena parties, request their passports in your motion to produce. The entry and exit visa stamps will disclose trips to regions such as Switzerland, the Cayman Islands, the Bahamas, Isle of Man, Netherlands Antilles, and other places. These trips may have been made to hide money.

By documenting financial withdrawals from bank accounts and timing them with trips to foreign countries, you can often discover offshore fund transfers.

For example, I know an accountant who made a trip to the Cayman Islands every month with his scuba gear. It took US Customs three years to figure out his tanks were filled with $ 100 bills.

Telephone records. Many smart attorneys request business or personal phone records but don't think to include their subject's mobile or car phone records. Remember that standard telephone records only record long-distance calls. Mobile phone records record all calls, local and long-distance, for billing purposes.

If you want to find an undisclosed business partner or a "significant other" in a relationship, try subpoenaing the car phone records. Compare the numbers and names on the bills against the people that are known to your clients. I promise you will find some interesting information.

Credit card statements. These records document out-of-town travel and often name people with whom your subject has had dinner or done business-people that may well be pertinent to your investigation. These records also indicate what hotel the subject has stayed in.

Hotel records. Hotels now invoice not only for the room, meals, and drinks but also for the long-distance phone service. Calls are often made to those people the subject wouldn't call at home, such as an out-of-town banker, business associate, or third party.

Credit reporting agencies. The trail of credit purchases follows us around the world. Like expense accounts, a credit report lists where we eat, stay, and make purchases. It also contains a record of other business entities and banks that inquire about our financial status. Credit card inquiries are one of the better ways to locate undisclosed bank accounts, insurance policies, and other major purchases.

Airline travel. When questioning parties about their business activities and

assets, always ask for the name of their travel agencies. Once you have this information, another subpoena can be sent to the travel agency to document all the trips made by the subject.

Telex. When investigating a company's assets, always consider the company's telex records to find foreign business entities, foreign bank accounts, and other offshore activities. The monthly telex log or bill will point you in the right direction.

Overnight packages. Almost all of us use Federal Express, or a similar carrier, to deliver our valuable mail and packages around the world. Examining the monthly bills for a company's overnight packages gives a clear idea of the cities and countries that it is doing business in and can always add more information to the discovery process.

All of the records listed are easy to obtain, particularly under a motion to produce. If you find that the opposing party is unwilling or unable to gather these documents, you should think about subpoenaing these records directly from the sources that produced them.

In many cases, once these records have been requested, obstinate parties suddenly become much more amenable to resolving financial issues and settling. their judgments. If they have anything to hide, they would much rather settle with you, an obviously experienced investigator, than produce these. records publicly for other creditors to find as well.

The next time you go in to postjudgment discovery, or if you want to find the financial worth and assets of parties earlier on in a case, consider these ideas and resources for your legal strategy. Edmiund J. Pankau,. CPP, CLI, CFE, is the chairman of Intertect Inc., a Houston-based national investigative firm. He is a member of the ASIS Standing Committee on Insurance Fraud and Investigation and a member of the Board of Regents of the National Association of Certified Fraud Examiners.
COPYRIGHT 1991 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Special Issue; investigation of hidden assets
Author:Pankau, Edmund
Publication:Security Management
Date:Nov 1, 1991
Previous Article:Investigating arson: coping with constitutional constraints.
Next Article:The risk where we live.

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