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Tracking down the global criminal.

WHEN CONDUCTING an investigation into the activities, business dealings, and assets of a person believed to be doing business in foreign countries or hiding assets outside the United States, and investigator must gather pertinent information from a variety of sources.

To conduct a successful foreign asset investigation, an investigator must do the following:

* Document the foreign travel of the subject to a specific country.

* Determine the subject's activities in the foreign country.

* Discover the location of bank accounts and the subject's business relationships to that country.

* Locate and interview the parties having access to such information.

A number of resources are available to help investigators determine if an individual has traveled to a foreign country. The most widely known, available to police agencies, is a data base developed and maintained by the US Customs Service, the El Paso Intelligence Center (EPIC).

This data base records the reentry of each person into the United States from a foreign port using the information that an individual fills out on a US Customs form that documents the reentry point and goods purchased and declared. This data base is commonly used to document the frequent foreign travel of parties believed to be involved in drug smuggling, money laundering, or other type of crimes investigated by the customs service.

The information in EPIC is reported to the Financial Crimes Enforcement Network (FinCEN) in Washington, DC. FinCEN provides the information to law enforcement and regulatory agencies interested in determining the travel history and activity of parties under examination by state and federal agencies investigating drug, financial, regulatory, or organized crime matters.

Investigators use a number of other methods to determine if a person has traveled to a foreign country. Some of these methods are described here.

When a suspect is arrested for any reason, a thorough search should be conducted to determine if he or she is carrying a passport or documents indicating foreign travel or business activities. If such records are found, an investigator should copy the pages recording foreign passport stamps and visas. The investigator should also look for receipts and matchbooks.

One of the easiest ways to determine the foreign business activities of an individual is to examine his or her business, personal, and mobile telephone records to identify the countries and parties called. These records will often lead to a bank, attorney, or business agent the subject has contacted to set up a business or financial relationship in a foreign location.

In either a criminal or civil case, telephone records can be subpoenaed to establish and document the telephone toll record of the person being investigated.

A subject's credit card statements are another valuable source of information for determining foreign travel. These records often reveal a detailed account of airline tickets, hotel accommodations, and purchases made by the subject in the foreign country.

In one case, investigators traced an economic ministry attache from Colombia, a man suspected of embezzling $12 million, by tracking his American Express charges from Colombia to the United States and then to Austria. Working with the credit card security department, investigators were able to document the daily financial, business, and travel activities of the attache and track his movements through hotel reservations and restaurant charges made to his account.

This information provided a detailed history of the attache's activities during the period of time crucial to the investigation and helped place the attache in locations where bank accounts were located.

While checking the record of bank transactions, an investigator should also look for information concerning the purchase of traveler's checks, money orders, wire transfers, or overnight packages. With this information an investigator can determine where money orders or traveler's checks were cashed, which may be the same location or bank where the subject opened an account.

The ultimate destination of wire transfers, telexes, or overnight packages may also be the financial institution, attorney, or agent with whom the subject set up foreign business activities.

IF THE INVESTIGATOR IS UNABLE TO LOcate foreign accounts by tracing transactions, the next step is to locate the people who know the subject's personal and business activities, including enemies, friends, and former employees.

An executive's travel plans are often made through a secretary or travel agent. Both may be able to contribute reliable information to an investigator. Another possible resource is a companion who accompanied the subject on a trip, particularly when the destination is Bermuda, the Bahamas, the Cayman Islands, or another tropical financial haven.

In one case, a secretary informed investigators that her former employer was hiding money overseas by sending it out of the country with his attorney. The secretary gave specific details of the dates and times of the foreign travel, the information was transmitted to US Customs, and the attorney was arrested when he attempted to leave the United States without declaring to customs that he was carrying cash in excess of $10,000, as required by law.

Once the attorney was searched and the money confiscated, he realized he had a choice: He could either state that the money was his own and face income tax evasion charges for unreported income or admit that he was acting as an agent for another party and face the lesser transporting charge. This transporting charge would probably be dismissed if he cooperated in the case against his client. He chose the latter.

Finding a subject's former secretary or assistant is also crucial to the case. The secretary is most likely the person who notarizes the subject's business documents. Look at other financial documents executed by the subject and then call the state notary board to determine the current registered address and bonding agent of the secretary or notary who worked for your subject.

Since they are responsible for filing, recording, and notarizing company records, corporate secretaries often feel responsible for illegal activities conducted by their employers. Sometimes they seek to protect themselves from future litigation by keeping personal diaries or retaining copies of documents they think may compromise their position if their employers' scheme is discovered.

Since a secretary often signs checks, and therefore is liable for the activities perpetrated through those checks, according to IRS and tax court decisions, many secretaries feel either a natural hesitancy to sign such documents or, when forced to do so, keep their own records to protect themselves in case of future problems.

In the course of an offshore investigation, investigators should question the subject's secretary or assistant and determine if he or she has the following items or information:

* a personal diary that details the employer's travel and business activities

* a personal Rolodex of numbers frequently called for the employer

* a notary log that records documents that the secretary notarized

* telephone directories the secretary kept to remember the employer's key contacts

* copies of documents made because of the secretary's personal concerns about the employer's ethics or business activities

TO LOCATE A SUBJECT'S TRAVEL AGENT, first try his or her Rolodex file if it is available. Businesspeople usually have a favorite travel agent. If there is a travel agency in or near your subject's office building, give the agency a call to see if your subject or his or her company had an account with them.

If the subject did have an account, the agency should have at least a three-year history of the subject's travel and can tell you exactly where and how often he or she traveled and where they stayed, if the agency also booked the hotel.

If you can't find the travel agent, search the records of the Airline Reporting Corporation (ARC) in Washington, DC, the clearinghouse for airline tickets of all the major air carriers. ARC compiles and collates all domestic air tickets. Its sister organization, the International Air Transport Association (IATA), headquartered in Montreal, collates the records of foreign travel for many of the world's airlines.

The records of ARC and IATA can help an investigator determine the name and location of the travel agency used by the subject. The agency can then reveal where the subject traveled.

Many offshore investigations begin with information provided by fired secretaries, spurned spouses, or disgruntled employees who harbor a grudge against the wealth or illegal activities of someone they know. The records they keep often provide the missing link necessary to prove the existence of foreign banking relationships or hidden business interests.

Consider this case, for example. Sheila was the faithful secretary and mistress of one of the nation's largest pornography dealers for more than 12 years. As his confidant and bookkeeper, she traveled with him on Caribbean vacations and helped him set up several Cayman Island bank accounts, where she deposited $5 million during the course of her employment.

Sheila took half of all cash receipts made in her employer's business and converted the proceeds to cashier's checks and money orders and sent the deposits to her employer's mother in Canada. The mother in turn put these envelopes in an overnight package and forwarded them to the Cayman Island bank so that no trail to the Cayman Islands could be linked directly to her son.

Sheila's employer became obsessed with younger women. He started bringing younger women into the organization, women who ultimately took over Sheila's relationship with her boss as well as her bookkeeping position. Her boss did not consider Sheila a threat and fired her from her job.

Forced into the job market and unable to find a well-paying job, Sheila became bitter. She became a willing witness when she was approached by an IRS agent investigating tax matters in the pornography business.

Sheila provided oral testimony about the trips to the Cayman Islands and the existence of Cayman Island bank accounts in the pornographer's mother's maiden name. She produced copies of deposits and overnight package receipts documenting deposits made to the Cayman Island accounts set up to hide the money made from pornography and drugs by her former employer.

With this evidence, the government agent was able to document not only income tax fraud but also income from drug dealings, which gave the US attorney sufficient grounds to obtain an indictment and conviction against the pornographer and his business.

ONCE A SUBJECT's FOREIGN TRAVEL HAS been determined, the next step is to find out where the subject stayed in the foreign country and what business activities were conducted there.

One of the best sources for this information is the credit card activity of the subject. The ease and convenience of credit cards work to the advantage of the investigator and the disadvantage of the suspect. Most people who travel overseas charge their hotel bills on credit cards so they don't have to purchase or exchange foreign currency.

The major credit card companies are quick and convenient because they accept all major currencies, but this efficiency creates a problem for the subject because they document the subject's itinerary and activities. By locating the hotel used by the subject, an investigator can examine the hotel's telephone records to find out who the subject contacted during his or her stay.

Examining a hotel's telephone record helped determine the existence of foreign bank accounts and the names of business agents used by an executive alleged to have transferred millions of dollars from a Texas savings and loan. Through the examination of credit card records, investigators determined the executive stayed at a hotel in Berne, Switzerland, and while at the hotel made telephone calls to two banks, an attorney, and a foreign private postal service located in that town.

By examining the daily photographs of the people entering the Swiss banks called by the subject, investigators were able to document that the executive visited a certain bank on a specific date. On that date, the subject opened accounts with the proceeds transferred from his savings and loan through a series of financial transactions to a Swiss bank.

The phone calls made during these hotel visits were crucial in establishing a link between the executive and a Swiss attorney with whom the banker did business. The attorney made purchases of real property in the United States for the benefit of the executive, who claimed he was only the caretaker of these properties.

By proving the existence of prior conversations between the executive and the attorney, government regulators were able to establish a relationship between the two, seize properties purchased for the executive's benefit in the United States, and prove a conspiracy.

In addition to examining the credit card statements of individuals traveling abroad, investigators should look for the purchase of money orders or traveler's checks, instruments that are also frequently used to make foreign purchases and pay for expenses.

Examining such financial instruments may also indicate the location of new bank accounts, the leasing of safety deposit boxes, and the purchase of extravagant gifts. In several cases, investigators have even traced purchases of expensive foreign automobiles through the purchase of traveler's checks bought by the subject in the United States.

An important step in an investigation of this type is to determine if the subject has traveled overseas personally or if her or she has sent another party-accountant, attorney, friend, or family member-out of the country with the assets he or she is attempting to hide.

An accountant representing a number of doctors in a suburban metropolitan area conceived of a scheme to take the unreported income made by his clients to the Cayman Islands where it was deposited in numbered accounts in the doctors' names. For years, the accountant made a trip every month to the Cayman Islands, complete with diving gear and scuba tanks.

In six years, the accountant illegally carried millions of dollars past US Customs and Cayman Islands Immigration in the scuba tanks he used as his excuse to go to the islands each month.

This crime went unreported for years until the accountant's wife filed for divorce and turned her husband in for the reward on an income tax evasion scheme.

The IRS alerted US Customs, which then monitored the flight plans of aircraft traveling to the Cayman Islands during the accountant's normal travel times. On his next flight, the accountant was detained and the scuba tanks inspected. When customs' agents found more than $100,000, the accountant was charged with carrying more than $10,000 outside the United States without a customs declaration and a charge was made by the IRS relating to unreported income of the monies found.

Facing the two charges, the accountant elected to plead guilty to the lesser charge of transporting money and gave the IRS an affidavit and testimony revealing the identity of the parties who had given him money to deposit in the Cayman Island accounts.

SOMETIMES THE BEST EVIDENCE IN THE investigation of offshore matters comes from getting down and dirty-that is, bagging your subject's trash. The garbage thrown away by subjects under investigation may contain a variety of clues and evidence.

This evidence could include envelopes that list a return address from parties having knowledge of the suspect, the address of foreign banks, confirmations from overnight packages sent overseas, or bank statements and checks that show the routing numbers and accounts where checks were cashed or funds were transferred through a subject's bank to an offshore entity.

Most people throw away notes scribbled in haste while picking up messages from their telephone recorder. By conducting trash pulls on the subject's garbage, particularly at the end of the month, an investigator may find documents that lead to offshore business activities.

Certain days of the year, particularly holidays, are magic to any investigator. On such days individuals often call home to family and loved ones or send cards or notes. These holidays include the following:

* Valentine's Day. Bag someone's trash after Valentine's Day and you may find return addresses from envelopes received from their mother, lover, or special friend. This is also a day to check for receipts for flowers, perfume, or candy on a charge card.

* Mother's Day. Even the most hardened criminals may call their mothers to let them know they are still alive. This is a good day to check the mother's phone bill and find a son or daughter hiding from the law.

* Father's Day. Not as many criminals call home to dad, but it is still a smart day to check the trash and phone bills when looking for sons or daughters that can't be found any other way.

* Halloween. This is the one night of the year people show their true colors. On Halloween, crazies strut their stuff, acting out their favorite fantasies and letting it all hang out.

* Thanksgiving. As a time of family gatherings, an investigator should keep a subject's family under surveillance to see if he or she comes home for dinner.

* Christmas. This is the best time to check credit card receipts for purchases. Christmas is also the time when cards and envelopes are found from people who only make contact once a year.

NO ONE SINGLE PATH OR MIRACLE method can make an offshore investigation successful. Cases of this type are solved by hitting all the bases, chasing down every possible lead, and finding where the suspect stumbled and left an opening into his or her financial affairs.

The resources discussed here, if diligently pursued, will lead to the discovery of evidence-if it exists-in many of the most complex cases.

Every investigation teaches an investigator new methods used by subjects to hide money and avoid and evade the law and the justice system. An investigator's job is to catch those mistakes made in haste and put together the puzzle that the subjects so carefully built and then destroyed, hoping no one could find and put together all the little pieces.

This article is excerpted from the forthcoming book, The Financial Investigator, by Edmund J. Pankau, CPP.
COPYRIGHT 1992 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Pankau, Edmund J.
Publication:Security Management
Date:Mar 1, 1992
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