By: Joe Hoover, Anni Adkins and Dr. Lew Deitch
April 10, 2007
When an individual or a company wishes to avoid being exposed to the
possibility of paying out money for judgments resulting from a lawsuit or in
personal matters such as alimony or child support, it is not uncommon for
substantial assets to be hidden in a variety of ways. This part of the report on
locating hidden assets details the manner in which assets can be camouflaged or
totally concealed.
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Any type of asset can be hidden, including real property, jewelry, stocks,
bonds, vehicles, pleasure craft and the most liquid of all assets - money. When
an asset is moved or transferred with the intention to defraud, hinder or delay
discovery by anyone classified as a creditor, it is then considered to be a
hidden asset. This includes hiding of funds from family members attempting to
collect on such payments as child support or alimony.
The most difficult of all hidden assets to reach are those that are placed
outside of the country in what are called offshore accounts. Certain countries
such as the Bahamas, Cayman Islands and Switzerland are known for their
discretionary banking laws in which secrecy rules. And these countries do not
recognize claims made against assets through courts in other nations. Thus
assets hidden in offshore accounts are essentially to be forgotten about by
those seeking to enforce judgments, or collect on debts or child support.
WHAT KINDS OF ASSETS ARE HIDDEN
Most hidden assets are of the liquid variety - bank accounts, stocks, bonds and
mutual funds. In most instances liquid assets are transferred into the name of a
spouse, other relative, friend or business entity. In the most extreme cases,
the funds are transferred into accounts in offshore banks where they cannot be
touched under the laws of the United States.
Liquid assets can also be hidden by placing them into safety deposit boxes in
the names of relatives or friends or an alias. Another method for hiding cash is
to convert it into traveler's checks, savings bonds or stockbroker accounts.
Still another method of ridding oneself of cash, but still retaining the value,
is to use the liquid asset to pay down a mortgage, overpaying the Internal
Revenue Service or pay down credit card balances.
Sometimes a liquid asset is converted into personal property such as works of
art, collectibles or antiques. Unless those items are hidden, they can be
attached as part of an award in a court ordered judgment, but collection of the
property can be difficult to accomplish.
Real property, vehicles, boats, planes and other so-called "personal
toys" can also be hidden for the same reasons as liquid assets. When
facing a lawsuit, which could lead to a judgment, many people attempt to hide
these forms of property by transferring ownership and title to the property to
another person or entity.
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HOW ASSETS ARE HIDDEN
In this section, the various methods for hiding assets are detailed. But it is
important to remember that when starting any asset search, the obvious should
not be overlooked. A basic background check will help to uncover the use of an
alias or the use of multiple social security numbers. In addition, the names of
relatives and business associates are often revealed through an initial, but
thorough background search.
Hiding Assets Under Someone Else's Name - This is the most commonly used ploy
for creating the illusion that assets are not in one's possession. When a
transaction takes place between a subject and spouse or in-laws and the date is
close to the date of a loan default or bankruptcy, a red flag of suspicion is
raised quite easily. However, proving fraudulent intent is still difficult,
especially when attempting to obtain a court order to seize property that is no
longer in the name of the subject.
Placing property in the name of a spouse or other family members can often have
a negative impact upon one's financial security.
Trust Funds - The most sophisticated asset-hiding method is to transfer property
into living trusts or offshore trust accounts. Many of these type transfers are
legitimate; thus it is important to look at such trusts in relationship to the
individual's overall asset/debt ratio. When transfers to these type trusts are
made to deliberately avoid payment of debtors or litigants, they are referred to
as "preferential" or "fraudulent" transfers. If it can be shown that such
transfers were made in anticipation of or during litigation or bankruptcy, they
can be reversed under the laws of most states.
People of substantial means who are exposed to litigation or the demands of
creditors may attempt to shelter large sums by making generous gifts to a trust
such as the Multi-Generation Trust. In such cases, the MGT grantors then assign
spouses and children as beneficiaries.
Real Estate Trusts - Most real estate trusts are established for legitimate
reasons. But there are those individuals who will use these trusts to hide real
estate as a means of concealment. In such trusts, it is not uncommon for the
person hiding the assets to serve as trustee or to have family members serve in
this position.
One tactic used that makes tracing the property to an individual quite difficult
is having a spouse, child or friend serving as trustee buy and obtain a mortgage
for the property through the real estate trust. In this manner there is no way a
records search will be able to trace the property back to the individual in
question. However, this type of relationship relies upon the faith in family or
friends to funnel the funds back to the individual at the proper time.
In some states, real estate trusts do provide a safe haven for the hiding of
assets. One may hold 100 percent of the assets in a trust, but not serve as
trustee. Therefore there is no way in which the trustee's name will be
cross-referenced to the name of the individual min question. But this only holds
true in some states, since the majority require that the names of any
individuals holding beneficial interests in the trust be revealed.
In many states, real estate trusts are a poor medium for the hiding of property.
Records of deeds, mortgages, declarations of trust and other such documents are
maintained in municipal and country recorder's offices. In half of the local
jurisdictions these records are cross-referenced between the name of the trust
and those individuals serving as trustees. Thus the paper trail is easy to
follow and the hiding of the asset can be exposed.
Hiding Under a Corporate Umbrella - Corporations and limited partnerships offer
essentially the same opportunities for concealing real estate assets as do real
estate trusts. But, as with trusts, many states require that deeds
cross-reference information to partner's names when they are signatory to real
estate documents.
Often corporations will list a statutory agent, and this is generally an
attorney who has no actual connection with the owners of the corporation.
In most states a corporation is required to file an annual report with the
commission that regulates corporate activities. Any information one is able to
acquire from corporate records that are available may be useful and give some
clues as to hidden real property or assets.
It may be fruitful to correspond with business partners or corporate associates
to glean further information regarding the subject in question and that
individual's business dealings.
Hiding Assets in Exempt Plans - There are various plans such as pension, profit
sharing, 401 (k)'s and Keogh plans that are exempt from creditor's claims. Often
people who know they are at risk from litigation will invest some of their
assets in these plans, which cannot be touched.
Hiding Assets as Gifts - When assets are given to relatives or friends as gifts,
they can be exempt from creditors or court judgments. But the inherent risk is
in having relatives or friends later refuse to return the assets. This method
for hiding assets is totally fraudulent; thus if the subject in question
ultimately looses the asset, one cannot feel sorry for their loss.
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LEGAL TOOLS
There are many important legal tools that can be utilized to retrieve assets
once they have been identified. This section details the important lawful
procedures available.
Writ of Execution - This is a common judicial order that directs the enforcement
of a judgment. The writ instructs the sheriff or constable to seize the debtor's
non-exempt property for sale at auction after which the proceeds are directed to
the creditor.
Turnover Order - This orders a debtor to turn all non-exempt property over to
the judgment holder. This remedy permits the holder of a judgment to cast a wide
net to draw in all available assets when the debtor's property cannot easily be
attached or seized by the ordinary legal process. This remedy is generally
applied when there is no other means that can satisfy the judgment. It is not
necessary for the holder of a judgment to first exercise all other remedies
before seeking such an order.
Bank Levy - An order that enables the creditor to attach the debtor's bank
account.
Blanket Levy - This procedure involves the serving of a Writ of Execution and a
Bank Levy on every bank in the debtor's home area. This procedure assumes that
the debtor's bank of record is located within a few miles of home or work, which
is usually the case.
Debtor's Examination - This is a legal proceeding during which the creditor can
demand that a debtor detail where his or her bank account is located.
Unfortunately, the debtor has time to withdraw funds from the account prior to
the examination. But an examination of the bank's records may reveal information
on a possible transfer of funds to another account or bank.
ASSET SEARCH COMPANIES
It is often wise to enlist the services of online database information
providers, as they have experience with the intricacies of accessing public
records. They are capable of conducting all or a part of one's asset search.
This saves one from the time-consuming process of conducting document searches.
But when engaging the services of such a provider, ask about the scope and area
of their coverage, their techniques for retrieving data, their fees and the
method of payment required. Investigative Professionals offers complete multiple
database searches.
[Order an Assets Search Report NOW].
Part One
of this article covers the topic of locating assets.
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Article provided by: Investigative Professionals LLC, ©2012 Information
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