When an economy declines as has been the case for about the past 5 years, there are always more financial conflicts, lawsuits, bankruptcies, and unpaid debts. In many of these scenarios it is advantageous for a party to underreport or otherwise conceal assets so that they are not confiscated by creditors. Lawsuits, divorces, criminal cases, and business failures each has an element of concealment which some parties to the action takes part in.
Each of these is an opportunity for an investigator to assist a client or attorney in discovering hidden assets. The fact that the volume of these types of cases is increasing is fertile ground for litigation support. First, do not confuse asset discovery or recovery with debt collection. Collection agencies mostly rely on direct contact with the debtor to force them into voluntary compliance, possibly combined with some heavy handed attempts at grabbing obvious cash such as garnishing wages.
Asset recovery is much more of a precision operation. In most cases a large part of the efforts are performed covertly. Intelligence is gathered from official records, e-discovery, observation or surveillance, witness interviews, and analysis of documents. The investigative asset discovery investigator will follow a trail of funds as it flows through third parties or innocent entities when the debtor attempts to wash it clean. IN almost every case, there is a path to tracking the assets. When a debtor was a high profile or high income individual, they almost never deteriorate into poverty. Affluent and high net worth people are accustomed to that lifestyle and find a way back to it, or near to it. Often times they remain in or close to the industry they knew in the good times. A common plan is for them to find an old colleague to work with as an advisor, consultant, or contractor in an attempt to keep much of their true income off the radar. This is ideal for the investgator since when this is discovered the colleague may have some liability for assisting the subject to conceal assets.
Of course placing assets in the names of friends and relatives is an instinctive move for attempting to hide assets. Putting the car in moms name would not be unheard of. No matter if it is car, yacht, aircraft, or tropical island, an asset held in the name of a nominee is of no value to the reluctant debtor unless they can use it. This is usually the best method of discovering the asset. The use of high value assets by the debtor which does not match their reported income is a red flag. Even if the title of vesting of the asset is not theirs, further inquiry is worthwhile. The true ownership often is discovered through hidden documentation connecting the debtor to the corporation or individual holding the asset. Another method is to determine the path of money which purchased the asset. Tracking down the wire transfer which bought the plane is a start, and then following the money backwards through accounts until it can be demonstrated to be connected to the debtor.
Don’t overlook the small payments in a case file. Payments for small repairs, replacement parts, parking, dock fees, fuel, insurance or taxes can tie a person to the beneficial ownership of an asset.
While asset recovery is usually a cat and mouse process, the investigator has several significant advantages.
1. Every step in concealing an asset is an event which creates documentation. This evidence cannot be erased. There are always third parties which have copies of documents. The seller, the bank, insurance companies, escrow agencies, and banks all have pieces of the puzzle which are durable.
2. Most individuals who attempt to conceal assets are not experts at it. Narcotics trafficers who need to hide money for a living have the most advanced technicques, and even they are usually defeated by professional investigations. The guy who is trying to hide $50,000 in a divorce case is doing it for the first time and is a relative amateur.
3. Time is on your side. Asset concealment is done once. The debtor typically does not want to keep improving the concealment, or try to “hide it better.” Each movement or action creates more records and more chances to get caught so they are avoided. The investigator has weeks, months, or even years to unwind an event which the subject may have had to plan and execute in a short time period.
4. Most of the typical concealment schemes are documented. You have a playbook of what to look for. No amount of complex planning can change the fact that it is simply a matter of moving money.
5. Actions are more completely recorded. IN the same way that there are many more security cameras covering every street corner, lobby, and business, there is more “surveillance” in the records world. Archiving and records retention is almost limitless snce the cost of storage is very low. Data storage is the norm in almost every area. Even the internet is being “backep up” on sites like The Wayback Machine. If the archived versions of every website are being kept, you can be sure that the records for a financial transaction, purchase, credit inquiry, insurance claim, flight plan, duty roster, or time clock is stored somewhere.
The analytic mind of a professional investigator applied to the largely untapped market for asset recovery is an excellent opportunity for business development in the investigative industry.