Finding hidden assets may involve offshore bank accounts or those set up in certain “secretive” states. In this podcast, you will learn the steps involved in locating, documenting, and recovering hidden assets in divorce cases – from Wyoming to Delaware, from the Cook Islands to the Caymans. Family lawyers will also learn the warning signs of marital fraud, and how to proceed when confronted with evidence that the opposing spouse has committed fraud or dissipation of assets.
Hosted by: Diana Shepherd, Family Lawyer Magazine’s Editorial Director
Guest Speaker: John Quirk, a Consulting Investigator
Here is the transcript of this podcast:
Diana Shepherd: My guest today is John Quirk, a consulting investigator on assets who has located and recovered millions of dollars for his clients in some of the world’s most secretive banking havens. As president of Asset Location and Recovery International, he offers litigation support for divorce cases and issues of family matters – especially in locating and recovering marital assets. Welcome, John!
What red flags are there when a spouse may be hiding assets from their spouse – during and even before a divorce?
John Quirk: We’re talking about financial intelligence. Usually, one of the spouses would be able to supply some information. But as you know, when people are getting divorced, their overheads double, they might have to pay rent or make mortgage payments, utility bills, food bills, more money for child support. Then, of course, they would have legal accounting, and maybe even investigative bills.
So if there’s any major shift in one of the spouse’s spending habits – if they’re seeking to hide money, or if they are going out with a new companion – and they’re spending more money in addition to their usual costs, those are some of the red flags. Another one could be traveling: they could be spending money on vacations that they wouldn’t take with their spouse. They could be spending money on themselves. There are probably indications of secrecy; they’re not being really forthcoming during the divorce proceedings about their current financial situation.
If a family lawyer believes the opposing party has failed to disclose all bank accounts, how do you determine where they have undisclosed accounts – and how much is in those accounts – without running afoul of the law?
That’s a good question. The first thing you can do, which is perfectly legal, is to run a background on the spouse. In the background, you can find if they have UCC filings, liens, their associates, if they’ve started new companies and corporate filings, you can obtain their phone records, you can obtain their emails, and you can find out if they have a mortgage payment with a piece of property and an associated bank account. After you use those leads, you can then run their banks to find out how much is in their checking, money market, if they have a family trust, etc.
If you want to do a full background financial check, you can check out brokerage accounts and possibly even offshore accounts that they may have set up before the divorce or during the divorce proceedings.
Over the last few years, technology has moved the arena of divorce actions into the digital domain. Is there a right way and a wrong way to capture, preserve, and present digital evidence?
Yes, these are called cyber attacks. There are very strict laws regarding hacking, even “white hat” hacking, to obtain financial records from your phone and financial records from your computer. Usually, you do a preliminary background check – which might give you some indication of the financial status – that could also be recorded on a phone or the internet. To obtain the documents to support it – which is what magistrates and judges look for – you have to have a subpoena.
If you hire somebody and they start delving into hacking, that’s breaking the law, and you’ll lose the case in court. Most lawyers are pretty familiar with that.
Many family lawyers, however, are not well-versed on what marital fraud looks like and how to proceed when confronted with evidence. What do lawyers need to know about this?
They need to know the truth in financial intelligence. There’s an old saying in the intelligence community and the Bible: “You shall know the truth, and it shall make you free.” Knowing the truth is the only way to get a final settlement. The frustrating thing for lawyers is to get all the financial information from the opposing counsel and their client. This can be a variety of things: it can be bank statements, it can be trust papers if they have a family trust, it can be offshore bank account information.
This is the big challenge that an attorney has. If you don’t get this information, divorce cases that are in the civil area can start to lean into the criminal area. That’s where we get into financial fraud. It could be contempt of court, it could be a conspiracy, it might even be wire fraud and money laundering. More and more lawyers are starting to go from the civil into the criminal because they’re so frustrated about not being able to obtain proper financial information from the opposing spouse.
If a lawyer is representing the “Out Spouse”, how can they be sure that the “In Spouse” is being completely truthful in their financial disclosure during a divorce?
The problem is obtaining the documents to support the intelligence. An intelligence investigator can supply general intelligence and say, “Look, there’s X amount of dollars at this particular bank account,” or “There’s money in the Caribbean or Europe.” But if you don’t have the documents to support that, most judges don’t know and they don’t like to rule on it. You have to have a very good investigator who knows how to collect financial intelligence. It’s done through financial databases and subpoena when the lawyer does depositions through discovery. It’s even done occasionally through a spouse who’s been spying on their husband for years and has been collecting information (if it has been the husband who has been hiding assets) about bank accounts out of state or out of the country.
You just mentioned that a family lawyer needs to hire a very good investigator; how does a family lawyer know what a “very good investigator” looks like? How do they know whether an investigator is the right one for their case: to find hidden assets and income?
It’s a good question. What usually happens is that lawyers hire investigators to do surveillance or maybe a general background check. But many investigators cannot track financial resources. As the case develops, more and more important information must come out about everything from a company’s P&L and balance sheet. If the husband owns a company, if he set up a family trust, if he has put money in a Swiss management portfolio account, or an IBC account in the Caymans – who’s the executor, who’s the beneficiary? You have to have a special investigator who focuses mainly on the financial area, and very few of those experts exist.
A lawyer can also use a forensic accountant. Forensic accountants are used mainly to measure fraud. They look at a lot of numbers. They will look at the bank statements that an investigator has produced or statements that a subpoena has produced. They will check to see if it looks like financial fraud has occurred. Then the lawyer can put pressure on opposing counsel, saying, “We don’t want to put this in front of a judge or even bring in law enforcement. So it’s best that you become more truthful, more open, and more transparent.” It’s the only way in the end that both parties are going to benefit from a final settlement.
When you are helping to put together a case for dissipation of assets, can what you don’t see be as important as what you do? For example, when you can’t see where the money to fund the documented expenses is coming from?
When you get into a divorce nowadays, it’s a little different than 30, 40, or even 50 years ago. Everything revolves around the final settlement now, especially if there are children involved. Whether it is child custody, or eventually paying future college tuition bills, or ending the bloodshed of a divorce where both parties are suffering because they’ve got legal bills, forensic accounting bills, investigative bills, and more. [A divorcing couple has] double overheads if they’re living apart from each other, and some of the leads that you could develop include looking at the person’s credit card history if they’re traveling a lot. If they’re spending more time on the telephone calling banks in England or banks in the Caymans, that’s where their money is.
With financial intelligence on the internet and the telephone, it’s easier to track wire transfers overseas, but only a few investigators know how to do that by tracking SWIFT [Society for Worldwide Interbank Financial Telecommunication] payments. So if you think it’s secret but you can obtain the SWIFT payment records, you can determine how much money has gone out before and during the divorce proceedings. In the end, you look at all of this information. What are the assets? What’s the revenue? If the person has a company, are they supplying accurate P&L and balance sheets? Does the lawyer have all of the bank statements in front of them? Do they have all of the trust papers? Do they have the balances of the trust? Do they have the balance of a hidden bank account in Switzerland, Liechtenstein, or even the Cook Islands? Financial intelligence in today’s divorce proceedings is the key. More and more, lawyers have to be trained in this area. The judges that have to make the ruling for the final settlement also have to be trained in this area.
Can you extract deleted data from electronic devices and digital storage media – assuming you can legally gain access to those devices?
It’s very difficult, but some new trained cyber investigators know how to do it. In a lot of divorce proceedings today that I’ve seen, one spouse or the other is hacking into the computer to gain information. One spouse or the other is wiretapping – which is illegal in all 50 States and Canada. There is also more technical acquisition. But a cyber investigator that is hired by and works under an attorney can obtain deleted information from an internet server from a dating site, for instance, or even from a telephone.
There is also more and more financial information through the app system than on telephones. People may think they deleted [the information] and that nobody can find it, then they turn over the phone or the records and say that there’s nothing there. But a good cyber investigator knows how to get in and not only obtain the information but also how to print it. That supplies good intelligence, and it can also get you to areas where you may find out that there have been wire transfers, or Zelle payments, or PayPal payments. All of that is part of the deception in hiding assets from one spouse.
How do you find a divorcing party and their income and assets if they’ve done everything they can do to cover their tracks? I think this is probably the minority of divorce cases – but I can think of some high net worth individuals essentially disappearing – essentially dropping off the face of the earth. Can you find those sorts of people?
Yes, you can find them. But going back to your original question, how does the lawyer do it? This is very problematic for a lawyer. A lawyer usually asks the opposing attorney for their client to turn over financial records. In nine out of ten cases, that information is delayed or stonewalled, and judges don’t know how to enforce it. You can’t always enforce it through contempt.
So the lawyer has to continue to pressure and pressure and pressure so that the lawyer has the ability to subpoena the records if the opposing counsel or their client delays turning over information.
You have to use a financial investigator who can find the bank balances the address of the bank, the history of the bank, and then other documents to support it, such as customer service records, letters from the bank letters of instruction from the client to the bank, a whole it might be one, two and three years of banking statements, and all of the customer service records that go along with it. If it’s past five years, you can even go back and get the microfiche division to supply you with information on the history of the account.
Usually, the spouse that is going to get divorced has a pretty good idea that, say, in this case, the husband is starting to hide money, or delay payments for child support, or delay payments for eventual settlement and alimony. Now the antlers are up, the red flags are up, and it’s up to the spouse, the lawyer, and then eventually the judge to continue to put pressure to obtain all those records.
What is the biggest and/or most complex case of hidden assets and income you have seen in a family law setting – and how did you find the missing money?
My company has done a lot of anti-counterfeiting work for years in luxury goods. We’ve worked for French and American luxury goods companies, including apparel, watches, and perfume. We had a very, very prominent billionaire luxury goods family in Italy. A family member started hiding money, and it was very complicated because they had many different bank accounts. They were intermingled with personal bank accounts – which you’re after – and the company bank accounts. It’s often very difficult to identify the intermingling between a company bank account where there are stockholders and boards of directors and the personal bank account.
First, we develop a case book and run a person’s background. You must have the proper spelling of their name, their date of birth, and their social security number or national identity number. You need those things – and when you have those things, you are armed to penetrate most of the big financial databases. It’s all legal. It’s completely legal to do that: you don’t violate the Privacy Act or the Banking Act.
Once you have that background, you can find the person’s personal bank accounts, the money market account, trust account, and so on. Then, in many cases – like we did in this luxury goods case – you have to work backwards and see how much money is actually coming in from the luxury good company to the principal’s bank account. Then you have a pretty good idea of how much money is there.
What kind of cases do family lawyers typically bring to you?
They bring me cases where one of the spouses is hiding money and either fibbing on the financial statements or outright lying. We get these sometimes at the beginning of a divorce case, sometimes in the middle, or sometimes towards the end because the lawyer is so frustrated that he can’t find financial information. They come to us and they say, “Please help us try to find wherever this person has his money. We don’t care if it’s in Guernsey, Cyprus, the Cook Islands, Bermuda, or even in the United States.”
There are two or three states that are now almost as secretive offshore banking havens. Wyoming is very secret and so is South Dakota. People start Delaware companies to hide money in the United States, but Wyoming is becoming even more secretive than places like the Caymans or the Cook Islands. The lawyer needs somebody like our firm to get all the details of the financial information and obtain all the details – and in some cases, the documents to support his argument in court.
What services do you offer to family lawyers and their clients?
We offer domestic asset searches. We can find anybody’s bank, money market, or stock account, or brokerage account. We can find anybody’s trust, and we do very comprehensive backgrounds domestically.
My company deals with international asset location recovery. We focus on finding money in all the offshore banking havens: Bermuda, Bahamas, Panama, the Caymans, Turks and Caicos, Switzerland, Guernsey, Cyprus, the Cook Islands, Monte Carlo, Liechtenstein, Luxembourg, and so on. Those are the banking havens. In each one of those, the venue is different. The laws are often different for banking secrecy and the type of vehicle to hide money is different. Sometimes it’s a bank account. Sometimes it’s a Swiss management portfolio account. Sometimes it’s a private trust. Sometimes it’s a specialized trust, sometimes it’s an IBC.
All of the vehicles to hide money are different in the way you go about finding them, and obtaining documents and making sure you don’t violate the host country’s banking laws are very important. You must observe the law in doing this, else, you’ll lose the case in court. So if we’re trying to find millions of dollars in Switzerland or $100,000 in the Bahamas, the system is the same. We do a background check, we start looking at domestic bank accounts, we trace money overseas through a variety of tactics. We supply all that to the attorney so that he has the best information to get a final settlement.
How do you work with family lawyers and their clients?
Family lawyers usually introduce us directly to the client. The client hires us and all the work product goes to the lawyer. It’s all under attorney-client privilege. We don’t even like giving the information to the client – even though the client is paying for it. It’s better to keep the privilege secrecy so that there are no leaks. It goes directly to the lawyer and it’s up to the lawyer to talk to the client or reveal what he or she wants to reveal. Then, of course, that information is used to convince the judge or magistrate that the opposing client is not telling the truth or not being forthcoming. So we’re usually hired directly by the lawyer, but we’re paid by the client.
What information do you need to get started on a case?
We usually need as much information [as possible] from the spouse that’s hiring us about the opposing spouse. In this case, let’s say the opposing spouse is the husband. Does he travel? Does he have another girlfriend? Does he have a separate business? Has he traveled overseas? Have you ever had access to his bank account? Does he have more than one bank account? And then we need Census information: the complete and proper spelling of his name, his address, social security or national identity card, and his date of birth. With that information, we can find anybody’s bank account in the United States. We can’t find it overseas – we need other kinds of leads to do that – but this type of information can help us find a trust, a stock brokerage account, and the current bank accounts.
It also would help us if the spouse tells us he has a very successful company, or he has a company that he says is not successful, but she doesn’t trust him. He’s cut off all financial information to us. We haven’t talked to him. [He may refuse to hand over complete financial statements, but] we can see that he’s spending a lot of money [on extra-marital expenses; meanwhile,] he’s being cheap with money for household bills and the child’s current tuition bills. All of that information is key in helping us develop a financial profile of the opposing spouse.
We are often in charge of hiring a forensic accountant if necessary. Forensic accountants, or Certified Fraud Examiners, as they’re called, measure the fraud. You have to be able to supply them with all the financial records, the bank statements, IRS statements, business statements, customer service records, etc. The Certified Fraud Examiner or forensic accountant looks at the information and then they’ll determine and measure the fraud. That also helps the attorney identify if the opposing spouse is having financial troubles. Is he having a recession or is his business doing well? Or is he just being very cheap and doesn’t want his longtime spouse to have any money at all?
Have you seen high-net-worth individuals putting their assets in S corporations, limited partnerships, limited liability companies, domestic and offshore trusts, and maybe tenancies-in-common to make it difficult to identify the owner?
Yes, it’s happening more and more. First, let’s determine what a high-net-worth individual is. If you’re going to open up a bank account in Liechtenstein nowadays, you need $2 to $3 million. If you’re opening up a bank account in Switzerland, you need a million and a half. If you’re opening up a bank account in Gibraltar, you just need $100,000. So when we talk about high-net individuals, we’re usually talking about multimillionaires.
Almost all multimillionaires in the United States – and Canada, for that matter – will tell you that nobody in their right mind keeps a lot of money in the United States or Canada. The reason is [that] somebody can [put a] lien on it, somebody can get a civil judgment against it, the government can send the tax collector after it. So when these high-net-worth individuals are setting up offshore bank accounts, this is what they’re looking for. They’re looking at the best legal ways to pay the least amount of taxes. They’re looking at the best ways to keep it secret. And who is it secret from? Well, they want it secret from the government. They want it secret from the spouse. They may want it to be a secret from a business partner, or possibly from members of the board of directors. So they set up an offshore account, either through a law firm or fiduciary. Most of the law firms will tell you, “Oh, it is secret, nobody can find it.”
Well, it’s not a secret from people like us. We use intelligence tactics to find the accounts. If the bank account is in Switzerland, or Liechtenstein, or Luxembourg, or even in the Cook Islands – we’ve recovered money in all of those venues. It’s a three-part system. You have to collect financial intelligence, then you have to position yourself to get the documents to support that intelligence, because many judges do not know how to interpret that financial intelligence. They’ll say: “Listen, Mr. Quirk, we believe that with your financial intelligence history, that the money is in Switzerland. But do you have any documents? Do you have any bank statements? Do you have any intermingling investment reports from a private bank in Switzerland?” The documentation proves that one spouse has been hiding funds from the other.
It’s more difficult to find money overseas, and it’s difficult to recover the money overseas. But more and more American lawyers are getting into it. Canadian and British lawyers have been doing it for many years because most of the banking havens follow British law.
Traditionally, women have been the victims in a divorce from high-net-worth men who control the money. Have you seen a shift in this dynamic over the last decade?
Absolutely – there’s been a shift. There are several reasons for it. More women are getting professional degrees. In addition to this, more women are smarter in many cases about household money, especially when it comes to child-rearing, the future of their children, college tuition, etc.
Again, it goes back to financial intelligence. They want to know everything and they want to be able to put pressure and get a very good final settlement because they’re going to need money for their children and living expenses. She’s no longer sitting back and waiting for her husband and the opposing lawyer to call the shots. She has had to become very aggressive and attuned to the details of financial intelligence.
Diana Shepherd: John, thank you so much for taking the time to share this important – and interesting – information regarding recovering hidden assets and income with us today! My guest today has been consulting investigator John Quirk, the author of ten books on intelligence and national security. Using intelligence tactics, sophisticated databases, and sources, he works with local law enforcement or friendly bankers, lawyers, and accountants in each banking haven. For more information about how John and his team can help find hidden income and assets, visit his website at www.assetlocationrecovery.com