• Using the Debtors Mortgage to Find Valuable Personal Property
• Creditors Bill The Big Hammer • UCC You Ca not Take That “Its Collateral”
• Fraudulent Conveyances The Good News • Real Estate Foreclosures It’s “Real” Cash
• Trust many Names, but On Two Types
Hear Joe Dickerson and his Special Guest Al Hochheiser discuss the pros and cons of: “The Basics and Beyond for Effective Judgment Enforcement” Basic Judgment Execution Strategies: Getting Paid What You are Owed a. Wage garnishments b. Bank attachments and beyond c. Judgment liens Obtaining Information about the Debtors Assets: Finding Additional Sources of Recovery a. Debtors examinations Timing is Important b. Depositions in Aid of Execution c. Subpoenas Timing is Critical to Success Strategies for Piercing the Corporate Veil: Peeling Back the Layers To Uncover Assets a. Membership interests in LLCs b. Single Member LLCs c. Officers of Corporation d. Family Trust Creative Execution Strategies: They Were not Expecting That a. Levy of personal assets b. Creditors Bills c. UCC Financing Statement Demands Large Recovery Opportunities d. Liens on Titled Collateral e. Fraudulent Conveyances-The Good News f. Foreclosures on Real Property g. Recovery from Various Types of Trust
Family Law issues to be discussed: Divorce Legal Separation Mediation-the pros and cons Post Decree Modification-what may be involved Property Distribution-who decides what’s fair Domestic Violence and Protection Orders-is this a two way street and how is it enforced? Specialty Cases-what is this about? Child Custody and Child Support-what is considered to ensure fairness? Arbitration-is this even really a good idea?
Investigative financial journalist David Marchant owns OffshoreAlert, a news and conference-organizing company that specializes in financial intelligence and investigations, with an emphasis on high-value, cross-border finance conducted in high-confidentiality offshore jurisdictions. OffshoreAlert has exposed more than 175 investment frauds and money laundering schemes in progress, contributing to their early collapse, and helped law enforcement, regulators, and asset recovery specialists hold those responsible accountable for their crimes. Fraudsters have sued Mr.Marchant and OffshoreAlert for defamation in Canada, Cayman Islands, England, Grenada, Panama, and the United States, with several plaintiffs subsequently going to prison, including one for 17 years. So, their deciding to sue Mr.Marchant should they be prepared to be looking out through prison bars for years to come.
FOLLOWING THE MONEY AND RECOVERY VIA BANK DISCOVERY
By: Joe H. Dickerson, CFE
I want to share with you three little-known advanced and dynamic sources that forensic experts can use to locate hidden assets, often anywhere in the world. The first is what’s called a “Treasury Management Report,” which the banks may create for their customers who have multiple accounts. If someone is doing business mostly with one bank and has multiple accounts- personal accounts, family business accounts, trust accounts, corporate accounts, LLC accounts, money market accounts- all of those different accounts (any accounts that the debtor signs on) can be combined into a monthly Treasury Management Report. This report has a massive amount of information and it identifies every banking relationship that the debtor has with that banking organization.
You can get this report by subpoena, just like you can get their monthly checking account information with subpoena. It’s not well known that these are available, but it’s a fabulous tool for doing financial forensic work and locating assets that are often missed by the average judgment enforcement process.
SUBPOENA TREASURY MANAGEMENT INFORMATION
Commercial banks and other financial institutions that focus on the needs of medium to large commercial customers may offer treasury management services. Treasury management products and services are also referred to as “Cash Management Services.” Treasury management and cash management have the same meaning and are used interchangeably throughout the financial industry.
For years, financial institutions had internal specialized software used to track an enterprise’s overall deposit relationships in an attempt to determine profitability or value- in other words, to analyze it. Initially, this specialized software was dedicated to analyzing account services charges of a depository relationship, as well as lending fees for a lending relationship. This specialized software was typically internally-generated proprietary software developed by that financial institution, as this specialized software had to interface with their deposit, lending, and many other systems.
Several years ago, treasury management services were offered exclusively at larger financial institutions and regional money center banks. Over time, however, access to industry-standard banking software has allowed smaller financial institutions to offer treasury management services on a limited scale.
Treasury management, also known as cash management, products, allow an enterprise to manage its liquidity and maximize its use of investable funds using specialized bank software. Treasury management products include real-time bank account data and information, electronic- and paper-based fraud systems, collection software, disbursement software, concentration software (nationally and internationally), investment/foreign exchange software, and funding with capital markets and equities.
Customer reporting from a treasury management system results in a completely separate set of documents than the traditional “bank statement” from a depository account or loan account. It is important to recognize that there is another completely separate set of signature cards (called the Treasury Management Agreement). There is another completely separate set of analysis statements, not only for each account, but for an enterprise’s overall relationship, called a Grouped or Consolidated Analysis Statement.
For forensic researchers, getting these treasury management statements reveals all the business or commercial accounts the client has with the financial institution. And in some cases, financial institutions even include personal accounts on the grouped analysis statement, showing every single account for the enterprise and the owners of the enterprise.
In addition, the analysis statements show all the treasury management services for that client. Things such as the overnight investment sweep or Eurodollar sweep account, electronic origination ACH (Automated Clearing House) for concentration/ wire originations by telephone, or by computer using a token.
By: Joe H. Dickerson, CFE
Franky O., another businessman, and three attorneys were indicted by a federal grand jury in Philadelphia for racketeering, fraud, and theft as a part of a “massive health-care scheme” that cost 560 small businesses more than $5.7 million, according to J.W. De La Rosa, who was Inspector General of the U.S. Department of Labor.
Some of the victims were then unable to get health insurance because of “pre-existing conditions” or serious illnesses contracted while the scam was in progress.
All five defendants were reportedly associated with several related but now defunct firms once based in Denver, Colorado, including Med-Kare Plan Trust, authorities said.
None of the firms were licensed to sell insurance, according to the grand jury, yet managed to conduct business in 14 states. To avoid a lengthy prison sentence, Franky O, reportedly turned state’s evidence and began working undercover for the US Organized Crime Task Force, while also continuing to commit massive civil fraud.
On two separate occasions over the next few years, I was retained by judgment creditors to help recover their significant judgments against Franky O. With the help of an outstanding and extremely aggressive Colorado civil attorney, we were able to recover 100 percent for both judgment creditors.
I was then contacted by a third client who said he had lost $200,000 to Franky O. in another fraud. This client was uncertain whether he should pursue criminal or civil remedies. With the clients permission, I called Andrew L. Quiat, Esq., the civil attorney with whom I had worked successfully on many cases, including the two Franky O. cases. We invited Franky to join us for Saturday brunch at a local country club. Over brunch, I explained my new client’s situation to Franky. After reflecting on our previous success and the possibility of his facing up to triple damages on a judgment up to $600,000, plus legal fees, costs, and interest, Franky thought it best to just settle with our client out of court for $250,000 cash.
After reaching our mutually agreeable civil settlement agreement, Andy and I asked Franky why he chose his line of work, considering the fact that he obviously was well educated and very bright. Franky shook his head, grinned from ear to ear, and asked for my yellow pad and pen so he could “explain the economies to us.” He drew the following inverted pyramid and explained:
By: Joe H. Dickerson, CFE
Start with UCC (Uniform Commercial Code) Filings that are with the Secretary of State in nearly every state. They are used to show a security interest in an asset that does not have a title. For instance, your cars, boats, and airplanes, all have a title, and the lien for the security purposes to the lender is on the title; you can’t transfer title without clearing that lien. But if you have financed something that doesn’t have a title, for instance, you bought a washer and dryer at Sears, there’s no title to that; yet Sears has the right to repossess that if you that if you don’t make payments. So, the public notice of that security interest is filed in a Uniform Commercial Filing recorded with the Secretary of State.
Banks must file a UCC showing what their collateral is for a loan, if the collateral, such as personal property, does not have a title. Search the debtor’s name with the Secretary of State, and you will find the UCC filings; then you see what bank, or other lender, has a security interest in the asset.
There are a couple of other things you should consider when you find UCC encumbering some of your debtor’s assets. You will often find, upon inquiry, that the debt has been paid in full, but the secured party failed to pay the nominal recording fee, so no release has been recorded. This is a simple matter to get resolved; it usually only requires a nice phone conversation, and the former creditor will file the necessary release. You can then take the asset, liquidate it, and apply the proceeds to your judgment.
Here’s another technique that, with a little work, may lead to a significant recovery. We know that if any asset is currently covered via a UCC filing, one cannot take that asset, right? Not always, so let’s do our homework and see what we can do. We find that the debtor financed a large piece of heavy, yellow, construction equipment for $200,000. That equipment originally sold for $250,000, with $50,000 down and monthly payments against the balance. There’s a building boom in the United States, and that manufacturer is 12 to 18 months behind in delivering new equipment. Supply and demand is in action, and more homework is now called for. Research shows that the same equipment, if you are even able to locate it, currently brings at least $285,000, in reasonable condition. You determine the payoff on the note reflected on the asset is currently $125,000. You take the equipment subject to the debt and spend $5,000 to recondition it. You now sell it for $280,000. It cost $5,000 for repairs, $125,000 to pay off the loan balance and you just recovered $150,000 that everyone else missed because there was a UCC filed against the equipment. NOT a bad return for the judgment creditor’s client.
You can’t tell the players without a program. In order to recover the money the court says you deserve it’s necessary to deeply understand the debtor, his friends and associates, his family, and perhaps his mistresses or other personal habits. Only then can you successfully exceed the debtors pain tolerance level and have him eager to pay what he owes These issues and other related natters will be discuss by Host Joe Dickerson and his special guest attorney Andrew Quiat on the Judgment Enforcement Hour this week.
By: Joe H. Dickerson, CFE
It’s a well-established fact that 80 percent of the civil money judgments entered in courts in the United States are never collected. This is a shameful failure of our justice systems.
The first question should be “WHY?”
For many years, collection work was considered to be “dirty work” that was beneath “good lawyers.” Fortunately, today we have some excellent attorneys whose specialty is creditors’ rights, which includes judgment enforcement. There are other attorneys and professionals who also provide various levels of judgment enforcement services.
So why are 80 percent of judgments never enforced? In my opinion, based on over 55 years of relevant experience enforcing judgments and teaching the subject to attorneys and other professionals, the skill sets and tools necessary to effectively enforce judgments are not currently sufficiently understood and implemented. In this era of sophisticated fraudsters, we must have many more well-trained attorneys and other professionals to improve the judgment enforcement rate above the current 20 percent.
At Financial Forensic Services, we believe that, like our children, each case is unique and must be respected and supported in its own way. Every judgment enforcement case is different, and every case management and recovery plan is unique. We believe, regardless of the debtors’ position, that successful asset recovery is possible in appropriate cases. We believe it is our job to accomplish that for our clients. We carefully screen our potential clients and their cases to ensure we accept the appropriate case, and then give them the service and attention they deserve. Therefore, we only accept about 25 percent of the cases that we review.
Financial Forensic Services (FFS) has developed a diagnostic and prescriptive approach to our cases that includes consulting and implementation of the Prescribed Judgment Enforcement Process. My experience using the diagnostic and prescriptive approach has allowed us to make recoveries for our clients of up to quadruple the national average of 20 percent, and up to 100 percent.
THE DIAGNOSTIC PROCESS
Our Diagnostic and Prescriptive approach to judgment enforcement is analogous to the diagnostic and prescriptive approach to treating a medical condition.
For example: You wake up in the middle of the night with chest pains. You take whatever you have on hand, antacids or over-the-counter pain pills, but they provide no relief. You decide to call you family doctor’s 24-hour number and speak to the on-call doctor. He asks a few questions and quickly tells you that you should either call an ambulance or have your spouse get you to the emergency room right away. He says this could be serious and could quickly get worse without attention.
At the hospital, several diagnostic tests are run, and the diagnosis is that you a serious heart condition that requires immediate surgery. Your life depends on the success of that operation. You want the best heart surgeon you can get. You are fortunate to find the perfect expert for your diagnosed condition. You undergo successful emergency surgery. The doctor then prescribes your recovery plan, including the proper medication and lifestyle changes to ensure a bright future for you. Now life is good. This much like the diagnostic and prescriptive judgment enforcement plan we develop with our staff of Judgment Enforcement experts for each case.
The FFS Diagnostic Process includes a four-page Case History Intake Questionnaire and an in-depth interview with the prospective client. We take the time to get to know our clients and understand their concerns and needs. We listen intently to understand their pain, situation, and goals. There is always significant pain involved when you are the victim of a multi-million-dollar fraud, embezzlement, or contract dispute. There may be significant family stress when a loved one dies, and it is learned there has been tampering with the will or the trust, and significant funds or heirlooms have been misappropriated. Nothing brings out the worst in some families like death or divorce. We understand the personal hurt and strife in addition to the financial loss. Only when we truly understand this background, in each case, can we develop and implement, with our client’s complete support, a financial forensic diagnostic process.
It is upon this process that our prescriptive process, the Case Management Plan, is based. Both are necessary to put together a client’s properly-staffed recovery team. This will include your case manager, research experts, and senior analyst. After the initial forensic research is finished and the report is completed, the recommendations are developed, the documented findings are reviewed with our client, and, if appropriate, with their attorney. This report is the framework for the prescription for recovering our clients’ losses. This, of course, is changed and updated as new information and facts are developed.
Look at a model using the prescriptive process, the process used by the Forensic Implementation Team to recover the clients’ losses and satisfy their court-ordered money judgment.
Remember : Winning the Judgment is NOT Justice; Recovering on the Judgment is JUSTICE!
Your Roadmap to Advanced Judgment Enforcement: Using
Financial Forensic Research to Find Your Debtor’s Bank
Accounts, Which Can Lead You to Hidden or Diverted
Assets Around the World.
The advanced judgment enforcement process, using financial forensic research, is initially directed at finding bank accounts so you can effectively follow the money. Once you find your target’s bank accounts, there is a wealth of information there to follow the money both in and out of the accounts. Following the money to reach the assets is what judgment enforcement is all about, so you can liquidate those assets and satisfy the judgment.
By: Joe H. Dickerson, CFE
Your chances of successfully enforcing your judgment are significantly enhanced when you understand the psychographics of your judgment debtor. You must know what makes your debtor tick, so you can understand how to attract him. Sun-Tzu says in The Art of War, “Take from a man that which he cherishes, and he will conform to your desires.” This is one of my favorite quotes.
We need to know what makes them tick so we know which buttons to push to get the best legal and ethical result for our client; to significantly improve their judgment enforcement success.