All posts by Joe Dickerson

ROW YOUR OWN CANOE (To Get Your Judgment Enforced Efficiently)

By: Joe H. Dickerson

You’ve won a significant civil case and have been awarded a significant amount of money by the court and it’s been months, or perhaps years, you have paid your attorneys a lot of money and you have never recovered a single dollar, you look in the mirror every day and ask yourself, “What am I doing wrong?”

I would suggest to you that you’re probably not doing anything wrong. You are, in all likelihood, just not doing most of the right things to get the job done correctly. Don’t be too hard on yourself – because 80% of the people or businesses that win judgments in the United States never get their money.

That’s right – 80% of the judgments entered in the US are never enforced or collected.

There are many reasons and even more excuses for this sad and unnecessary fact. It’s not your fault – that’s not the business you are in – but it’s your responsibility to Row Your Own Canoe, and you don’t have to do it yourself. It’s much like owning your own yacht – in all probability, you are not the captain of your yacht. You hire a qualified expert – A seasoned expert to be your captain and he hires managers and supervisors, the crew that all work together to get you safely to your destination.

Unless you are in the business of buying and collecting your own judgments, you do not need a yacht or a captain. Even if your fishing for trophies you will probably do just fine with a reasonable sized fishing boat or canoe.

When I say, “Row Your Own Canoe”, I am of course speaking metaphorically. You must take the responsibility as the owner of the judgment, to see that either you or your trusted consultant and advisor, take charge and ensure that the right team of judgment enforcement experts are on the team and managed properly. The team should consist of: a Financial Forensic Research Expert; perhaps a Digital Forensic Expert; perhaps a Forensic Accountant; and an experienced, aggressive, no non-sense attorney.

Let’s quickly review the major reasons that 80% of the judgments in the US are never enforced:

  1. Only three of the top 50 law schools ever mention judgment enforcement – those three, according to the Dean of the Law School, discuss judgment enforcement for two or three hours in their Creditor’s Rights course.
  2. Typically, attorneys want to keep on doing what they’ve always done and then they keep on getting what they’ve always got – 80% failure.
    A. They subpoena the debtor to a deposition and require him, via subpoena, to bring all his financial records, bank statements, brokerage account records, etc. They are surprised when the debtor does not comply – but they do little, if anything, to force compliance.
    B. They seldom, if ever, checking to verify the lies told by the debtor under oath.
    C. They act as they actually believe the debtor or his attorney when promises are made to locate and supply the wiring documents.
  3. They continue to bill the client and usually want to repeat the two above.

Surprise, they fail 80% of the time but they got lots of billable hours.

The other 20% of attorneys who work judgment enforcement cases do anywhere from an acceptable to an outstanding job for their clients.

The Basics and Beyond for Effective Judgment Enforcement


Episode Description
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

Podcast – Reflections of a Family Law Attorney-In the Trenches for Clients


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?

Podcast – Cross-Border, High-Dollar Fraud and Money Laundering


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.

ADVANCED DYNAMIC SOURCES: CASH MANAGEMENT a.k.a. TREASURY MANAGEMENT SERVICES

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.

FIVE PERCENT OF FRAUD PROCEEDS IS “JUST THE COST OF DOING BUSINESS”

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:

FOLLOWING THE MONEY AND RECOVERY VIA UCC FILINGS

By: Joe H. Dickerson, CFE

UCC FILINGS
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.

Podcast – Getting Paid is Better Than Getting Even


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.