Making Crime Pay

[Music] [Music] [Music] every crook C man and swindler thinks he can walk away with a pile of cold hard cash none of them ever believe they'll get caught and end up here we'll hear from men who have tried each one thought they could make crime pay and each one was eventually caught I knew I wanted to make a lot of money because my parents weren't that wealthy and I had friends from Beverly Hills and they were getting brand new Mercedes when they turned 16 and I wanted to have have all that nice stuff too Steve

Kar thought he knew how to make crime pay he was a career criminal a con artist who began swindling people the moment he stepped out of high school kar's motive was simple he wanted money and I didn't really know how to get it and a lot of people well they were going to go to college and study to be doctors and lawyers and I figured I'm going to take a shortcut I'm going to make some big money I'm Natalie Luna for the association of certified fraud examiners Steve Kar did make big money millions and he

did it by running just about every kind of fraud scheme imaginable telemarketing schemes loan schemes investment swindles there was nothing he wouldn't do for a buck I could corrupt an official at a bank or an accounting firm I could get an investor to give me a check I could get an old lady to give me her life savings it's just a gift I have and it was so easy for me to do that it's just something bred in my personality I think the US attorney's office had deemed me the Jeffrey dmer of fraud I was

considered a oneman walking crime wave Walt Pablo was once a promising manager at MCI pressure from his bosses to cook the books led him to committing a fraud on his own and it netted him a lot of cash my bosses are paid much higher salaries or getting greater stock option options or you know they they seem to be enjoying the fruits of this manipulation much more than I am the customers of mcis that are out there seem to be absconding with all this this money my bosses aren't reporting these people running off with this money

um that we had some evidence of of a misappropriation of those funds they're not reporting to the FBI to internal Auditors to the FCC everybody's getting rich in this game except me and I look and I say I don't think that that's uh that's fair their crimes generated a flood of illegal money and they became experts at hiding that money in this video we'll show you how people like Steven Walt hide assets and how you can track those assets [Music] down there are three major ways frauders hide money currency hordes which are stashes of money

hidden in the frauder home cashier checks or Travelers checks which are used to reduce the amount of currency the fraudster has to carry and deposits to financial institutions which are done when the amount of elicit funds becomes so large that the fraudster finds it difficult to manage on his own Steve and Walt hid their dirty money in Banks asset hiders who put secret money in financial institutions usually set up accounts under false names typically shell companies in kar's case these companies were really nothing more than a post office box and a bank account but they

kept his name off the records he used straws to open the accounts for him I would find a kind of a transient type of person like at a bus station or in a bad part of town someone that had a driver's license and I would offer them a 100 bucks first thing is I would go to this little newspaper in Hollywood that would give you a DBA in one day the newspaper didn't really exist but the guy had credentials and he would go down and file a DBA and it would be in this person's name

The transient person a search of County records will sometimes show you that a frauder has established a shell company to hide money or to run a fraud scheme but Kar was smart he put the company in the Straw's name so the records would never point back to him the next step was to open a bank account and establish a mailbox where he could collect checks from his victims that same transient person after they opened up the DBA would go to a mail drop address open up a po. box so the money can be picked up

and then they would also go to the bank and open up the account after the person came out of the bank and brought me the temporary checks and open the mail drop address and had the DBA I would have no use for that person anymore that's when Komar cut the transient loose they were left to wander the streets Anonymous and nearly impossible to locate it didn't matter because he now had his accounts established in someone else's name he could deposit checks without tying himself to the transactions I realized that the authorities how they catch you

is they follow the money and if they're going to follow the money to a dead end for example if they're going to go to a bank and say well who owns this bank account and is um poly prostitute address unknown it's going to be awfully hard to find her and that's the same person that has the PO Box in the DBA it's going to be awfully hard to find that person and if they couldn't find that person they couldn't find Kar as the money from his schemes poured in his only real exposure came when he

collected checks at the post office box or when he deposited them but he took ample precautions to protect himself when the checks would come to the mail drop address I would sneak over there at like 2:00 or 3: in the morning cuz you know you get a key to the front door and a key to the box and I would make sure nobody was around I'd get the checks out and then I would um put the checks in the night depository so nobody would ever see me I'd put on my surgical gloves because you know

that um paper gives off a very good fingerprint once asset hiders place money in the banking system they can move that money from account to account simply by writing checks this can make it extremely difficult to trace the funds Dennis lorel a former FBI special agent and now a consultant on money laundering and other Financial crimes talks about the challenges for the fraud examiner the more you move the money around the more an of an appearance of legitimacy you give the money so clearly the more you can do that the more it looks legitimate also

you know from the investigative standpoint from a forensic accounting standpoint the the more transactions that you have to go back and and try to peel back later on certainly the more difficult that becomes from an investigative standpoint clearly once there are Financial records there's a financial footprint but a lot of times by moving money from different accounts and kind of playing a shell game as they move money around it makes it a lot more challenging for the forensic account accountant or for law enforcement to be able to track back to to the original placement Kar

had secret accounts set up all over the country and he knew how to keep law enforcement from catching up to him after money was deposited into one account a check would be written and put into another one and another one so if the authorities were to follow me they would have to go from bank to bank to bank and law enforcement agents do not like to work they the longer you make them work the harder you make them work the more they're going to go on to another case especially in a big city like Los

Angeles the reason law enforcement turned to other cases was because Kar made it nearly impossible for them to track down the money he was hiding $10,000 check goes into bank a check clears check is then deposited another check is written from Bank A's account into bank B that check is written from Bank B to bank C I'll do it to three or four or five banks the FBI the postal inspectors they get tired after it's about one or two Banks it may be exhausting to trace dirty money but it can be done [Music] not every

asset Hider is going to hoard his cash some will hide their money through the use of financial investments transfers and Gifts fictitious loans or purchasing other assets investing illegal money in Securities or Commodities can be a very effective method of concealment Phil Manuel is founder and president pres of the Philip Manuel group of Fairfax Virginia a management consulting firm that specializes in the detection and prevention of economic crime he discusses some of the options that are available to asset hiders Securities in general whether they're stolen or not are a great device to to transmit money

to hide money to perpetrate other crimes there are one-time payment life insurance policies uh there are annuities that you can buy and you get a the fixed percent interest so if you have a million dollars that you've stolen you can deposit this in a in a bank or you can take those proceeds directly to an insurance company buy an annuity buy a one-time payment life insurance policy that's what Walt paavo did he invested some of his illicit funds in life insurance policies I actually tried to create some sort of legitimate U investment for that and

I had put a great deal of money into um whole life insurance policies here in the United States um to to have that money for retirement at a at a later date I mean it was a false perception that I would never get caught you know or that anyone would ever think about uh you know this whole life insurance policy that uh you know if I did anything extravagant it was that you know here's a guy with a $10 million whole life policy working in a $70,000 a year paying job at at MCI so I

did try to achieve some sense of security for the future and I thought that that would that was a safe vehicle to do it with and so I would say almost half of my money went toward funding a a failed life insurance policy which I ended up you know forfeiting I didn't get that money and Steve kassar was buying up Securities so he could run dirty money through brokerage accounts it was one of the methods he used to throw investigators off the money Trail I would um purchase stock through company checks and then have that

converted into Cash by selling the stock and having a check made out to a person who would then cash the check the trick for Kar was to get his money in and out of the brokerage when an asset Hider has money stashed in a bank account he needs a way to get it out without writing a check to himself buying Securities was one way for Komar to extract his money he explains the process so what you would do is you would um receive my check I'd buy stock let's say in Microsoft or a solid company

and then after a little while I would sell all the stock maybe leaving a little bit of it left well a stock brokerage firm would write a check to anyone you want to for the sale of the stock whatever you had in your account that could go into one account and that account could write a check into another account and it just makes the trail a lot harder to find the harder the check is to find the better for a fraudster like Komar and of course this is just one of several concealment techniques you might

run into as you search for hidden assets for instance fraudsters often set up phony business structures to acquire and conceal their loot this is something you need to look for in every investigation one of the preliminary steps you're going to take is to determine whether he's acquired real estate whether he's paid mortgages whether he has uh in his name or in his family name established a business or a trade Style a corporation or a limited partnership you're going to try to establish what assets those entities have what he controls what he beneficially controls another common

way to hide money is to transfer to friends or relatives Phil Manuel says these transfers can give asset hiders several layers of protection I take my ill gotten million dollars and I place it in the hands of three or four family members who then can either create a trust or they can invest directly in their names thereby shielding me so there's either one layer of protection in that the family member has a different name than you and so that gives you a degree of protection but if they're really smart they will take the family member

and go the extra mile create that extra trust create escrow accounts and then acquire property a similar method for hiding money is by making fictitious loans to friends or business associates loan documents may be signed but the money is never dispersed if you run across a suspicious loan verify that payments were actually made and then compare them with the terms of the loan agreement a final way to dispose of secret money is to purchase Assets in some cases frosters simply blow their stolen money on a lavish lifestyle if you look at a lot of the

individuals like the Burnie ma offs the stanfords and people like that they lived lavish Lifestyles so a lot of the money that then they're laundering is going to purchase luxury houses cars and and other items of of value and you know later in the process as an investigator um one of the things that becomes important is asset forfeiture because if you can forfeit those assets you know you're getting some some of those illicit proceeds back um in the system tangible assets can also be a very good way to hide money a particularly valuable investment for

the asset Hider is gold the purchase of gold is very very difficult to to trace the storage of gold is very difficult to penetrate if if one uh makes his moves very secretly and so the purchase of Gold Silver Platinum to to hide Otten gains is a very very effective way to thwart investigations gold trading is one of the most common methods for hiding money it was a favorite technique of Steve Kar there are people all over the country called gold Brokers you can buy and sell gold in fact if um you were a gold

broker I could send you the $10,000 and order some gold from you you could take that gold once you get the check and you could put it the gold bars or gold coins in a box and mail it to anywhere that I tell you to mail it to of course the gold was purchased under a false name so it couldn't be traced back to [Music] Kar money laundering is the process by which a person takes illegally obtained money and conceals its existence Source or location and then disguises that income to make it appear legitimate it

is estimated that as much as $300 billion worldwide is laundered each year if money is uh is gotten illegally usually it's cash money and cash money presents a problem to the to the person having it in that he has to move that money he has to wash that money he has to launder it he has to bring it back he has to invest it and he has to pay taxes on it that's the circuit of money laundering the goal of all money launderers is to convert their money into what appears as legitimate funds Jonathan Turner

is a CFE who specializes in financial fraud cases and he stresses how important it is to the crooks to launder their funds the key concept in money laundering is legitimization in other words I've got to take criminal proceeds and be able to portray them as legitimate proceeds the easiest way for me to do that is to move them through otherwise legitimate businesses so if I could take the proceeds from an illicit activity and use those to purchase dishwashers for example and then sell those dishwashers I can then claim the income from the sale of dishwashers

so we're going to have lots of legitimate entities uh manufacturers distribution places but most importantly cly the biggest category is Banks because when I get a cashier check from a bank it doesn't say illicit proceeds it says guaranteed funds the objective is simple to take the dirty money and make it look clean the potential methods for laundering money are practically unlimited you can also buy Securities you can buy cashier checks you can uh establish real estate trusts and and put the money here in the United States there are just any number of ways that you

can use this money to launder uh the proceeds so that that it becomes useful money to you down the road there are three basic steps to money laundering first the subject must Place illicit monies into the banking system or legitimate Commerce next the money is passed through several Financial transactions to wash it and finally the money is integrated into legitimate funds that first tier of movement is the most important once a a criminal or someone with criminally derived money gets past that first crucial step of taking the cash or the or the the money that's

illegally derived and putting it into a legitimate institution once he takes that step then the whole world is his oyster in terms of where he can invest what he can invest in and he's limited only by his Ingenuity and his business Acumen as to how he's going to move from that point while getting the money into a financial institution may be the most difficult it's possible for a fraud examiner to catch them at any step you could catch a money launder at any of the stages if you think about it they they have a risk

in each place and the risk is going to be different so depending on the sophistication of the money launder placement is obviously very risky it's getting the illicit cash into the banking system or into the business system itself the layering process is going to involve multiple transactions each one of which could get discovered and then of course the final part is integration if you are living a lifestyle above your means that's an opportunity for Discovery so moneya laundering is often caught at one stage or another uh and unfortunately moneya laundering is often caught because of

an unrelated crime there are five common ways that money is laundered they are deposits to financial institutions wire transfers front businesses fictitious identities and offshore transactions direct deposits to financial institutions are risky for money launders the United States Treasury Department requires that all cash transactions at financial institutions exceeding $110,000 be reported by the filing of a currency transaction report there are similar reporting requirements for anyone engaged in a trade or business within the United States as Phil Manuel explains cash now is is is a magnet for suspicion all Merchants all automobile dealers all jewelry dealers

anybody selling anything of value has to declare with the government on a special form whether they've received over $10,000 for the payment of any any type of of merchandise or service currency transaction reports list the identity address and social security number of the person making the transaction obviously asset hiders want to avoid these reports reporting requirements are a valuable tool to preventing fraud they can often be circumvented by frauders that's why we have reporting requirements that's why we have currency transaction reports any transaction greater than $10,000 has to be reported and and the premise for

that was drug money laundering years ago and so what the bad guys have done is now they go below that threshold if they don't want to be detected and they don't want a currency transaction report filed against them what they're doing is is they're coming in and saying put 95 $500 or $9,000 it's usually round amount but it's amount under 10,000 and what's happened over time is is money launderers like fraudsters are adaptable and they understand that when the banks or law enforcement put mechanisms into place to identify what they're doing these guys are going

to take other steps to avoid detection and and look for other ways that they can exploit the system so like with money laundering instead of that $9,000 threshold what what the money launderers will do is they'll what we call micr structure and they'll break those transactions down to2 or $3,000 increments now if they're going to do that and they have the resources and capability to do that those two2 or $3,000 transactions are going to be so difficult to detect as as the proceeds of money laundering and basically what financial institutions have now they have pretty

robust software money laundering monitoring systems in place because the bank secrecy Act and the reporting requirements I mean banks are mandated to have a robust anti-money laundering program but again because of the totality of transactions and the versatility of the bad guys in terms of their adaptability and flexibility it becomes very challenging on the part of the bankers to to be able to to identify this knowing that Bankers are looking to report suspicious transactions fraudsters like Steve Kar often take another approach if they want a report to disappear they simply their Banker to make it

go away you find a branch manager at your bank and you befriend him and you offer him amounts of cash that when you come in and cash a check or receive cash $80,000 00,000 that he's going to lose that report or not file one with the bankers in his pocket Kar could easily avoid the government's reporting requirements robbery of Bank officials is a common occurrence in and money laundering schemes once money goes into a financial institution wire transfers are one of the most common methods for laundering that money they are especially useful for frauders who

want to move money to Offshore accounts one of the moneya launder favorite techniques is the wire transfer the wire transfer allows him to move money anywhere around the world instantly wire transfers were always popular because otherwise you had to carry cash or you had to mail checks whereas a wire transfer is instant but in today's technology driven world it's even more popular you could have a money launder sitting with his laptop logged into multiple online banking sites at one time wiring funds back and forth between the various accounts all from one computer the best part

about the wire transfer is it's almost impossible to track because I wire transfer money to a safe haven maybe the British Virgin Islands possibly Switzerland the aisle of man anywhere around the world and from there I withdraw it as cash and then deposit it again and wire it somewhere else after making these transfers multiple times it makes it very difficult for somebody to follow my steps because I'm in a different jurisdiction with a different law enforcement requirement with different court issues all of which makes it much harder and by the time you get to me

it only takes me 30 seconds to move the money again after the dirty money is received by a foreign Bank there are countless ways it can be cleaned up and brought back to the fraudster another common money laundering technique is the front business almost any type type of business can be used as a front for a money laundering scheme but Manuel says the ideal front is a business that's cash intensive the businesses that you want to look for in terms of hiding money especially cash money are high intensity cash businesses historically the best businesses for

moving cash in and out would be restaurants bars theaters businesses which take uh a lot of cash and where the infusion of cash is very difficult to separate from the sales of the uh of the institution itself restaurants and bars and theaters bowling alleys all meet this criteria frauders seek High cash businesses because they can fudge the revenue and expense numbers Steve Kar explains the benefits restaurant business is very good because restaurants deal with a lot of cash on a daily basis and the money goes in and the money goes out and there's really no

telling if um 300 people came in that night and bought $110,000 or $60,000 worth of booze and if no one can tell how much revenue is generated then it is easy for a money launderer to place Dirty Money on the books and describe it as Revenue he can siphon the money back out of the business by simply overstating his expenses [Music] [Music] the final method commonly used to launder money is the offshore transaction where asset hiders Place their money in tax or countries with strong secrecy laws Phil Manuel says the first step in moving money

offshore is to open an account in a foreign Bank you establish yourself a friendly Banker one who will take this cash money you take the cash you deposit it in the bank it's not a good idea to do it in your own name but you're probably going to establish a an offshore Corporation to which you will deposit those funds it's not very hard to establish an offshore Corporation says Manuel all you need to do is contact the right lawyer these lawyers in in offshore uh locations often have a shelf of Corporations shell corporations that they

use for the specific purpose of assisting someone who wants to do a financial transaction in an offshore place and does not want to be discovered confidentiality in offshore places is often regarded as a very very legitimate function they view it as ensuring privacy not assisting the criminal it's obvious that there are benefits to hiding money in offshore accounts but which countries are the most likely destinations for criminal proceeds your favorite countries are going to be those that uh have created that type of tax Haven offshore protection are there any number in the Caribbean uh Southern

United States area off the southern coast of the United States starting with Bermuda the Bahamas Grand Cayman The Turk and Kos Islands Panama has become probably the biggest banking center since money laundering laws were established in the United States it seems like banks have uh sprung up all over the place in Panama you have Antigua you have just any number of places where these banking laws are favorable to the potential money launderer Walt Pablo decided to hide the money in the Cayman Islands he used the help of an outside partner to launder millions of dollars

to shell companies he had formed a company one here in the United States to act as a a management company to to help facilitate putting these deals together and to pay some some forms of taxes you know and and and make give the appearance of an office and income and everything like that the money to fund that was funded into the Cayman from the Cayman Islands in the form of investment from offshore and then investment came in and you know came out in salaries and whatnot so there was a a company set up in the

United States in the Cayman Islands there were tens of 20s of companies set up to facilitate the movement of cash all over the world just to have it in a safe haven if you will and those companies are very easily set up takes a driver's license and a mailing address and that's pretty much it I've never been to the Cayman Islands I never had a really work with banks that much to go down there and to see companies that my partner had set up offshore multip companies on the office of a uh of a Investment

Company or whatever the they are that make these companies was amazing to me I was overwhelmed I was overwhelmed at his financial prowess his ability to move this these massive amounts of money and then he shows me a deposit slip of $100,000 into an account for a company that that I've named and then he proceeds to give me $122,000 in cash that we just were just going to walk around and spin while we're down there and the power of of cash in hand he knew he knew that it that how powerful that was because it

was overwhelming I've never held $112,000 in my life um to know that it was mine um to know that the bank account down there was mine that in a period of two weeks I had all this money in the prospects of making so much more in fact when we were down there the um the second wire from the customer had come for his weekly payment on his promisory note of $10,000 so that you know the $112,000 in my hand is nothing it's all ahead of us it's just going to get bigger and bigger varying secrecy

laws in other countries can make it difficult to follow the money much less retrieve it in cases where you're able to trace money you know through the layering stage and particularly internationally and and this is where that International laundering becomes very attractive for instance you track transactions to a country like Pakistan Pakistan is a cash-based country It's Not Unusual for somebody after you have the launder and go through that layering process to have that money parked in a bank in Pakistan for people to walk into that bank and just take all the funds out you

know they just withdraw that entire amount of money it's not unusual in Pakistan and at that point as an investigator you know that's the end of my paper for trail and that cash is gone regardless of which Haven the fraudster chooses there are several ways to move money offshore the most common methods are wire transfers physical Transportation cashiers checks attorneys brokerage accounts International money orders and e-money wire transfers which we have already discussed are probably the most popular method however physical transportation is also common money launders can use a variety of techniques besides wiring money

to transfer their money around the world they can physically carry cash but that gets bulky one of the techniques is to physically carry checks money orders and other financial documents to transfer funds in those means uh Travelers checks used to be used but traveler checks and in this day and age are fading from view it's much more common to see them use cashiers checks and money orders because even though there's reporting requirements at certain dollar levels you can buy a lot of them so you go into any place that sells them and you buy multiple

$200 money orders and you can fill a shoe box full and now you have a million dollars in cash that you can transport by mail in person or by common carrier anywhere around the world even though physical transportation is a popular method it does have its disadvantages the big disadvantage is that uh you can you can get caught it is not against the law many people think it's against the law to carry currency outside the United States it's not it's perfectly legal to carry cash outside the United States the only requirement is that you have

to file a form with the US Custom Service on your departure from the United States if you're carrying more than $10,000 in cash some asset hiders don't want to risk being stopped at Customs they choose to let the US Postal Service do their dirty work for them many people mail cash as simple as it is mailing of cash outside the United States is a very common thing putting cash in containers of merchandise that are being taken out of the United States by ship or by plane is another very common way to get cash out of

the out of the country it's a very simple process if you want to risk the uh the discovery of the cash and the confiscation of it as our society continues to move farther into the digital age Paper Trails will be harder to follow as more electronic methods for transferring funds are veloped as we move forward and we move closer and closer to digital currencies we're going to see a wider range of choices for the money launderers to use because once they're transacting business using gift cards credit cards prepaid credit cards debit cards then they're going

to have an almost unlimited range of choices of how to move the cash in and out of various business types the future of that transaction is going to be two men texting each other one texts electronic cash from one phone to the other the other one texts back the location where the drugs can be picked up this is going to make it substantially harder on law enforcement and if you will the placement side of the money laundering transaction heavily depends on the problems of getting cash into the system once we're dealing with electronic cash be

it eold or e-money or digital currencies gift cards prepaid or stored value cards all of these bypass all of our controls you can make a $10 million electronic transfer into an account and doesn't generate near as much paperwork as a $10,000 cash transaction does Walt understood the value of bank and ATM cards he would recharge his debit card on the trips to the Cayman and be able to use that money almost anywhere the most effective way that we found to get money back in the United States was to have a credit card the credit card

just looks like any other Gold Card Master Card and uh money was put on the account in gr Cayman and I could use that card anywhere I wanted to I could buy anything it was a bottomless pit it was the key to $800,000 in the Cayman Islands ATM machines grocery store whatever I wanted it was it was extremely convenient and uh it was a very effective a way to move it you didn't have to move big money onshore to a bank or anything locating offshore assets can be truly challenging for the fraud examiner some of

the steps you should take include the following review domestic bank accounts for transactions involved in offshore Banks look for overseas travel determine if the subject personally traveled overseas locate travel agencies attempt to locate the subject's travel agency identify means and try to identify the means employed to move cash offshore after money is successfully laundered offshore asset hiders may want to bring it back to the United States they typically use an intermediate transaction so that the money comes back clean Bill Manuel explains you can uh buy real estate you can buy Securities you can invest in

mutual funds you can uh buy and sell merchandise you can get involved in the import export business and you can create a Perpetual money machine that money machine works like a circuit Dirty Money leaves the country in one form and comes back in another the most common methods for bringing back laundered money include ficti ious loans fictitious foreign investors fictitious fees fictitious salaries cashier checks and wire transfers and precious metals Manuel says it can be extremely difficult to spot laundered money coming back into the country illicit money moves in the same way and through the

same channels as does legitimate money and once it gets out of the country it can be used in any type of investment which is seemingly legitimate it can come back to the United states taxes can be paid and uh the criminal gets the benefit of uh of that [Music] circuit knowing how and where illicit funds are hidden is only half the battle you also need to be familiar with the investigative techniques for locating hidden assets this kind of investigation usually be Begins by developing a personal profile on the subject a personal profile will contain the

subject's financial information and lifestyle habits Walt paavo lived a sort of double life while at MCI he made a conscious effort to make little changes to his lifestyle so he wouldn't draw much attention to himself however he would frequent the Cayman Islands and once there he would spend his money freely I did tend to dine out at nicer restaurants I did update my wardrobe a bit but I didn't do anything too flashy I didn't buy big cars I didn't buy you know big watch or anything like that I mean not not while I was working

at MCI I tended to try to maintain as much of I could of of a consistent profile um that I had had but um you know outside of MCI anytime that I had a chance I would I would certainly live it up I would certainly not uh hesitate to spend the money there are three major sources of information for a personal profile interviews with the subject himself can establish income and assets third-party sources can provide valuable information about a suspect's behavior and of course bank account records are an important source of financial information subpoenas are

usually needed for access to bank account records and you need to be careful not to violate privacy laws in your search when you're dealing with money that's moving through business accounts you should also develop a business profile this will contain all the important information about a subject's organization such as its money flow pattern and financial condition the better you understand the company you are investigating the better your chances of spotting the illegal movement of assets the following is a list of steps you should take to establish a business profile determine how the business is legally

and structurally organized identify the key personnel associated with the Enterprise identify the money flow patterns of suspected transactions locate all of the company's bank accounts determine the financial condition of the business and become familiar with the company's recordkeeping system it's the abnormal transactions the ones that don't seem to make sense that are usually a sign of fraud most fraudulent dispersements show up on the books as fictitious payables ghost employees or over billing schemes once you spot those questionable transactions you you should use the following steps to trace the payments first obtain documentation look for any

available bank account information as well as any Source documentation for the suspected payment invoices and purchase orders are good examples of course this type of information can be difficult to obtain obtaining information from offshore accounts is extremely difficult in many cases they have secrecy laws just like we do that would block any random Citizen's access to your account but in addition most of them have blocking statutes these are laws that are designed to limit your ability to either see copy or review financial documents imagine the fraud examiner who travels to an offshore Haven gets the

Court's permission to review a bank document but can't make a copy or take notes when he gets back to the United States and testifies in court he only has his word as testimony there is no proof and of course that makes the money launderers technique very successful once you have obtained all the necessary records familiarize yourself with the activity in the subject's business make an effort to determine categories of payments dividing the information that has been gathered into three categories payables and expenses charged to the suspect account any payments for services and any questionable dispersements

you should also be looking for clues of suspicious money going into the business banks are mandated to have an anti-money laundering program and part of that program is for them to have mechanisms in place where they can identify suspicious activity for instance the cornival ice cream shop the carnival ice cream shop was located in Brooklyn New York and it turned out it was an illegal money remittance business in addition to being an ice cream shop their income for that ice cream shop for a year should have been about 185,000 their bank accounts had $22 million

flow through them is that reasonable for that type of business and the answer should be no you know somebody should be going out and wanting to know why $22 million were flowing through some illegal payments won't show up on the books at all off-book payments can be much harder to trace there are two methods that are usually most successful first try to identify the source of funds look for indirect evidence of unrecorded sales such as costs and expenses that are not normally associated with the business's activity keep an eye out for unbalanced ratios of cost

to sales which might indicate unreported sales you can also get good information by investigating the marketplace look for canceled checks in the records of a business's customers or interview the business's competitors the other direct method for tracking down off-book schemes is to use an inside witness such as a former employee they can provide valuable information about who is involved in the scheme or where to find documentation of hidden assets you won't always find direct evidence that a subject is hiding assets that's why it's important to know how to use analytical procedures these techniques help you

prove indirectly that a subject has hidden wealth there are three indirect methods for proving that a suspect is hiding assets they are net worth analysis the expenditures method and the bank deposit analysis method the theory behind net worth analysis is simple it's established ing that a man is living beyond his means that he has certain provable sources of income and that his lifestyle shows in and of itself that he's exceeding that income and is living in a way that unless he has more money than what you can prove that he earns he's got other sources

of money that you then must examine and consider Manuel recounts how he used this method to establish that a buyer for a large male order company was taking kickbacks we determined that he had a Porsche automobile which he bought from one of the vendors that he had a real estate and his own residence was in one of the Premier areas of this particular City he was taking frequent trips to places such as Hawaii to Palm Springs to Florida to places in the Caribbean with his wife and with his children in short our observation our surveillance

of him our examination of his lifestyle his assets his real estate his automobiles his jewelry his personal property his bank accounts his the way he was establishing and paying off his bills indicated to us that uh he was Far exceeding the income that he had which was substantial from the company [Music] but in this video we've shown you the most common methods criminals use to hide their assets and some of the best ways to trace them the challenge of locating hidden assets is in knowing who you're after understanding how they operate and beating them at

their own game The Examiner understands how to do it understands the techniques and the mechanics of moving cash and how it's done I mean you have to do a lot of studying about about the mechanics of the scheme but my message is that all this stuff is tailor made for you it's readily available it's almost like the terrorist being able to go to readily available literature on how to make a bomb so once you know that you know how to defense it and you have to understand the kind of people you're up against people like

Steve Kar most anyone is corruptible when presented at the right time with the right opportunity what makes me different different is most people will say I'd never want to try something like this I'd never want to do this most people are scared that's why most people don't make very much money because they're scared to take a risk and take a chance criminals take risks because they think they're entitled and they think they're smart enough to get away with it and finding that money is how to make crime pay for the association of certified fraud examiners

I'm Natalie Luna I took a risk I wanted to have money I wanted to have power I wanted it all and it's not worth it all the millions I made all the fun that I thought I had it's not worth it there is no amount of money that I would have obtained um that is that would be worth what I've gone through none um and you know $800,000 and the lifestyle and the changes and and some of the things were so short-lived and threw away so much of what had accomplished um you know the ability

for me to walk in and and interview for a job now is is gone financially it's it's exhausted every resource that I had in order to defend myself I missed my kids growing up for eight years of my children's life and my marriage this was what I lived with if not being you know the fraud itself is being caught if not being caught it was being chased it was not being chased it was being in prison [Music] he [Music] [Music]