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For a variety of reasons, asset searches are one of the most difficult things an investigator can do; finding “hidden” assets is even tougher (they wouldn’t be called “hidden” if they were easy to find).

Assets can be hidden in all sorts of places such as property in a family member’s name, a shell company, an offshore bank account, gold bars in a safe deposit box, a stamp collection or even a box of cash buried in the backyard. These types of hidden assets are difficult to find.

There are literally hundreds of things you can do to conduct an asset search, but one part of an asset search that is often overlooked is searching UCC filings.

Without getting too technical, a UCC filing is a lien placed on a business or the assets of a business and registered with the state in which the business is located when a business gets a loan. Typically, the lien is collateralized by the revenues of the company, inventory or some other type of collateral in case the loan is not repaid. UCC filings are publicly available, typically at the office of the Secretary of State or Department of State in the state that it was filed.

Over the years of conducting asset searches, among the things that I have seen listed as collateral include an art collection, a gold coin collection and an extensive jewelry collection. As noted above, these are difficult-to-find, or “hidden,” assets because there is little trace of them. For example, purchasing real property, a car, a boat or an aircraft can be traced because the ownership has to be filed with the local or state government. In contrast, the gold coin collection or the jewelry does not have to be registered and can be easily transferred to another party.

As for the bloody sock, The Boston Globe reported that the infamous sock worn by Curt Schilling during the 2004 World Series was listed as collateral to a bank in a filing earlier this month. (Here is a little history on the bloody sock in case you are not a baseball fan.) He also listed several other important pieces of memorabilia, including a 1927 hat worn by Lou Gehrig.

We are not suggesting that Schilling is hiding assets; however, this does provide another great example of how hidden assets can show up in all kinds of places, including UCC filings.

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Finding creative ways to locate hidden assets is no easy task; there are literally hundreds of ways to hide assets, such as stashing them under the mattress, prepaying an existing mortgage or buying a stamp collection and putting it in a safe deposit box. 

Locating hidden assets under the mattress or finding that stamp collection is no easy task, but there are legal and legitimate ways to locate hidden assets that you may not have thought of before:

  • Surveillance – Follow anyone for a few days and you can find out quite a bit about them: where they eat, the people they meet, where they work and with whom they associate. It can also lead you to a yacht registered in the Cayman Islands, a vacation home listed in a relative’s name or a business that you didn’t know about.
  • Dumpster Diving – Depending on local laws and regulations, someone’s trash may be a perfectly legal and legitimate way to find bank statements, financial records or other records that can lead you to significant assets. It may be a little messy, but this may be the most effective (and legal) way to get financial details.
  • Interviews – As we chronicled earlier, there are numerous open sources/public records that can be reviewed and analyzed to find assets. In some cases, however, you may need to take it a step further and conduct interviews. Former business partners, opposing parties in litigation, former neighbors or co-workers may provide clues to locate hidden assets.
  • Business Affiliations – The individual for whom you are trying to locate hidden assets may not have any assets held directly in his or her name, but he or she may be holding assets under a corporate veil to insulate himself or herself or hide the assets from prying eyes. In addition to searching for corporate affiliations of the party you are looking into, corporations can be set up under the names of family members or close business associates, or in states such as Delaware where you can maintain anonymity.  In a recent case, we identified more than $3 million in government contracts that were recently awarded to an entity related to the subject company.
  • Family Members or Business Associates – In order to shield assets, parties who are in financial trouble may try to “park” hidden assets with immediate family members, close business associates or even distant relatives until the dust settles. In doing so, they can mask their true net worth with “trusted” associates until the coast is clear.
  • Overseas Assets – Parking assets overseas is a common way to hide assets. While banking regulations overseas may prohibit you from legally obtaining bank records, items such as real property, boats, corporations or, in some cases, income tax records may be publicly accessible. Before you get too excited, there is no comprehensive way to search for assets overseas. Knowing where to look, and the specific countries the party may be linked to, will be the keys to successfully identifying any assets held overseas.

This post is part of a series of posts titled The Anatomy of an Asset Investigation.

 

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There are hundreds of reasons why you might consider hiring a private investigator to locate assets. Here are the 10 most common reasons clients contact us to locate assets:

1Prior to Filing Litigation – In preparing to file litigation against a party, the ultimate success of the case depends on whether the opposing party can pay for the damages. Prior to spending thousands of dollars in legal fees, you are better off understanding if the party has adequate assets to cover the potential damages.

2During the Course of Litigation – So you didn’t hire a private investigator to locate assets prior to filing litigation and now the opposing side is claiming poverty. A detailed asset search may confirm or deny the existence of any real assets or any hidden assets that may have been transferred to related parties.

3New Investment – One of the biggest red flags indicating an investment fraud is an investment manager living beyond his or her means. That oversized boat and expansive home may be an indication that the manager is taking an oversized “paycheck” from the proceeds due investors.

4Due Diligence – During the course of conducting a due diligence investigation on a possible acquisition, the party may have some reported assets, but do you know how much those assets are really worth or where the assets came from?

5Internal Corporate Investigations – Do you suspect that one of your employees is embezzling money or accepting kickbacks?  That money has to go somewhere, and it may be going into a newly built vacation home on the beach.

6Lending Money – Prior to a financial institution or private party providing a loan, identifying assets to support the financial health of the party may be the key to recovering assets down the road if the deal goes bad.

7Divorce Proceeding – While it may not always be the case, in some instances, joint assets may have been acquired without the other party’s knowledge.

8Judgment Recovery – Getting a court-ordered judgment is the first step, but then there’s finding the party from which to collect the judgment and actually receiving the proceeds from the judgment. Those are not always so easy.

9Leverage in Negotiations – Understanding the financial health of the party you are negotiating with may ultimately mean a favorable settlement. If you know that the other party was in serious financial trouble, you may want to consider settling quickly.

10Executive Background Screening – A newly hired executive living beyond his or her means or experiencing financial difficulties may raise a significant red flag warning of potential fraud down the road. A recent study by the Association of Certified Fraud Examiners showed two key warning signs of occupational fraud are living beyond one’s means (43 percent of cases) and experiencing financial difficulties (36 percent of cases).

This post is part of a series of posts titled The Anatomy of an Asset Investigation. Our next post dives into some open source records that you can utilize to find assets.

Your turn.  What are some of the reasons that you would want to locate assets?

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