In many investor frauds, stolen money is hidden offshore. Although fraudsters do not think they will be caught, they are cautious enough to hide their stolen money. In some frauds they invest the stolen money in real estate or other investments. Fraudsters have become very adept at this and the recovery has become more complicated, although not impossible. A representative of the investor will try to locate the hidden money. He may be a court appointed receiver or trustee, law enforcement official, class action attorney or an attorney representing one or more investors. He will hire professionals to help follow the trail of the money. This is complicated by the bank secrecy laws of countries used. An example from a real investor fraud was a fraudster who stole over $5 million from US investors and transferred it to seven companies. Each company was incorporated in a different country. The companies were owned by a nominee and were managed by a management company in the Isle of Mann. One of the companies owned a farm in Australia, another a compound of houses on Maui and the remaining five had bank accounts in the country of their incorporation. Additionally, a house in Florida was purchased for the fraudsters brother to live in, which was in a trust not associated with the fraudsters name. When the fraudster needed funds he simply e-mailed the management company to wire the funds to him from the company he chose. The fraudster disappeared and moved around from country to country having no property, bank accounts, or credit cards in his name. He lived at the farm in Australia and the compound in Maui from time to time. He was married and his wife accompanied him, but used her maiden name on all of her identification. Since he did not change his identify, a US law enforcement agency found him through his passport and cooperation agreements with other countries. They had an open case against him, but did not pursue him for extradition. Although the investors funds were traced to the offshore banks, each countrys bank secrecy laws prohibited finding out the account information or whether the funds had been further disbursed. The management company got suspicious and thought the fraudster may be laundering money, a crime in their country. They notified their local constables office who posted the information on a worldwide network of law enforcement agencies established to identify money laundering. At that point the parallel investigations of the constables office, the US law enforcement agency and the investors representative came together. The fraudster, after finding out his hidden assets had been discovered, voluntarily came back to the US, cooperating with the law enforcement agency and the investors representative. All of the cash and the three pieces of real estate were recovered. After sale of the real estate, the recovered cash was returned to the investors. The fraudster pled guilty to various violations of US security fraud, mail fraud and wire fraud laws and is presently serving his sentence in a US prison. In this example finding the money and recovering it were easy because of a responsible management company in the Isle of Mann. In many investor frauds, the stolen money is never recovered nor are the fraudsters prosecuted. Investors often do not realize their investment loss was a fraud or simply are too embarrassed to admit it. Investors who have lost all or most of their investment should report this to their local regulatory and law enforcement agencies. These agencies are trying to rid the investment community of fraud and are the first stop in the recovery of investor funds. |
