| You have gone through the full legal
process, won your client's case and obtained a substantial
judgment. All you have to do is levy the assets of the other
party and reap the rewards. But is it that easy? You've perfected your judgment, the opposing party refuses to
pay the debt, and the sheriff or constable cannot find
sufficient assets to satisfy the judgment. What happens next?
Most attorneys first try to depose the other parties in a
postjudgment discovery action to determine their net worth and
then locate the source of assets. You should require the
opposing parties to present their financial statements, tax
returns and bank statements. Also, question subjects about their
income and personal and business assets. During this
postjudgment discovery, many attorneys find that the opposing
parties have already hidden their assets. Subjects may have
either taken the money offshore or transferred it to other
entities, such as their children's or family trusts. Or they may
have hidden it using another name, such as the spouse's maiden
name. Assets will be there nine times out of ten.
People use all kinds of stories on how they have lost their
assets and now can't pay the judgment. Typical stories include:
"I went to Las Vegas (or Atlantic City) and lost it all
gambling." "My wife and I used the money to live on and spent it
all." "My bookkeeper or accountant stole the money." "I lost it
all on bad business deals trying to raise the money to pay this
judgment." You may have heard similar stories and found that the
parties could not document their claims. Here are a few
suggestions that may show you where the money has really gone.
Check to see if the subjects made large payments on their
home mortgages during the period of your lawsuit, especially in
the last year of the lawsuit. Many people try to hide their
assets by paying on their mortgage and adding to the equity of
their homes which they believe to be "bullet-proof" in Texas
because of the homestead law.
Examine the payment of their universal life or whole life
insurance policies. A prepayment can accrue interest just like a
savings account and doesn't show up on financial records except
inside the insurance policy itself.
Look for savings bond purchases, either in the subject's
names, their children's names or the spouse's maiden name. Until
recently, these transactions were not registered centrally and
were a favorite purchase of money launderers and drug dealers.
Look for cashier's check purchases in the bank accounts of
your party. These checks can be purchased and tucked away for
the future just like cash.
When you bring opposing parties to depositions, instruct them
to bring the kind of documents that will help you and your
investigator trace their financial history. This is one of the
most overlooked areas of discovery because attorneys frequently
don't understand the process of investigation.
Where a person went and who they spoke to or dealt with is
often more important than knowing about their business and where
their money was when those last financial statements and tax
returns were filed. Sometimes the most crucial evidence can be
found by tracing certain activities. Timing of these activities
may prove that financial transactions were made to protect
personal assets.
The following key documents may reveal a person's hidden
assets. They may also help prove the intent of hiding these
assets from the court.
PASSPORT When you subpoena parties, request their passports
in your motion to produce. The entry and exit visa stamps will
disclose trips to regions such as Switzerland, the Cayman
Islands, the Bahamas, Isle of Man, Netherlands Antilles and
other places. These trips may have been made to hide money
By documenting financial withdrawals from bank accounts and
timing them with trips to foreign countries, you can often
discover offshore fund transfers.
For example, I know an accountant who made a trip to the
Cayman Islands every month with his scuba gear. It took US
customs three years to figure out his tanks were filled with
$100 bills.
TELEPHONE RECORDS Many smart attorneys request business or
personal phone records but don't think to include their
subject's mobile or car phone records. Remember that standard
telephone records only record long distance calls. Mobile phone
records record all calls, local and long-distance, for billing
purposes.
If you want to find an undisclosed business partner or a
"significant other" in a relationship, try subpoenaing the car
phone records. Compare the numbers and names on the bills
against the people that are known to your clients. I promise you
will find some interesting information.
CREDIT CARD STATEMENTS These records document out-of-town
travel and often name people with whom your subject has had
dinner or done business-people that may well be pertinent to
your investigation. These records also indicate what hotel the
subject has stayed in.
HOTEL RECORDS Hotels now invoice not only for the room, meals
and drinks but also for the long-distance phone service. Calls
are often made to those people the subject wouldn't call at home
such as an out-of-town banker, business associate or third
party.
CREDIT REPORTING AGENCIES The trail of credit purchases
follows us around the world. Like expense accounts, a credit
report lists where we eat, stay and make purchases. It also
contains a record of other business entities and banks that
inquire about our financial status. Credit card inquiries are
one of the better ways to locate undisclosed bank accounts,
insurance policies and other major purchases.
AIRLINE TRAVEL When questioning parties about their business
activities and assets, always ask for the name of their travel
agencies. Once you have this information, another subpoena can
be sent to the travel agency to document all the trips made by
the subject.
TELEX When investigating a company's assets, always consider
the company's telex records to find foreign business entities,
foreign bank accounts and other offshore activities. The monthly
telex log or bill will point you in the right direction.
OVERNIGHT PACKAGES Almost all of us use Federal Express or a
similar carrier to deliver our valuable mail and packages around
the world. Examining the monthly bills for a company's overnight
packages gives a clear idea of the cities and countries that it
is doing business in and can always add more information to the
discovery process.
All of the records listed are easy to obtain, particularly
under a motion to produce. If you find that the opposing party
is unwilling or unable to gather these documents, you should
think about subpoenaing these records directly from the sources
that produced them.
In many cases, once these records have been requested,
obstinate parties suddenly become much more amenable to
resolving financial issues and settling their judgments. If they
have anything to hide, they would much rather settle with you,
an obviously experienced investigator than produce these records
publicly for other creditors to find as well.
The next time you go in to post judgment discovery, or if you
want to find the financial worth and assets of parties earlier
on in a case, consider these ideas and resources for your legal
strategy. |
