(1)
I agree with Gregg 100%. Hiding assets is a relatively easy exercise - as long as you are smart about it. Yes, there are legal ways to do it, semi-legal ways to do it, and some illegal ways to do it. And it all comes down to how smart you are when you start doing it. The problem comes when you have to do it quickly and in large chunks - and it is even a bigger problem if it is illegal. It is even worse if you put those assets in the hand of shady characters. They might decide that running off with the assets that you worked so hard in converting into being untraceable are an easy haul.Gregg wrote:Let me tell you about hiding assets.
Could Joel and Ed have converted their take from NASI into untraceable assets? It is possible, and I would not discount this as one explanation for where the money went. But I am speculating that this is not probable since they hung around until the bitter end instead of pocketing the last couple of months of buy-ins and simply heading for the border.
A forensic audit will focus on matching up the investments with the payouts and then looking to see where the remaining receipts went to. That means paying close attention to what was going into in Ed's and Joel's personal accounts, what went into their related business ventures, what was paid out for operating costs of NASI (including payroll and commissions), and what went to other sources that cannot be explained: wire transfers to other banks or brokers, purchases of investments, commodities or real estate, and any payouts to supposed investors that seem out of line with the rest of the payouts. This last one is important, in that if Ed and Joel were cunning enough to create a phony investor/investors as a bolt hole to do even more skimming, it would enable them to hold their loot as currency and be able to move it during the tenure of NASI. From there it would have simple to launder the money into accounts or assets overseas in the names of other phony principals, and moving the money to where it can not be recovered. Can you say cashier checks or gold ingots held in safety deposit boxes in the Channel Islands? I knew you could!
(2)
Tednewsom wrote:Lots of guys here dismiss the idea that old Ed and Joel could have hidden anything, since they clearly spent every dime of their scam paying back the Faithful.
Only because of their age and because they didn't run for the hills. If Ed and Joel were still in their 50's and took the dive, I would be looking real hard at the hidden asset possibilities. At that point, with a good attorney, they may only be looking at 3-5 years in terms of actual time served, with enough time left to enjoy their ill-gotten gains after they get out, sipping gin fizzes on some beach in Costa Rica.
But with the current situation, the only argument you can make is that they squirreled away the money for their families and are willing to die in prison so that their wives and kids will benefit. That makes Joel and Ed even more altruistic than you have me making them out to be. And I know you can't swallow that on, so this conclusion is even more unacceptable.
And then we are left with the last possible nutty conclusion: Ed and Joel were real smart until the last few months, and then forgot to run away so they could enjoy what they have put beyond the reach of anyone else.
None of those work. And so we are left with the one simple conclusion you won't accept: that they did this out of simple greed and simply did not plan on this scam folding before they died.
(3)
This is actually a good example of a possible source of where NASI funds could have went. And it should be a fun exercise to talk about getting it "foreclosed" so that the victims can get some money back:Tednewsom wrote:Just one example: Gillis's daughter owns a high-end Italian restaurant on Ventura Boulevard, along with her husband. I think Joel Gillis is actually on paper as one of the principals. It's been there two or three years now. Tell me that wasn't kickstarted with NAS funds.(And that, by extension, is an asset which can be foreclosed.)
(a) A restaurant is a business that is very competitive, cash-intensive, and cash-hungry during the formation and start-up. Any successful restaurant needs to have sources of capital to back it up until it can develop a steady clientele. Most start-up restaurants fail during the first year of operation due to competition and mismanagement. So Gillis' daughter could have benefited from an constant infusion of cash from NASI to keep the doors open. And that doesn't mean that the restaurant is successful now by any means. It could still be a bleeder and Gillis might have paid the shortages so that his daughter and son-in-law could feel gainfully employed.
(b) But before the government can make a case that this restaurant was essentially an asset of NASI that can be used for recompense, it will have to prove that the money was coming directly from NASI. That means establishing a paper trail. That means showing that Gillis had equity in the business (being listed as a principal or officer; anyone can get listed on a Secretary of State filing without plowing any money into a business). That means showing that the relatives had no ability to put their own money into the business and had no experience in running a restaurant (essentially showing they were nominees of Gillis and figureheads). That means interviewing and deposing witnesses who can attest to how much of this was Gillis' idea, motivation and involvement.
And there are legitimate defenses that can and will complicate a "foreclosure" of the business. One of the biggest will be either Gillis proving that the money came from a source that was not related to NASI skimming or the daughter proving she put up her own money, again from sources that cannot be traced to NASI. If the business was successful on its own and the daughter can prove that the money was a legitimate loan that was paid back or being paid back, that might be another complication. But I don't want to rain down on the parade at this moment, so let's just say that the government is able to show that the business was an asset that belongs to NASI and the judge orders that the business be seized and sold.
(c) Remember that part about restaurants being notoriously competitive? Well, it really messes things up for a restaurant when it gets closed - since it isn't competitive anymore. You lost the clientele you had built up and it is really hard to get them to come back once you manage to get re-opened again. So that means whatever your business might have been worth if you could have sold it with the doors still open, it is going to be worth a lot less with the doors closed. Most bidders are not going to want to bid top dollar to take over a restaurant that has been shuttered and associated with a publicized criminal fraud - in fact a lot of potential bidders won't show up at all.
I know someone is going to say,"But what if the government kept the doors open and sold it as a turnkey operation?" Government does not do that sort of thing when it comes to seizures and sales. Number one issue is liability that might occur during the operation of a business for which the government would be responsible, as well as any lawsuits from the winning bidder who could come back and sue the government for ruining the business during the operation (especially if the business fails after the bidder takes over operations). That is why government sales are "as is."
So the bottom line here is if the government attempts to sell the restaurant as a going concern, it is going to be darn hard to do so. If it does it will be a pennies on the dollar sale. And we haven't even discussed about the equipment and property in the restaurant. What if it is leased? No equity there to recover. Is the restaurant land owned by someone else? Even less likely - and if it can be shown that Gillis owns it, then you need to establish if there is equity in the real estate or not. Too many questions here and all of it up to speculation. webhick put it best:
(4)Not to mention that most restaurants - even the fancy ones - take years to turn a profit, so that restaurant isn't likely worth anything yet.
Well, from what I have read, it is not money that Madoff socked away overseas, but pending lawsuits against overseas banks and investment firms that had put money into feeder funds that went to support Madoff's "investment" fund. So this is a case of going after deep pockets rather than going after money that Madoff stole and hoarded. 30% recovery from a Swiss bank? And heading for litigation? Probably a lot less than that once the lawyers get through.Tednewsom wrote:There's some current-news stuff about Madoff, BTW. He socked away hundreds of millions, and they're still finding stuff: Luxembourg, NYC, Switzerland, etc., etc. Apparently the investors stand a chance at recovering 30% of their investments.
(5)
And having worked in asset recovery for the last 27 years of my life (and that includes teaching and managing people in asset recovery where we have seized a variety of real and personal property), I can tell you that the hard part is recovering something that can be liquidated to show a profit. It doesn't take a lot to show where the money went. But you usually find that once the money "went" it hardly ever "comes" back.And having worked for an investigator for several years and seen asset-hunters in action, it's not ALL that hard to figure out where it went.
Why? Because we live in a world where it is very easy to "own" things and pay for them over time. A world where it is easy to look important and flashy without much substance behind you. A world where you just have to say the right things to the right people who will turn their money over to you without a question. And a world where the prevailing philosophy seems to be "live for the moment" and not for the future. Throw in some reality, in that this country has evolved into a service-based economy, that most businesses do not own their inventory outright, and that the world is banking electronically. Money moves quickly, assets are typically encumbered, and the longer a debt is owed before asset recovery people get going, the less likely the asset will be worth recovering.
