Trustees handling the bankruptcy cases of US mega-fraudsters Bernard Madoff and Scott Rothstein (left) have not "thought outside the box" as much as they have simply built a new box. Their new box: A Web browser.

In recent weeks, high profile fraud conviction and asset recovery efforts have been hindered by competing international interests. But there are ways to deal with these problems and prevent cross-jurisdictional quagmires.

While members of a US Senate anti-corruption subcommittee questioned real estate agents, bankers and escrow agents this week about their role in bringing dirty foreign money into the United States, one key enforcement topic was ignored: asset recovery.

While behind-the-scenes machinations of modern day Ponzi schemes are detailed in court documents and tabloids, asset recovery specialists can glean some insight into what compels targets to defraud investors -- and what causes investors to open their wallets.

Link analysis creates graphic, pictoral maps of subjects activities -- see left -- and are increasingly important to intelligence analysts working in complex asset recovery investigations. The days of managing cases via file folders and notebooks are long over.

For years, Guatemalan ex-president Alfonso Portillo exploited his immunity as a head of state to elude justice while stealing millions of dollars and allowing drug-dealers safe haven in his country. Now, Portillo finds himself on a short list that once held Manuel Noriega and Pavel Lazarenko: Corrupt foreign heads of state under U.S. federal indictment.

Enforcement of the US Foreign Corrupt Practices Act has changed with the political climate since it was enacted in 1977, and its latest, more vigorous incarnation under President Barack Obama's administration promises opportunities for outside investigators as well as payback for the public.

With recent revelations that admitted-fraudster Bernie Madoff's investment scam yielded cash and property in Canada, the receiver charged with recovering assets in the largest Ponzi scheme in history has found help from north of the U.S. border. The court trying the case approved a request by the court-appointed trustee to retain the Montreal-based firm Kugler Kandestin to work on recovery efforts in Canada.

Social networks give investigators a window into the lives of their subjects that was once unavailable. Researcher, investigator and all-around information guru Cynthia Hetherington is one sleuth who makes the most of this wealth of online information.

Associated Press legal affairs writer Curt Anderson spent six weeks piecing together the details of his year-end investment fraud story. His investigation dealt with dozens of offices and three different levels of regulation, eventually tabbing 2009 as the Year of the Ponzi scheme. He spoke to Asset Recovery Watch about the work that went into the story.

Many of the forensic accountants and intelligence analysts who pore over the vast amounts of data generated in asset recovery cases are likely, at some point in their careers, to have the opportunity to serve as an expert witness in court proceedings. Those who are able to do it well can find providing expert testimony to be a major career-enhancer.

When receiver Marion Hecht began the process of unravelling the $50 million Ponzi scheme masterminded by Pennsylvania investment manager Joseph Forte early last year, all avenues to recovery of victims' losses seemed open. The scheme had taken in some 80 investors, many of whom withdrew principal and false "profits" well before the scheme collapsed in late 2008.

As 2009 drew to a close, professionals in the asset recovery field were able to look back on a year of events that would have a long-running impact on their work and careers. In the grand old tradition of the year-end countdown, Asset Recovery Watch has assembled the "Top 10 Asset Recovery Stories of 2009." There are no prizes for guessing this year's top story, but as always, reader comments and suggestions are encouraged...

It's no surprise to AssetRecoveryWatch.com readers that criminal bankruptcy cases are prosecuted at an extremely low rate in the U.S., as we reported on the issue in October. But now the story appears to be gathering steam in the mainstream media, which has picked up a thread first reported on this Web site, and begun to pull...

A federal judge has opened the door to litigation over the question of whether "winning" investors in a Ponzi scheme should be required to disgorge not just profits, but principal, in the interests of a fair and equitable settlement. The ruling challenges the position of US regulatory authorities, and invites major changes in how receivers approach asset recovery in the aftermath of Ponzi schemes...

Powerful lawmakers told U.S. law enforcement officials this week that they want to see more effort focused on investigating financial fraud -- particularly mortgage fraud -- and on recovering the ill-gotten assets of the perpetrators. They cited the Department of Justice's own finding that every dollar spent in criminal fraud litigation returns $20 in asset recovery...

 Asset recovery is a key element of the United Nations Convention against Corruption, which was mentioned at length during the observance of the sixth annual International Anti-Corruption Day on Wednesday. But critics claim that a newly-minted review mechanism will do nothing to further the cause of asset recovery.

The thousands of Suspicious Activity Reports filed by banks and other financial firms every month can provide a roadmap to asset recovery, writes Steve Gurdak, a detective with the Alexandria, Va. Police Department and the supervisor of Operation Financial Compliance (OFC),  Northern Virginia's SAR Review Team. Knowing what you are looking at, and knowing when to bring in an asset tracing expert are key to success...

The recent guilty plea of a Maryland mortgage broker involved in a multi-million dollar fraud highlights the fact that taking back assets lost to mortgage fraud will be a major focus of asset recovery professionals in the coming years. Mortgage fraud is expected to continue to climb through 2011, according to one industry report, and those working to take back the proceeds of that fraud can't afford to stop after simply investigating the fraudster himself.

The second wave of litigation from the credit crisis is beginning, says Andrew Sandler, as investors victimized by failed banks and other institutions begin looking to third parties to recover lost assets. Sandler, a Washington, D.C. attorney with long experience dealing with financial institutions, says that the new target of investors' fury appears to be so-called "gatekeepers" -- the underwriters, credit rating agencies, and auditors whose professional judgments led investors to have confidence in shaky institutions.

Rather than moving on parallel tracks or even competing with each other, private parties working to recover assets in the aftermath of fraud and prosecutorial authorities often better serve victims by entering into a agreement to coordinate their efforts. This article, by international asset recovery expert Martin Kenney, outlines in detail the elements that ought to be a part of any coordination agreement, and includes strategies for avoiding common pitfalls that cost time and money.

Mutual legal assistance treaties, though not without their frustrating elements, are a tremendous tool for asset recovery -- and one that too many private sector professionals ignore. In this article, Linda Candler, a former federal prosecutor and asset recovery expert, notes several methods by which those working in the private sector can obtain information through MLATS. She also offers warnings about the perils of failing to use foresight in planning MLAT requests.

When one understands three principles about the role and regulatory oversight of banks, writes asset recovery expert Wayne Klein, one can quickly recognize how records maintained by banks and other financial institutions can be a valuable compass pointing to hidden assets. In this article, Klein outlines the numerous kinds of records that banks are required to retain and points out how they can assist in asset recovery investigations.

Asset recovery experts were heartened by statements made by U.S. Attorney General Eric Holder last week at a conference bringing together representatives of countries that have signed the United National Convention against Corruption. Holder noted significant problems surrounding international cooperation in asset recovery cases and pledged that the U.S. will work to fix them. In the asset recovery community, those who frequently work across borders say that they hope some major obstacles to recovering the proceeds of corruption will be taken down.

In the final article of a four-part series, internationally-recognized asset recovery specialist Martin Kenney (left), who has recovered hundreds of millions of dollars for his clients worldwide, pulls back the curtain on intensive international investigations. This article explains how to best structure an investigation so that the risk of failure is mitigated. It also explains how to assure operational security -- so that the target never has the opportunity to take additional steps to hide assets.

The Tax Justice Network, an internationally-known group that advocates financial transparency and the restriction of bank secrecy jurisdictions, this week named the United States as the world's top bank secrecy haven, citing the opacity of financial transactions in certain states, such as Delaware. Given U.S. lawmakers' vocal criticism of tax havens, the designation may seem strange. But asset recovery experts interviewed for this story say the Tax Justice Network's criticisms are on target.

Asset recovery specialists that work across multiple jurisdictions know that winning a judgment is one thing, and collecting on it is another. Properly positioning your case to maximize the chance of successful recovery may require changing your legal strategy or doing significant research on how foreign judgments are treated in the jurisdiction holding the target assets.

The U.S. Supreme Court on Monday declined to hear former Ukrainian Prime Minister Pavel Lazarenko's appeal of his conviction on conspiracy and money laundering charges. Asset recovery experts like Martha Boersch (left) say that the Lazarenko case, in which the U.S. seeks to recover hundreds of millions of dollars, signifies a major shift in how prosecutors view foreign corruption cases. 

In the third article of a four-part series, internationally-recognized asset recovery specialist Martin Kenney (left), who has recovered hundreds of millions of dollars for his clients worldwide, pulls back the curtain on intensive international investigations. This article explains how to identify the legal and ethical restraints that investigators may face in various jurisdictions, and shows how careful planning can both keep investigators on the straight-and-narrow and help increase the likelihood of success. Kenney will be a featured speaker at the 2009 International Association for Asset Recovery Conference.

The U.S. government loses billions of dollars each year to fraud. There are people out there willing to act as whistleblowers, sometimes even filing qui tam lawsuits, to help get the money back. But the U.S. government's treatment of whistleblowers may be hurting its own asset recovery efforts by making them too scared to come forward.

As receivers and trustees around the U.S. continue to unravel the numerous Ponzi schemes and other financial frauds that have been revealed over the past year, the tactic of using "clawbacks" to recover assets lost to fraud is being increasingly employed. It is also getting more support from the courts.

In the second article of a four-part series, internationally-recognized asset recovery specialist Martin Kenney (left), who has recovered hundreds of millions of dollars for his clients worldwide, pulls back the curtain on intensive international investigations. This second article explains how to identify targets in an international concealed assets investigation and how to gain access to vital evidence. Kenney will be a featured speaker at the 2009 International Association for Asset Recovery Conference.

The news that international risk consulting firm Kroll Inc. settled a lawsuit with a foundation that lost money in the R. Allen Stanford (left) Ponzi scheme suggests to some asset recovery experts that third-party lawsuits may be the next wave of court cases to arise from recent major frauds. The foundation, Electri International, had hired Kroll to do due diligence on Stanford's company, and invested in it after Kroll delivered a clean bill of health. The lawsuit, resolved last week, accused Kroll of gross negligence and sought recovery of $6.4 million.

Mutual legal assistance treaties are not specifically designed to deliver information to receivers, but that doesn't mean they can't be useful in an asset recovery investigation. By developing a relationship with prosecutors, understanding the specifics of each treaty, and suggesting that certain language be included in MLAT requests, receivers can reap a wealth of valuable information about concealed assets.

U.S. receivers working to trace assets overseas are often frustrated by the fact that their authority to gather information and evidence largely stops at the water's edge. But a little-known provision of the USA PATRIOT Act allows courts to appoint a special Patriot Act receiver with the authority to invoke mutual legal assistance treaties and other international agreements that compel authorities in other countries to assist in investigations. The benefits to receivers working multi-jurisdictional cases, experts say, could be huge.

One in ten bankruptcy filings contains elements of fraud, but an AssetRecoveryWatch.com analysis of data produced by the U.S. Trustees Program, which appoints trustees to manage bankruptcy filings, indicates that less than one percent of bankruptcy filers face fraud-related criminal or civil penalties. Part of the problem, experts say, is that lax standards allow the appointment of trustees with no experience in asset tracing and recovery.

The USA Patriot Act, passed in 2001, contains a provision that would allow a special receiver to be appointed, at the application of a federal prosecutor or federal or state regulator, to help recover assets in criminal and civil cases. The Patriot Act federal receiver has many advantages not available to the typical receiver. In this first article of a series we look at one of those advantages, access to Bank Secrecy Act data, and discuss the difference it can make to how receivers do their job.

In the first of a four-part series, internationally-recognized asset recovery specialist Martin Kenney (left), who has recovered hundreds of millions of dollars for his clients worldwide, pulls back the curtain on intensive international investigations. This first article outlines the necessary elements of an investigation, explaining in detail how to build a case-specific model that includes forward- and reverse-tracing as well as built-in decision points to aid in risk management. Kenney will be a featured speaker at the 2009 International Association for Asset Recovery Conference.

Many asset recovery professionals will tell you that mutual legal assistance treaties are one of their most vital tools, especially when it comes to recovering the proceeds of corruption. Others will tell you that the MLAT process is cumbersome, inefficient, and frequently a waste of time. Both are probably right. In this first of a series of articles on MLATs, we look at how the treaties are used to recover assets from corrupt public officials and what changes experts in the field say would improve the process.

How far can a trustee go in the effort to win back the assets of the victims of fraud? Not as far as Irving Picard has gone, claim lawyers for Stanley Chais, a California investment advisor and philanthropist who, from the 1970s, ran one of the largest "feeder funds" that channeled money to Bernard L. Madoff Investment Securities. Picard, trustee for the Madoff estate, has frozen millions of dollars in Chais' accounts at Goldman Sachs, but this week a judge will hear arguments from attorneys for Chais, who are expected to claim that Picard has no proof that the money in the account is the proceeds of fraud. The decision, which goes to the heart of a receiver's authority, could have a significant impact on other cases.

Leaders of the Group of 20 (G-20) countries last week resolved to take steps to improve cooperation with countries seeking to recover assets stolen by corrupt political leaders. The heads of the 20 large industrialized nations pledged to reform financial regulations to make it easier to trace stolen assets. They also announced a partnership with the World Bank's Stolen Assets Recovery Initiative, aimed at making it easier to pursue asset recovery when stolen assets are identified.

In its recent report on global corruption, Transparency International found that asset recovery professionals representing developing countries victimized by corrupt government officials face "unreasonably high legal thresholds, lengthy procedures and overly formalistic requirements for granting judicial assistance to victim states and repatriating the stolen funds." The report also identifies specific changes that would significantly change the playing field for those working in the asset recovery field.

The United States' increasingly tough enforcement of the Foreign Corrupt Practices Act has meant not just an increase in the number of FCPA cases filed, but a change in the types of cases being pursued. U.S. authorities are increasingly interested in targeting individual decision-makers, not just the companies they work for, when it comes to both criminal sanctions and asset recovery efforts.

In remarks delivered in Washington, D.C. this week, Stuart Gilman, Deputy Coordinator of the Stolen Asset Recovery Initiative of the World Bank and the United Nations Office of Drugs and Crime, said that there a potentially "fatal flaws" in the approach being taken by the U.S. to combat global corruption. He warned that asset recovery efforts have to take into account the fact that the proceeds of corruption now largely take the form of bribes paid by large, multinational corporations.

Robb Evans (left), the founder of California-based Robb Evans & Associates, has worked on hundreds of asset recovery cases since getting involved in the field during the legendary BCCI scandal in the early 1990s. In an interview with AssetRecoveryWatch.com, he discussed the positive changes he sees with regard to bank secrecy jurisdictions, as well as the considerable hurdles that still remain for professionals charged with tracing and recovering assets around the world.

When determining restitution payments to defrauded investors, one of the most difficult issues for a trustee is setting a baseline level of equity on which each victim's level of reimbursement will be based. Nobody knows this better than Irving Picard, the trustee in charge of liquidating the Bernard L. Madoff estate and paying victims restitution. His recent proposal to base victims' net equity on a cash-in/cash-out formula has outraged many who lost money to Madoff, but according to some experts, it remains the best of a set of bad options.

Peter Turecek is a senior managing director in the New York office of Kroll, a leading risk consulting company. He conducts a variety of investigations related to asset searches, securities fraud, business intelligence, and other areas. Reporter Mary Spicuzza spoke with Turecek, who's also an authority on multinational investigations, about how asset searches can be much like finding a spider and following its web.

The United States recently announced the return of $750,000 to the government of Peru. The funds were forfeited in United States federal court as part of the Peruvian government's effort to recover assets stolen from a pension fund meant to benefit retired members of the military and the Peruvian police forces. Peru's success, however, is relatively uncommon in the world of international asset recovery, where cooperation between law enforcement and judicial authorities from different jurisdictions can be difficult or impossible to arrange.

In the wake of the settlement between the Swiss government, the Swiss bank UBS and the U.S. Department of Justice, the Report on Foreign Bank and Financial Accounts (FBAR), a form filed by U.S. citizens with significant overseas assets, is increasingly important for asset recovery efforts. But the Internal Revenue Service, which is charged with tracking FBAR filings, seems to be having trouble maintaining data on FBAR submissions.

The recent three-way agreement between the U.S., the giant Swiss Bank UBS, and the Swiss government, which will provide the Internal Revenue Service with account information for 4,450 U.S. citizens suspected of tax evasion, is not just good news for the U.S. Treasury, says asset recovery expert Michael Diaz Jr. A featured speaker at the 2009 Conference of the International Association for Asset Recovery, Diaz says that fraud victims, too stand to benefit from the UBS agreement and the change in attitude that it signals.

Many asset recovery professionals cringe when they find that money they are tracing appears to be located in or to have moved through an offshore financial center, where record keeping requirements are light and disclosure requirements nearly non-existent. But attorney Martin Kenney, a featured speaker at the 2009 Conference of the International Association for Asset Recovery, notes that in Commonwealth countries, many of which offer offshore financial services, there is a provision in the law that can compel banks and other third parties to share information with investigators. In addition, they can be placed under a gag order that prevents the target of an investigation from being alerted to the ongoing investigation.

With banks in the United States failing at rates not seen in more than twenty years, the demand for asset recovery specialists in the financial services field is significant. From the Federal Deposit Insurance Corporation to private investors, there are multiple parties involved in tracing and claiming assets lost to bank failure. Longtime banking attorney Andrew L. Sandler (left), a featured speaker at the 2009 Annual Conference of the International Association for Asset Recovery, discusses recovering assets from failed financial institutions.

Relying on the provision of the False Claims Act that allows a private citizen to bring an action on behalf of the U.S. government, six whistleblowers will share more than $100 million between them as the result of the Department of Justice's settlement with the pharmaceuticals giant Pfizer this week. The settlement, in which Pfizer confessed to pushing doctors to prescribe drugs for uses not approved by the Food and Drug Administration, will cost Pfizer $2.3 billion.

How should the trustee in a complex fraud case decide how much "net equity" a victim has in the assets recovered from a fraudster? The issue is a difficult one for Irving Picard, who is charged with liquidating the assets of confessed Ponzi schemer Bernard L. Madoff. In recently-filed court documents, Picard argued that victims should be compensated based on the amount of money they invested with Madoff. But suits filed on behalf of some victims claim that net equity should be determined by the amount investors thought they had gained based on Madoff's fraudulent financial statements. In an interview with AssetRecoveryWatch.com, Steve Harbeck, president and CEO of the Securities Investor Protection Corporation, stated his position on the issue.

A Florida appeals court has allowed Banco Espirito Santo, which won a $522 million jury verdict against accounting firm BDO Seidman in 2007, limited access to the books of the privately-held BDO. The ruling came after the Portuguese bank argued that public statements by the accounting firm and its attorneys created concern that BDO might be dissipating assets that could be used to pay the award.

In an exclusive interview with AssetRecoveryWatch.com , Global Financial Integrity Director Raymond Baker (left) discusses the challenges facing groups struggling to recover assets stolen by corrupt political leaders and the potential benefits of proposed legislation that would close off tax havens and reduce corporate secrecy.

Federal receivership, which among other things gives a court-appointed receiver the power to use U.S. mutual legal assistance treaties and to demand information collected by the government under the Bank Secrecy Act, is a powerful, but virtually unknown tool for those working to recover assets in complex fraud cases. AssetRecoveryWatch.com board member Linda Candler (left) was one of the primary drafters of the law creating federal receivership, and explains that it was created specifically to empower asset recovery professionals working to untangle complicated international fraud cases.

The U.S. Internal Revenue Service and Swiss Bank UBS AG on Wednesday released the details of an agreement under which the bank will reveal the account information of 4,450 U.S. citizens who may have used those accounts' formerly secret status to evade U.S. taxes. The agreement falls well short of the release of the names of an estimated 52,000 U.S. accountholders at the bank, but IRS commissioner Doug Shulman said Wednesday that the U.S. got "what we wanted" from the agreement.

As the Republican primary nears in the election for Sheriff of Putnam County, New York, the three candidates (two challengers and the incumbent) continue to battle over how significant a role asset forfeiture should play in the county's law enforcement strategy

A human rights group's request to Secretary of State Hillary Rodham Clinton during her trip to Africa outlines a critical problem for those who trace and recover assets in developing countries. When assets are returned to countries victimized by corrupt rulers, the same political system that nurtured corruption in the first place often is entrusted to handle them.

The man who helped Bernard L. Madoff manage the massive Ponzi scheme that imploded last year, obliterating tens of billions in victims' assets, pleaded guilty in federal court in Manhattan on Tuesday. Frank DiPascali, who had worked for Madoff for 30 years, waived indictment and pleaded guilty to a ten-count criminal information. Facing as much as 125 years in prison, it is believed that DiPascali has struck a deal with prosecutors, and may provide information vital to the recovery of assets that can be returned to victims.

The effort to force the former leaders of three impoverished African nations to disgorge wealth allegedly stolen from their countrymen has recently gained ground in French courts. The civil society groups backing the lawsuit now face a challenge from French prosecutorial authorities.

Prosecutors in the case of Congressman William J. Jefferson (left) of Louisiana are seeking forfeiture of cash and securities that, they allege, the longtime Democratic Representative collected during years of corrupt influence peddling. Among other things, prosecutors claim that Jefferson demanded payment from companies in exchange for his assistance in obtaining contracts to do business in several African countries.

AssetRecoveryWatch.com publisher Charles Intriago was recently interviewed by the British Broadcasting Corporation for a story on how U.S. citizens have hidden assets in UBS and other Swiss banks. Click here to listen to the interview.

In a videotaped message, publisher Charles Intriago announces the transformation of AssetForfeitureWatch.com into AssetRecoveryWatch.com, and outlines the new and expanded coverage the site will provide. He also unveils the new name of the Association for Certified Asset Forfeiture Specialists.

Claiming that she lived a "life of splendor" as a result of her husbands misdeeds, bankruptcy trustee Irving H. Picard has sued Ruth Madoff, wife of convicted Ponzi schemer Bernard L. Madoff, for nearly $45 million. Picard argues that Madoff's victims have a right to recover money that was transferred to Ruth Madoff's personal accounts from Bernard L. Madoff Investment Securities.

As the U.S. Internal Revenue Service continues to press UBS AG -- Switzerland's largest bank -- to release the names of 52,000 U.S. citizens who have hidden assets in the bank, a tax evasion case in Florida has revealed an alleged scheme by a former bank official to discourage U.S. account holders from voluntarily paying their taxes. Court documents filed this week suggest that one UBS customer was told that a $45,000 payment to an unnamed Swiss government official could secure information about whether his account was at risk of exposure to the IRS.

The Caux Round Table, an international network of business people dedicated to "moral capitalism for a better world" has announced a new effort to trace and recover assets that corrupt public officials have stolen from developing nations. The new group, tentatively called the Global Asset Recovery Initiative (GARI) aims at empowering citizens of developing nations to institute civil asset forfeiture proceedings and other legal measures in order to return stolen wealth to their countries. In an interview, Caux Round Table executive director Stephen B. Young (left) discusses the new project.  

The Criminal Division of the U.S. Department of Justice has been instructed to be more aggressive about pursuing asset forfeiture, according to Assistant Attorney General Lanny A. Breuer (left). Saying that it is their access to large sums of cash that allows criminal groups to remain in operation, Breuer reported that he has instructed DOJ attorneys working in the Criminal Division to pursue the proceeds of crime in all cases with "forfeiture potential."

United States Attorney General Eric Holder on Wednesday praised the Department of Justice's Asset Forfeiture Program for its "critical" role in battling criminal organizations and for the "devastating effect" asset forfeiture has had on organized criminal groups. He spoke at the Organized Crime Drug Enforcement Task Forces and Asset Forfeiture Program's National Leadership Conference in Washington.

The United States' effort to seize and forfeit the trademarked logo of the Mongols Motorcycle Club, whose longtime president pleaded guilty to RICO charges earlier this year, is being met with resistance by members of the club who claim that they were never involved in illegal activity. The fight over the Genghis Khan-inspired logo illustrates some of the difficulties inherent in the forfeiture of intellectual property.

South Africa's asset forfeiture unit was forced to grow up quickly. Formed in 1999, the unit has has been battling South Africa's rampant crime and corruption since its inception. Under the leadership of Willie Hofmeyr (left), the AFU has been recognized as a model for other countries looking to implement asset forfeiture units and recently celebrated its 10th anniversary with the news that it had just completed its most successful year to date.

U.S. Attorney for the District of Maryland Rod J. Rosenstein (left) is taking dramatic steps to boost his office's use of asset forfeiture in financial and other cases. This summer the asset forfeiture unit will be moved out of the office's major crimes section and will become part of a free-standing asset forfeiture and money laundering section. In addition, Rosenstein has brought on internationally-known asset forfeiture expert Stefan D. Cassella to help guide the new program.