Uncovering Concealed Assets

Uncovering Concealed Assets

Here are some highlights of my methodology when approaching cases that require special efforts and tools to uncover concealed assets upon the non-amicable termination and distribution of joint assets of different kinds of partnerships; ranging from spouses and business individuals to those between commercial entities. A commonality of most partnerships is that partners often have dissimilar skills as well as different information regarding the going-ons in their partnerships. One might manage the partnership’s joint assets and as such possesses the trust of the other partners who might focus on other aspects of the partnership. Only when these partnerships end in a non-amicable way is there a struggle for control of these assets as they might be well concealed.

When red lights start flashing these `naïve` partners hope to get their fair share of the partnership’s assets, and we – their service providers – must work creatively, quickly, efficiently and discreetly to best assist our clients to best ensure ALL assets are fairly distributed in any agreement that is reached.

Interrogation: First – Listen; Then – Cross examine

Often, when clients approach they tend to focus on one specific occurrence that caused the dispute and needs our attention. We, in turn, tend to follow their lead and focus on that single event and to the data relevant to it. This is exactly where many mishaps occur. We must look for hints of concealment and shine a light for our clients to all possible concealed assets. To do so properly, it’s essential to conduct a deep and thorough interrogation of our client.

During our clients’ ‘interrogation’ it’s crucial to obtain all the relevant background. 

Encourage your client to provide more than just mere facts, such as dates, sums etc., but also information pertaining to their partner’s habits, hobbies, tendencies, interests, additional business investments, relationships, destinations of frequent travels, names of lawyers, accountants, advisors and bankers who they encounter, including relevant banks and financial institutions where hidden assets might be, drinking friends and all other people who have any kind of interaction with the client and/or their partner/s. Collect any available information that will enable you to discover hidden assets.

It’s crucial to listen carefully, this can be a very tedious task since the stories are not always coherent and almost never in chronological order. If possible record and arrange for another person to take notes.

The next stage is the inquisitory stage. Actively extract as much specific information from the client as possible by asking the right questions. This ‘cross-examination’ often helps to gain additional specific data that can be followed up during the financial investigation.

Smart Gadgets are our friends

One of the most important tools that is often not correctly approached is to identify each available digital tool (i.e. smartphones, laptops and gadgets) new and old.  Search for used-devices or if their current outlook or e-mail boxes are shared.  Maybe an old iPad or tablet can be retrieved from a drawer or might have been passed on to a family member or friend.  Be curious about the hard-drives and disk-on-keys.  Trivial questions such as these might win your case! The right technical experts can bring life to deleted files, open stubborn computer files and analyze huge amount of data. These remarkable devices may reveal assets or leads to assets which were otherwise well concealed.

Photocopy

Documents tend to disappear as soon as the opposing party feels that a litigation procedure is near. Similarly, passwords tend to be changed as soon as a dispute arises, email boxes erased, and electronic devices formatted. Hence, it’s necessary to urge your client to discretely print and photo-copy every available relevant document they have ASAP, as well backing-up their e-mail boxes and hard-drives. They should make a copy of every important document and bring such copy back to the advocate for safe keeping.

Safe Contact Line

All data from the partnership’s devices and email accounts is available to the administrator as such encourage clients to purchase a new cell phone and open a new email account after your first meeting.

Target Profiling and Investigation

Once you have collected all the available information locate the `weak spots` and decide what assets they may have been concealed and where they might be.

Try to identify accounts, real-estate, trusts, representatives, trustees, accountants, attorneys, bankers, brokers and even friends who might be relevant. With the profile established it is then time to retain the correct capable professional service providers to hold the relevant financial and other investigations as well as surveillances and under-cover interviews (again, all in accordance with the relevant laws).

Preparation and time gaining

It’s vital not to take immediate action but rather be patient and allow for due preparation.

The First Strike: Seize, Attack, Restrain

Once enough evidence regarding the concealment of the joint assets is gathered, it is time for the first strike – initiating the legal proceedings, which should be surprising, strong and effective, and if possible – ex-parte.

The purpose of the first strike is usually a combination of: Seizing as many assets as possible; Laying on the pressure over the counter-party; Obtaining as many documents and data as possible; Sending the message to the opponent that they have much more to lose in a legal fight than in a settlement.  An exhaustive set of requests could ensure that the first hit be strong and most efficient. It is also, equally important that following the initial strike, the legal pressure on the opponent will not diminish.

The Open Investigation

Once legal proceeding has been initiated, there is no longer a need to keep the investigation secret and direct investigation actions can be performed. A good place to start is with accountants and lawyers, since in many cases they represent both parties of a partnership.

The purpose of these investigations is to keep collecting data and identifying weaknesses and other means of pressure to be used during negotiation or litigation.

Surviving the counterstrike

The roadmap is not an easy or a simple one, it is often lengthy and complex. The preparations are time and cost consuming. In addition, the opening strike often does not end with a knock-out, and the opponent who is usually financially strong often fights back attempting to drag the client into a lengthy and costly proceeding to apply their own leverage. The costs of the proceedings and the amount of resources the client can dedicate to finance them should be considered. Such costs consist not only of the work to uncover concealed assets but also the cost of conducting the subsequent legal battles to properly distribute the assets between the partners. This matter should be considered and communicated to the client from the very beginning.

In cases when initially the client is not financially capable to cover legal costs but uncovering the concealed assets and gaining their fair share can potentially yield substantial sums, it is often best to seek the support of Claims Financing Funds.  These funds can provide the client with the financial longitude to see the battle out till the end, and reduce the risks taken by both the client and the attorney of running out of resources. In some cases, such funds can also provide the client with cost of living.

Bottom-line

Dig deep! Refraining from doing so means concealed assets remain buried and your client may never see justice.

About the Author:

Adv. Safi Riba, Partner at Soroker Agmon Nordman, Israel – Head of the Commercial & Civil Litigation department. Adv. Riba focuses mainly on complex commercial and civil litigation, including – unique cases that combine both proxy fights and litigation of corporate acquisition. safi@sanlaw.legal