Unmasking The Mystery Of Hidden Assets

BY KELLY E. RIDDLE

The thought of conducting a hidden asset investigation can send shivers up the spine of many a good investigator. The word "hidden," almost conjures up a thought process that the assets can't be found because they were intentionally hidden. Sometimes this is true, while other times the assets are simply not in a convenient place for us to find them. There are a variety of reasons for conducting hidden assets investigations and these types of investigations are great for cross-selling. For instance, if you were hired to check the activities of your client's spouse and you conclude that the person is having an affair, you should suggest to your client that they conduct a hidden asset investigation. This benefits your client by giving them a total picture of their assets and benefits the investigator by providing more work. I have been involved in numerous cases where the hidden asset investigation turned up more than one-million dollars in assets that the spouse did not know about prior to the investigation.

There are a variety of other reasons a client may have you conduct a hidden asset investigation. Most of the time, this is done in an attempt to satisfy a delinquent debt or judgment. Insurance companies conduct hidden asset investigations, called "subrogation" whenever they pay for the damages their insured received due to the other party being uninsured. The insurance company then tries to locate assets to reclaim the money spent to their insured. Businesses may conduct hidden asset investigations before entering into business dealings with another company or person to make sure they are stable. Regardless of the reasons, hidden asset investigations can be a good source of income for an investigator.

During the initial consultation, many clients will often request that the person's credit report be obtained. Obviously, this can't be done legally unless you have their written permission or there are certain other criteria. At this point, you know that the client is trying to determine what the person's financial picture is and I typically advise the client that we can provide a "financial profile." Although we are unable to access their credit report, other records can give you information about the person's financial status. For instance, if you check the District Civil and County Civil records and find that the person has several lawsuits against them for failing to pay debts or failing to pay taxes, you can assume that this is a characteristic of that person. By building on this, you can provide the client with an overall profile of the person's financial responsibility.

Conducting a hidden asset investigation is simply following the basic rules of investigations. You have to start with the known information and work towards the unknown. The investigator should also understand civil laws in their state to ascertain whether or not time and money should be spent investigating other subjects who may be hiding assets for the subject. For instance, is your state considered a community property state? If so, the person probably would not hide assets in the name of their spouse as half of the asset is already theirs by law (assuming they are trying to hide assets during a divorce). Most states have guidelines regarding transferring property into another person's name prior to a bankruptcy, judgment or other related civil action. Normally, if the assets were transferred within six months to a year of the civil action, they are considered part of the civil action. Part of the investigator's job is keeping the client focused and reasonable. It is not uncommon for a client to provide a list of 20-30 people they think could be hiding assets. Obviously, the cost to check each of these people would be enormous and is probably futile. The investigator must therefore encourage the client to provide only those names that are prime candidates for hiding assets and to think of people in the subject's past that they trust. A lot of who the person uses to hide assets depends on the value of the asset and the type of asset. If the asset is a large boat or airplane, they may have the vessel taken out of service for maintenance and an agreement for storage worked out with the mechanic. The person may have a small amount of cash and this is typically given to a confidant to hide for them. Large amounts of cash are placed in off-shore accounts, structured investments and related hiding places.

The investigator should start with known information such as the person's current address, name and social security number. All addresses should be checked through the appraisal district to determine the actual owner of the property. If the subject is found to own the property, the investigator should then check the records to determine if there is a mortgage holder or lien holder listed on the property. Even if there is, a phone call should be make to the institution to make sure that the note hasn't been paid off and the property is free and clear. Remember that the first three numbers of a social security number tells you which state the number originated in and therefore guides you to another geographic area to investigate. I had a case where a bank loaned a subject from Louisiana $750,000 to build a strip-center type mall. The subject never built the mall and hid the money. I tracked the subject's asset trail all over Louisiana and Texas and was unable to locate the money. While combing over the file for that piece of evidence that would open the door, I realized I had skipped the obvious. I checked his social security number and found that it originated in North Carolina. After conducting some quick record checks, I discovered that he still had a mother and brother living in North Carolina and soon located the bank where he had hid more than $500,000.

The person's movements will provide insight into where assets may be hidden. By checking their social security number, driver's license history, determining where they travel and related information, you may soon discover the location most likely used to hide assets. Another useful tool is the good old tool of "dumpster diving." In a recent case, we were hired to check the financial status of a subject that owned a real estate company and a custom home building company. One evening, we gleaned through the trash in his dumpster and found reports detailing all of the houses constructed over the past three years, current construction projects, total expense, total profit, number of properties listed by the real estate company, total revenue generated over the past three years, a list of employees, telephone records and much more. Of course, the investigator should keep in mind trespassing laws. In this case, the dumpster was in an office complex readily accessible.

Public records should be researched for any clues related to assets and should include the following:

  1. District Civil records: Check for cases involving divorce, debts, judgments, damages, auto accidents, business disputes and related cases. Even if some of these cases are old, pull the file and research the enclosed information. In many of these cases, the subject has to prove his assets or damages and provides financial related information. In one case, I reviewed an old divorce case and found that the subject raised Arabian horses. Armed with this knowledge and the Internet, I was able to find his web site and determine where his current ranch and stables were located.
  2. County Assumed Name records: A check of these records will provide information about any alias names or "doing business as (dba)." If you find a listing for a business, review the actual record to determine what address the subject used and if they listed any partners.
  3. County UCC (Financial Statements): If a person obtains a loan and posts any type of collateral, this information is often filed in the county financial statements. If a record is found, pull the actual document to determine what assets were posted. Next, follow up to see if the note was paid off and if the asset if free and clear and still owned by the subject.
  4. County Deed Records: These records deal with the purchase and sale of property. However, in most jurisdictions, much more is included in these records. Other information often-included in deed records include gifts, garnishments, power of attorneys, liens, judgments, mineral rights, etc Even though the record may indicate that the person sold the property, the investigator should take note of who the property was sold to as this may be a friend who is being used to hide the property. The bank involved should also be noted as this may tell you where the person does most of their banking.
  5. County Brand Indexes: Most counties require livestock brands to be registered. One case that I worked was successful because I took time to check this index. I found that the subject had a registered brand and I called a local feed store in his area and was able to determine where the subject had his cattle. I drove to the area and found oil wells pumping on the land. I took photographs of the cattle and the oil wells along with all of the related equipment on the land.
  6. County Tax Assessor: Check the tax assessor's office to determine any property the subject may be paying taxes on, including automobiles. This doesn't necessarily mean he owns the property simply because he is paying the taxes, but logic would tell you that he has some kind of financial tie to the asset.
  7. County Appraisal District: I use this to cross-check the information if the deed records and the tax assessor's records. If property is found, the appraisal district appraises the property's value for taxing. Be sure to check the record to determine if the mailing address for the subject is different than the property address.
  8. Local Police Department: Run a "name survey" through the local police department for at least the past year. Ask for a list of every call associated with the person's name. You may discover that police were called to a dispute at a rental house or other location that the subject may have financial ties with.
  9. State Comptroller's Office: The records will provide any businesses associated with the subject, mineral and franchise assets, whether the subject is or was a state employee and related information.
  10. Secretary of State: The record will provide information related to any businesses associated with the subject.
  11. State Parks and Wildlife: A check with their office will provide any boats registered to the subject. Additionally, the records will provide any information related to any hunting or fishing license. The investigator should determine where the person purchased the license as this may reveal a different part of the state where they may have a ranch.
  12. Federal Civil and Bankruptcy Records: A review of the records will provide insight into the subject's financial responsibility. If a bankruptcy file is found, review the actual file as information about credit cards, hobbies that produce income and all other debts and assets will be listed. A quick phone call can verify whether the asset still belongs to the subject.

Once the public records listed above are researched, other more specific searches should be conducted. Several good web sites can be used and are good because they can conduct state specific or nationwide searches. Some of these include:

  1. www.knowx.com: This web site will allow you to search for stocks listed to the subject, real property, bankruptcies, boats, airplanes, lawsuits, judgments, liens and much more. Often, you will find information in other areas of the United States that involve the subject and no other information lead you there. Once you uncover a new location to search, you can zero in on specific records in that area.
  2. www.iqdata.com: On this site, you can check real property, social security numbers, drivers license, motor vehicles and more.
  3. www.dnb.com: Dunn and Bradstreet has financial and biographical information on companies and their officers.
  4. www.pac-info.com: This web site provides access to property appraisal districts throughout the U.S.
  5. www.kelmarpi.com or www.kellyriddle.com: This is my personal web site that has more than 100 pages of search sites available by topic. Go to the site, click on record searches and then on "Internet on Demand." Click "yes" to download and you will have more than 100 pages of searches at your fingertips. If you want to search to see if a person has a boat, bankruptcy, criminal history, etc, this will give you a list of sites used to conduct the topic search.

The investigator should recognize that any information obtained through the Internet is an unverified source. It needs to be confirmed and correlated with other information. Also, most of the information on the Internet is not designed to be complete and should therefore be conducted in conjunction with public record sources.

Once these searches are done, you will have a pretty good idea of what you are dealing with. The next step is to conduct searches outside the U.S. and/or bank searches. These are very specialized searches and like everything else, can be done legally or illegally. One legal way to determine a person's bank account is to create an alias name for you such as XYZ Marketing. Then, open a checking account under that name and send the person a check for $50 thanking them for trying your product or for entering your contest. Once cashed, it will go through their bank and back to yours where you can then look at the back and determine what bank they use and their account number. Foreign accounts are very difficult and require great contacts to access. These can be very miss leading as well. For instance, in many off shore areas, a person can become their own bank simply by posting $20,000 with the government. All kinds of scams and hiding places can erupt from this.

Hidden asset investigations are very complicated and time consuming. However, they are not as complex as we are often lead to believe. The searches outlined herein are only guidelines and many times, the investigator will reveal information through these searches that require additional searches of action to be taken. Good luck and great hunting!