By Kelly E. Riddle
Why Look for Hidden Assets?
There are a variety of reasons for conducting hidden assets investigations. For instance, if a PI were hired to check the activities of a client’s spouse and concludes that the person is having an affair, they can suggest to the client that a hidden asset investigation may be in order. This benefits the client by giving them a total picture of their assets. 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 other reasons a client may want 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 dealings with another company or person to make sure they are stable.
The word “hidden” almost conjures up the idea that the assets can’t be found because they were intentionally hidden. Sometimes this is true, but other times the assets are simply not in a convenient place to be found.
Enlisting the Help of a Private Investigator
During the initial consultation, many clients will often request that the person’s credit report be obtained. Obviously, this can’t legally be done by the PI unless there is written permission or there are certain other criteria. At this point, 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 provide information about the person’s financial status.
For instance, if by checking the District Civil and County Civil records and finding that the person has several lawsuits against them for failing to pay debts or taxes, one can assume that this is a characteristic of that person. By building on this, you can get an overall profile of the person’s financial responsibility.
Asset Investigation Varies By State
When conducting hidden asset investigations, we have to start with the known information and work towards the unknown. We 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.
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.
Methods of Investigating
Part of the investigator’s job is to keep the client focused and reasonable. It is not uncommon for a client to provide a list of twenty to thirty people they think could be hiding assets. Obviously, the cost to check each of these people would be enormous and probably futile. The investigator will 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.
Whom the person uses to hide assets depends on the value and 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. But large amounts of cash are often placed in offshore accounts, structured investments and related hiding places.
The investigator will start with known information such as the person’s current address, name and social security number. All addresses will 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 will then check the records to determine if there is a mortgage holder or lien holder listed on the property.
It’s important to 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 hidden more than $500,000.
The person’s movements will also 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, we can 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 combed 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.
Public records can be researched for any clues related to assets and will include the following:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Secretary of State: The record will provide information related to any businesses associated with the subject.
- 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.
- 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.
The investigator recognizes 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 is therefore conducted in conjunction with public record sources.
Hidden asset investigations can very complicated and time-consuming, but are often necessary to assure that a client is being treated equitably.
Kelly E. Riddle is president of Kelmar Global (www.KelmarGlobal.com), a worldwide licensed private investigation company with offices in San Antonio and Dallas, Texas. Call us at (888) 873-1714 for a free consultation.