Investigative firms are often called upon to conduct an asset search in the context of litigation; whether a law firm is in pre-litigation mode and wants to see if a case is worth filing or to potentially gain leverage in the course of negotiations. In most cases, attorneys don’t have the luxury of having the legal authority to access information about liquid assets such as bank accounts and investment accounts. Legally conducting an asset investigation through open sources is one of an investigator’s most difficult tasks. Privacy laws prevent investigators from identifying the most obvious assets (i.e. bank accounts) and people are willing to take extreme measures to hide their financial interests and defraud creditors.
Below are 5 not-so-obvious areas that an asset search can identify records through open source records:
(1) Real Property
You may be thinking that real property is pretty obvious, considering that for most people it is the most significant asset held in their lifetime. But identifying the ownership and true net worth (including outstanding loan obligations) of real property may not be so easy. Assets may not be held in the individual’s name – they may be held by a close associate, family trust, family member or shell company. Real property assets may also be held overseas. One of the best ways to locate any hidden property assets is through investigator interviews with former colleagues, associates or neighbors.
(2) Shell Companies
Identifying corporate affiliations through secretary of state filings and other research is an important step in identifying assets held by affiliated companies which may not be held by the subject directly. Assets are often transferred into shell companies to hide them under a corporate umbrella.
(3) UCC Filings
UCC filings, which are filed with a designated state government agency, are financing agreements between a corporation and a financial institution and typically require an individual or corporation to post some type of collateral in order for the bank to accept the loan. A review of the UCC filings can identify collateral such as merchandise and equipment, and in certain instances individuals or corporations will use rare art collections, vintage cars or valuable jewelry as collateral.
(4) Civil Litigation
A review of court filings relating to civil litigation involving a corporation or individual may not be the most obvious place to identify potential assets. However, in certain situations an individual or company may have been awarded a large financial settlement as part of the litigation. In other situations, parties may have had to supply financial statements or asset information as part of the litigation and that information will be preserved in the public record. Litigation can also develop a web of professionals, such as attorneys or accountants, who the subject could have utilized to hide assets.
(5) Divorce Filings
Although divorce records are not available publicly in every jurisdiction ( e.g. New York), in many of the most populated states (e.g. Illinois, Connecticut, Florida and California), divorce cases are available to the public. Identification of assets is a typical part of the divorce proceedings and publicly-available documents may contain a wealth of information relating to bank accounts, employment information, investment income and other sources of income.