You probably imagine one of two scenarios when you think of a private investigator: a person hiding in his car catching a cheating spouse, or an old-fashioned private-eye in a trenchcoat and dark sunglasses. The reality is far more mundane; private investigators actually provide a wealth of modern services from computer forensics to deep-dive background checks and high profile hidden asset recovery.
Last year, for instance, investigators in Trustify’s network uncovered in excess of $8 million in hidden assets in the course of conducting asset searches for high net-worth clients. To protect clients with sensitive positions many case outcomes are sealed, which means that this number is likely much higher.
Hidden asset searches by private investigators are more common than most people know, in part because the nature of private investigation is that it is performed, well, privately. High-profile cases of divorce fraud, child support payment defaulting, and hidden assets are, of course, often kept as private as possible by the involved parties to avoid bad press, and to avoid the scrutiny of the opposing counsel. Because of these nuances, the public is rarely made aware of how – and by whom – the discovery of hidden assets was made. When individuals or companies suspect financial foul play, private investigators are often the most common and effective way of find out what’s what.
How Do Wealthy People Hide Their Assets?
When the parties to a divorce are called upon to split assets, pay alimony, and cover support for their children, most people play by the rules. Others, however, try to avoid splitting what they believe is theirs by hiding what they own ahead of the discovery phase so they won’t have to share it, or masking their wealth so they don’t appear capable of paying alimony.
For wealthy people, the process of hiding assets isn’t fumbled or done carelessly in most cases. Usually, the person hiding their assets is already equipped with the resources to cover his or her footprints.
While we use all sorts of techniques to cloak wealth, here are a few of the more common mechanisms and approaches that are used by high net-worth individuals:
- Offshore assets: Storing assets and holding bank accounts in other countries allows a wealthy person to avoid domestic, federal taxation of those assets. Further, banks in other countries have different guidelines for security and privacy that make hiding money more viable.
- Art and collectibles: Because the value of these items can be subjective and they can be passed off as gifts, individuals hoping to hide their assets will list these items at an undervalued price, if they are disclosed at all.
- Fake or ‘back to back’ loans: A wealthy person can quickly lower his or her perceived net-worth by pretending to loan a large sum of money to a real or made-up entity. The person forges documentation to verify the loan amount and then the amount is transferred to a friend or to a fake account, creating the appearance of debt. “Back-to-back” loans in which one person is both the lender and the borrower are common in these cases as well. The on-paper appearance of heavy debt lowers net-worth and thus, the assets for the courts to split.
- Deferred payments: By deferring payments or underpaying on bills, a wealthy person can pretend to be ill-equipped to pay and rack up debt and credit concerns that were previously a non-issue. In the reverse, If the wealthy individual is anticipating a bonus or large check to be paid to them, he or she will defer, send the funds elsewhere, or fail to accept the funds during the proceedings to avoid them being noted during discovery.
- Safety deposit boxes: Keeping deeds, cash, jewels or other items of value in a safe deposit box is a common tactic used to make assets difficult to find during discovery.
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How Do Private Investigators Find Hidden Assets?
This work requires technical acumen and forensic investigative skills to dig into databases and records hunting for red flags. Primary resources are financial documents like tax returns, which allow investigators to get to the bottom of a complex asset search quickly and methodically. Here are some of the strategies investigators use:
- Tax returns: Private investigators can analyze years of tax returns to verify business relationships, provide inarguable evidence of income, get documented proof of real estate ownership, and proof of other expenditures and assets that belong to the subject, even if they have since been “misplaced” or undeclared.
- Sophisticated background checks: Conducting an analysis of the entire lifestyle and background of the subject will yield asset recovery results such as the ownership and operation of vehicles they haven’t disclosed or would not be able to afford with their stated income. Background checks can also uncover previous fraudulent activity that can help make the case for a more invasive discovery process.
- Forensic accounting: Investigators can analyze the income and assets of a couple to look for discrepancies between the stated wealth of each party and the financial facts of the marriage. If there is a discrepancy, it could indicate that one of them is attempting to conceal marital assets. This can help persuade the court to compel one or both sides to reveal these assets.
- Lifestyle analysis: Private investigators can examine the income breakdown and spending habits of the couple during their marriage and compare those figures with the found behaviors and expenses of each party as separate individuals. Large discrepancies here can indicate unreported wealth as well.
- Interviewing: Successful private investigators don’t just look at the numbers – they must also be highly socially skilled and trained in conversation and common sense. The best investigators are adept at interviewing a person’s close circle to gain valuable insights and useful statements that wouldn't appear in the data.
With these skills, private investigators can uncover owned assets in the form of real estate deeds, loans, contracts, physical belongings such as cars or jewelry, accounts, and more.
If you are interested in learning more about asset search services and what our network of private investigators can provide, contact us. We’re happy to consult, listen to your concerns, and determine whether or not PI services are appropriate for your needs.