Insurance is unquestionably no stranger to hidden assets. Subrogation and insurance fraud both being examples of when an insurance company intends to recover monies paid and often that money isn’t readily accessible. Hidden asset investigations during these recoveries ultimately help both the insurance company’s bottom line and keep premiums lower for the customers.
The insurance company can assume the legal right of their client to collect for damages owed from the liable party. Sometimes that responsible party is underinsured or not insured at all. If that party can be pursued directly, an asset investigation could reveal opportunities for recovery that were not previously on the table.
Those who commit fraud and other illegal activities have several methods for hiding their ill-gotten assets to avoid detection.
August 2001, a father and son team in Florida were found to have fraudulently billed over forty automobile and health insurance companies over 1 million dollars. Fake blood tests was the scheme, and the money paid for blood tests by insurance companies was converted to cash using a bank account with the Florida Bank of America. This account was in the name of a fake Miami medical laboratory which was nothing more than a rented mailbox.
A dentist and his wife living in and working out of Westchester, New York were found to have been laundering money in connection with a Medicaid fraud totaling around $2.8 million. The July 30, 2007 press release from the N.Y.S. Attorney General’s office claimed the couple submitted numerous fraudulent Medicaid bills for oral surgeries, x-rays, and dental cleanings, then proceeded to make financial transactions and file false financial disclosure statements for the express purpose of hiding assets from the courts. The couple also attempted to use the name of their 18-year-old son to open a foreign bank account with $828,817, according to the Attorney General.
Today, investigators use powerful technology to track and expose hidden assets. Many modern techniques require digital forensic specialists. Whether the fraud is related to insurance, business or other financial arrangement, the methods for finding hidden assets tend to follow similar paths.
Let’s look at the basics first.
Building a financial profile of the person in question is the investigator’s first step. This involves legally obtaining and reviewing documentation and records including:
credit card statements
mobile payment account history
life insurance policies
investment account statements
real and personal property records
lien records and any other financial-related statements for the period during which questionable activity is suspected
As these documents are reviewed, the investigator will build a master list of all identified accounts, including names of authorized users and their addresses and other profile information. The investigator will also want to identify email addresses, any social media accounts, and other web-based information.
Once all the information is gathered, the investigator’s next step is tracing funds - analyzing deposits and withdrawals for each of the identified accounts. Tracing the funds can sometimes uncover even more accounts for analysis. The master list will be updated to reflect the new accounts and to record deposits, withdrawals, and any other activity for each account. The investigator will pay close attention to:
Developing an exhaustive list of the suspected fraudster’s family and acquaintances and see if those names correspond to any account statements or transactions to determine if any of those parties have received funds.
Any transfers or expenditures that appear unusual and deserve extra attention such as recurring payments to a brokerage.
Canceled checks which will not only show to whom the checks were paid but also to the account number and institution where the check was deposited. This can lead to hidden accounts.
ATM withdrawals and credit card cash advances, including the amounts and the locations these transactions took place.
Digital analysis is another powerful method for uncovering hidden assets. Any activities on work computers, personal computers, a tablet or a smartphone, can leave behind a trail of evidence for the investigator to follow. More sophisticated people may use encryption, applications that wipe data, private web-browsing sessions and virtual private networks (VPNs) to hide evidence, and while not evidence itself, such activities can help indicate fraud.
Digital analysis to uncover assets concentrates on a variety of areas, including:
Email - investigators can search for specific keywords such as names of potential co-conspirators, family members, romantic partners, business names, business dealings, or any other word or combination of words that might be of interest. The investigator is also looking for new account setup forms, confirmations, and details related to fund transfers, mobile payments, or other case-specific information.
Social media activity (Facebook, LinkedIn, etc.) – a thorough analysis of public profiles and social media activity could uncover hidden business and other interests, leading to unknown accounts. Many people share information and photos of newly obtained assets like cars and boats on social media sites.
Mobile devices – investigators can analyze call data, text messaging, and often, email and email attachments. Also, many users tend to use their smartphones to access various assets like financial accounts and for making online payments
Browsing history - internet browsers log information such as website visits, and temporary internet files. Internet activity can show visits to bank or brokerage websites and online purchases and payment activities, which is useful for identifying expenditures or other potential assets.
Accounting or budgeting software - a business owner or accounting employee could be keeping hidden books.
Spreadsheets or similar documents - account numbers and other information are often kept in spreadsheets.
When an investigator can analyze electronic devices (computer hard drives, mobile devices, etc.) several potential data sources become available. Included in this data can be previously deleted files, multiple versions of files, records of files and applications being accessed. All of this can provide hints of additional information sources.
The importance of finding hidden assets
Conservatively speaking, fraud steals roughly eighty billion dollars a year from all lines of insurance and costs the average American family between four hundred and seven hundred dollars a year in increased premiums. The ability to recognize and recover those assets is invaluable when they can be found quickly and efficiently by trained investigators with the necessary tools and experience.