In the November/December issue, W. Michael Kramer described the typical sources of illicit funds for money laundering, money laundering methods, and how to detect illicit financial transactions. Here he describes how to use the information to make the case.
Use the information gathered about the subject from the point of receipt to identify his accounts, assets and expenditures and then trace back the source of funds for each. This might require the filing of civil action or a criminal referral to obtain subpoenas.
The â€œtracing backâ€ steps are relatively simple, assuming the records are available and the witnesses are cooperative. For example, you might begin by contacting persons from whom the subject purchased goods or services, such as real estate agents, home sellers, home improvement contractors, and others during the relevant period. (Find the leads to these witnesses from public records, such as building permits or real property records.)
Sellers, agents, and contractors often retain records reflecting how the subject paid them such as cash, cashier's checks, traveler's checks, and bank checks. The payment records could provide leads to previously unknown bank accounts or other sources of funds, leading eventually back to the original corrupt payments. If the witnesses didn't retain the payment records, they can request that their bank obtain microfilm copies of checks or other deposits to their accounts.
If direct evidence of illicit income isn't available, prove it circumstantially by showing:
- The subject's expenditures exceeded his legitimate source of funds (known as the â€œexpenditures methodâ€); or
- the subject acquired assets or reduced his liabilities, i.e., increased his net worth, in an amount that exceeded his legitimate source of funds (known as the â€œnet worth methodâ€).
Proving Excess Expenditures
- Identify all expenditures (use of funds);
- deduct known income; and
- the remainder equals funds from unknown sources.