Ties That Bind: Untangling Hidden Partnerships

PROBLEM:

Some of the cleverest concealers of assets decide to enter into partnerships that are tougher to look up or unravel than corporations or even limited liability companies.

Some states will let you search for limited partnerships on a central website, but sometimes a lawyer can be listed as the agent for process of service. For general partnerships it’s even harder. You often have to go to the clerk of the individual county to see the records, but you won’t be able to visit every county clerk in the country. Even if you could, many counties require the searcher to know the name of the business since there is no way to look up the business by owner.

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SOLUTIONS:

Just because a person creates a separate entity to hold assets he beneficially owns doesn’t mean the assets are not findable. If that were true, then no asset search would ever work because people would just create a company or partnership, use that vehicle to buy a building or other investments, and we would never be able to collect what we’re owed.

While general partnerships can be tough to track down and see into, there are in fact several ways to do it.

• Lawsuits. Partnerships go into business with other people. They buy and sell things, just like companies. If you don’t know the name of the partnership, guess what? People the partnership did business may have known the concealer of assets and named him as a personal co-defendant in the case.

• Real estate records. Your debtor occupies a building, but who owns it? Maybe a company you’ve never heard of. But there’s one person who will always get to know who the ultimate beneficiary of a building is, no matter how many corporate layers there are to look through: a lender. Acme Real Estate LP may own your debtor’s condo, but if there’s a mortgage then the bank may want a guarantee from someone other than Acme that money will be repaid if the condo’s value drops. If a partnership or company controlled by the debtor signs a guarantee, that will be something we can find on the public record.

• Securities filings. People like to get paid through their companies or partnerships, and sometimes those details make it into securities filings if the person making money is a significant company officer or director. These records are always worth checking.

• Databases. We can often find addresses associated with a person because of the most innocuous purchases. The secret apartment owned by a debtor’s partnership doing business as Acme Real Estate? If the debtor subscribes to a magazine at the apartment or orders a pizza and gives his cell phone number, that’s the kind of information a database would use to associate the apartment with that individual. We then would look at who owns the apartment the debtor spends time in, find the partnership, and nail him.

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