Securities Records: Treasure Not Even Buried
We Found $60 Million in two hours, and our client wasn’t happy.
Sometimes looking for assets is like hunting for buried treasure. Other times, there’s a pot of gold under such a light dusting of soil that you can spot it in an hour or two.
That’s the way it works with securities records (covering stocks, private placements, bonds and mutual funds). When you hit, you can hit big. We’ve written about this before, but usually the big money comes out a bit later.
Last month a client came to us with little more than her husband’s full name, cell phone number, address and place of work. She suspected he was worth hundreds of millions of dollars or more, but had no idea where to begin looking.
We did what we always do: Started with the basics by turning over every public piece of information we could find about him.
When we searched securities databases, here is what we found:
- The man had had two holdings in mutual funds in past years. These don’t usually appear on the public record, but he had more than five percent of the total holdings of two funds, and these needed to be disclosed in the funds’ prospectuses for new investors. There it was: His name and home address right there on the record, with millions of dollars in holdings.
- Then, we found that he had held 1.5 million shares of a company that was acquired the next year, netting him $45 million.
When we told our client that we had located a one-time and perhaps current location for $60 million after two hours of work, she said, “That’s ALL?”
Pulling on String
Even though I had tried to explain how asset searches work before taking on the case, I needed to do so again. Here is what I told her:
You may think $60 million is a drop in a very larger bucket. But if we find that he had $10 million in a money market fund at Large Mutual Fund Co. of America, this is great for a number of reasons.
- You can subpoena the fund to see whether that money is still there. If it is, you may be able to claim a portion of it.
- If it isn’t still there, you can find out where they sent the funds. Once you know that, you have the number of a bank account, and you can subpoena for those records. Bank accounts connect to overseas banks and to cryptocurrency platforms.
- Finally, do you think he had only one investment at Large Mutual? He may have had more, but none of those would have cracked the five percent total so they were not disclosed. A subpoena could turn up other, possibly much larger holdings.
The same obtained for the other fund company we found. As for the shares he sold, his lawyer could get to the trustee who would have handed over the money in exchange for the shares. The trustee would not have paid out $45 million in twenties. He would have wired it somewhere.
Most asset searches don’t yield such specific information so quickly, I told her. Your $2,500 investment in our preliminary search was money well spent.
The Next, More Expensive Steps
I also had a bit of sobering news for her.
If this very smart person made it so easy to find $60 million, it could be that another $300 million or more is buried way offshore.
We had started out the right way by looking onshore, as we wrote in The Offshore Asset Starter Kit.
If you are lucky, you could find links to offshore holdings in the bank accounts you discover from tracing the $60 million we found so quickly. Even if you are lucky, though, getting your hands on money traced to some tax havens is expensive. Legal fees alone can take up tens of thousands of dollars, often more. Bermuda, the Caymans, the British Virgin Islands – they know this and set up their legal regimes this way on purpose.
But if this woman’s husband was just being careless, we have the beginning of something pretty promising. And $60 million, while initially disappointing, means you never have to worry about having enough money again.
But Wait – There’s More
All of the above for $2,500 may sound like a lot of useable information, but we also gave her more. Hedge funds are complex beasts, with interlocking companies in different jurisdictions.
Our client knew only the trade name of the husband’s hedge fund. By looking through corporate registries and litigation records, we were also able to supply her some eight other companies under the husband’s hedge fund umbrella. Come divorce time, her lawyer will be asking for ownership stakes and financials of all of them.
It’s early days, or course, but it’s always better to start a search such as this as early as possible. As you move along and find out more information, you can always commission more searching.
But if you engage an investigator with weeks to go before your filing deadline, an overseas search is going to be out of the question. If there is big money involved, that’s just an unnecessary shame.
Want to know more about how we work? Our website has a wide range of publications and videos. You can also read my book, The Art of Fact Investigation which is available at bookstores online and for order from independent book sellers. And check out our other blog, The Ethical Investigator. We take you through the process step by step in Why Does My Investigation cost $2,400? A Breakdown of a Typical Bill.
