Many investors believe the government will watch their back and protect them from investment frauds. While most will admit that the government can’t stop every fraud from occurring, few believe that the government itself can be charged with fraud.  Think again. Federal regulators from the SEC brought the first ever complaint against a state government, the State of New Jersey.

In August, Regulators charged New Jersey with misleading investors about the health of its two largest pensions; the $34 billion teachers pension and the $28 billion public employment retirement system.  Like many states, NJ has inadequately funded its pension funds. In recent years, NJ sought to sell bonds in order to bolster the funds. Unfortunately, in selling the bonds, the state failed to disclose that it had not been keeping up with its pension funding obligations in recent years. According to a Wall Street Journal report, the state made no contribution last year.

The case has been settled and although New Jersey admitted no wrongdoing, they also promised to not violate the law again.

This case highlights what many savvy investors already know - anyone can find themselves a victim of investment fraud. Always do your own due diligence before investing.  As folks who purchased New Jersey government issued bonds just learned, sometimes you can’t even always trust the government.

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MahanyLaw helps victims of investment frauds recover their hard-earned monies. Whether you were defrauded by an individual, broker, accountant, business or lawyer, the fraud recovery and asset recovery lawyers at MahanyLaw can help you. We are located in Portland and Milwaukee and have helped fraud victims throughout the United States.

Founder Brian Mahany, a former assistant attorney general and law enforcement officer, welcomes your call. Brian can be at (414) 704-6731 (direct) or at brian@mahanylaw.com

by Brian Mahany

Why do so many fraudsters live in Florida? Some would say its the climate but more probably, it’s Florida’s unlimited homestead exemption.  Under Florida law, creditors cannot force the sale of one’s primary residence to satisfy claims and judgments.  Many lawyers and creditors believe that protection is absolute and simply give up. It’s not.

While Florida and that of a few other states (e.g. Texas) have very powerful asset protection laws to protect residents, courts have started to place limits on these statutes in the event of fraud.

In June of 2010, the United States Tax Court ruled that the IRS could pursue a condominium property that had been transferred from father to son at the time the father owed  $112,000 to the IRS.  Dad transferred the property for $10, a sum well below the value of the property.  Although the son lived in the condo and it was his homestead, the court declared that dad’s transfer to the son back in 2003 was made for the purpose of avoiding his debt to the IRS and was therefore a fraudulent conveyance.

Even though Florida has one of the strongest homestead protection laws in the nation, the court ruled that a transfer of a home to avoid creditors allows creditors to pursue their claims against the property.

Why is this case significant? First, Florida has strong asset protection laws that protect residents from claims against heir property.  In Florida, creditors can pursue bank accounts, businesses, automobiles and vacation homes… just about everything except a person’s home. Although the son had acquired the property 7 years ago and made the condo his primary residence, the court said it could still be sold to satisfy the father’s tax debt.

The case is also significant because fraudsters routinely transfer real estate to friends and relatives for nominal consideration. Often this ruse works; suing a third party and proving their acquisition of the property was fraudulent is no easy task.

In this case, however, the court demonstrated there are limits on asset protections laws and those that engage in fraud should beware.  Scott Rubenstein v. Commissioner of Internal Revenue Service, 134 T.C. No. 13 (June 7, 2010).

Asset protection and homestead laws remain a valuable tool for people seeking protection against creditors and runaway jury awards. When it comes to transferring property, however, timing is everything. Unfortunately, most people do not engage in asset protection until after they have been sued or incurred a huge debt. The doctor that attempts to put his home in a trust the day after he botches a surgery or the father that sells his condo to his son for $10 after he is insolvent and owes the IRS $100,000 generally will find it much more difficult to protect their homes from savvy creditors.

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Brian Mahany and MahanyLaw helps high net worth individuals and those that face large litigation risks protect their hard earned wealth. From our offices in Portland and Milwaukee, we help people throughout the United States.

We also concentrate in helping victims of fraud and Ponzi schemes recover their money, anywhere in the nation or the world.  Whether you are a business, a bank or an individual, we can help recover your money.  Even if you already have a judgment and are unable to collect, we may still be able to help.

Contact founder Brian Mahany directly at (414) 704-6731 or by email at brian@mahanylaw.com.  MahanyLaw - “Trusted Advisors to the Highly Successful”

It’s a rainy day in Macau, a former Portuguese island colony off the coast of China.  My work as an asset protection and asset (fraud) recovery lawyer frequently takes me to interesting spots in the world.  This week is no exception.

Many nations are popular for Americans seeking to diversify their banking risks and protect their assets from creditors. Some Americans flee to foreign lands to avoid extradition on tax evasion charges.  Two years ago I defended an individual kidnapped from Panama back to the U.S. to face such charges. No nation is as extreme as China, however, in its zeal to prosecute tax cheats.

Most civilized countries do not criminalize violations of the tax code. The U.S., of course, is an exception. Fail to pay your taxes in most nations and the tax authorities might be able to take your home, take your car, seize your bank account and maybe even take away your livelihood. But in most nations, they can’t take away your freedom. The United States and China are not so progressive.

The headline in the Macau Post today is China’s plan to scrap the death penalty for economic crimes.  According to Amnesty International, the Chinese courts execute more people than the rest of the world. Some estimate over 5,000 yearly.

Presently an incredible 68 offenses carry the death penalty in China. Included are such crimes as murder and robbery to drug trafficking to tax evasion. That’s right, tax evasion can land you in front of a firing squad in China.

The U.S. may be more zealous than most other nations in prosecuting tax cheats but only China can give the death penalty for such an offense, although that is likely to change.

Failing to file returns, pay taxes or filing false returns is risky business.  Defrauding Uncle Sam will not subject you to the death penalty but it may land you in jail.

For those tax cheats seeking exile in Macau, don’t worry. The death penalty has long been abolished here. In addition, there is no formal treaty governing extradition for tax cheats, although as western money pours into Macau, so does the reach and influence of Uncle Sam. Running away, however, is not usually the best answer.

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MahanyLaw helps people with tax compliance, IRS  collection and criminal tax problems. We can often help those with serious histories of tax problems avoid prosecution and avoid jail.

We also assist high net worth individuals and those working in litigation intensive professions protect their hard earned wealth. Working with the client’s estate planning lawyers, we help protect against catastrophic litigation and zealous creditors. Safely and legally.

For a no obligation consultation, contact attorney Brian Mahany directly at (414) 704-6731 or by email at brian@mahanylaw.com. Our services are provided throughout the United States from our offices in Milwaukee and Portland. Concentrating in tax, asset recovery and fraud recovery, we are your one stop for helping you keep your hard-earned money.

Situated mid-way between England and the Republic of Ireland sits the small, 227 square mile nation of the Isle of Man. With a population of just 80,000 residents, the Isle of Man is a popular destination for offshore asset protection. A recent statement by the chief executive of the Isle of Man Financial Supervision Commission admitting to years of cooperation with the U.S. Securities and Exchange Commission has some people questioning that choice.

The Isle of Man, although quiet small by size and population, boasts the longest serving legislature in the world. The island’s legislature, called the Tynwald, was established by the Vikings in 979. Over the years, both England and Scotland have fought over the Island.  Beginning in 1866, the island has slowly gained its sovereignty.  Today, the UK retains the ability to legislate for the island nation in matters involving war and international matters.  Why is this important?

Although the U.S. and U.K. enjoy a cozy relationship in many things, trust law remains uniquely the domain of the Isle of Man and the Tynwald. To date, the Manx courts have been very protective of trusts; the vehicle most used by those seeking asset protection.

The recent decision by the Manx Financial Supervision Commission is not surprising. The Isle of Man is a great location to create a trust seeking protection against future creditors. But the island is not open to people seeking to commit frauds or evade taxes. According to published reports, the executive director of the FSC stated that it does not view the promotion of “aggressive tax mitigation structures” as a prudent business strategy for Isle of Man trust providers.

The island’s remote location makes litigating claims quite daunting for any creditor and the powerful trust laws make such litigation doubtful. When added to the island’s stable government and banking system, the Isle of Man is a great location for offshore asset protection.

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MahanyLaw assists high net worth individuals and those in risky professions preserve their hard earned wealth. Working with local counsel throughout the world, our lawyers cann create an offshore asset protection strategy for almost any budget and situation.

The key to any successful asset protection strategy is to plan and implement the strategy before a suit is filed or major incident occurs. Although it is never too late for asset protection, implementing a strategy after a claim arises makes the strategy more susceptible to fraudulent conveyance claims.

From their offices in Milwaukee, Wisconsin and Portland, the asset protection lawyers at MahanyLaw help clients with both asset protection and asset recovery (fraud recovery) anywhere in the United States. Attorney Brian Mahany can be reached directly at 414-704-6731 or at brian@mahanylaw.com. All inquiriess are confidential.

A just released report shows the IRS collected $400,000,000,000 less in 2009 than in 2008. (Yes, that is 400 billion.) No surprise there - the economy remains in a slump and placing food on the table occupies a higher importance than paying taxes for many families.

The same report, released by the Treasury Inspector General for Tax Administration, also revealed that the government ramped up collection efforts and enforced collection procedures last year. Again, no surprises.

Looking at federal budget documents, the IRS hired an additional 2000 revenue agents last year. Couple that with hundreds of new revenue officers and criminal special agents and its easy to see the handwriting on the wall. Increased audits, more sophisticated revenue discovery techniques and more enforced collections are on the horizon this year.

Taxpayers can continue to expect more scrutiny. Those with unpaid taxes can really expect to see more “heat,” including an increased risk of criminal prosecution.

The increase in tax enforcement has lead to an increase of late night infomercials promising to settle tax debts for “pennies on the dollar.” Be careful!  As I write this blog, I just now checked the Better Business Bureau for a rating on industry leader, JK Harris.  Their rating? An F.

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Mahany & Ertl, LLC helps people and business with a wide range of tax problems. Partner Brian Mahany has been a lawyer for over 25 years, several of those as an assistant attorney general handling tax cases and as head of a large state revenue agency. Partner Christopher Ertl has been practicing tax and criminal tax law for a decade.

Mahany & Ertl can represent you at any point in an audit, collection action, tax court  litigation or criminal investigation. Call Brian Mahany directly at 414-704-6731 or email at brian@mahanylaw.com for a confidential consultation. Don’t wait.

They say the devil is always in the details and that certainly applies to much of the recent financial reform legislation coming from Capitol Hill these days.  Jilted lovers and disgruntled employees have reported billions of dollars of unpaid taxes since the IRS revamped it’s whistleblower program. Why have they done so? Congress authorized the IRS to pay rewards of up to 30% of the taxes recovered through the program to whistleblowers. Dubbed the “Rat Your Neighbor” program by one US senator, the program is being expanded. Now the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission get to pay rewards.

Even loyal employees have a huge incentive to turn in their bosses. If their information leads to a $1 million dollar fine, they can “earn” 10 to 30% of that fine if they are the first to blow the whistle on their employer.

Think about firing that employee who just turned you in? Think twice, the new legislation has an anti-retaliation provision too.

What does this mean for American businesses? Expect increased reporting from unhappy workers, competitors, activists and even ex-spouses. Paying huge rewards encourages people to become government informants.  The stakes have once again been raised.

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MahanyLaw concentrates in criminal tax defense and regulatory compliance law. Whether you are the target of an SEC enforcement action or seek a forensic audit / review to avoid future problems, Brian Mahany and the legal, investigative and accounting team at MahanyLaw can help. We are a national practice ready to help anywhere in the U.S.

Have someone you wish to report? Our practice is limited to defending businesses and their officers but we can steer you in the right direction.

Founder Brian Mahany can be reached for a confidential consultation directly at (414) 704-6731 or at brian@mahanylaw.com

Government tax authorities asking banks and credit card companies for information on foreign account holders is hardly news these days. The I.R.S. does it, so do Germany, Britain and many other countries. Officials want to know when their citizens transfer wealth overseas or open foreign accounts. Generally the practice is legal if the accounts and activity are disclosed. Australia, however, has taken their quest to root out unreported accounts to a new level.

Published news reports indicate that the Australia Tax Office is asking banks if any customers have merely asked about setting up foreign accounts.  “Asked,” not opened.

Assistant Tax Commissioner Malcolm Allen is quoted as saying that his agency will begin investigating bank customers that merely had offshore conversations with their bankers. This means merely mentioning to your banker that some of your money is stashed overseas or asking how one opens a bank account in the Caymans may get you audited. Even if you never actually open a foreign account!

Is there a lesson here? Absolutely!

Just ASKING QUESTIONS about offshore banking may get you audited. Obviously, complying with federal reporting requirements is always the single best approach  to avoid unwanted scrutiny and possible prosecution. If you are unsure what to do, however, then “Don’t ask, Don’t tell” may be the best policy. It certainly is the best policy with respect to your banker. Do not ask about opening an offshore account and do not tell them if you have opened one without proper disclosure.

Government officials have long claimed that a tremendous amount of unreported offshore income never gets taxed each year. As long as there are “tax havens” and “secrecy jurisdictions,” the tax police will continue to be creative in their methods to ferret out these accounts.

Of course, offshore investing and banking is legal. Many invest overseas to diversify risk, thwart vexatious litigation risks at home or to to better keep their affairs private. The U.S. government requires Americans to disclose offshore accounts to the Treasury and report any foreign source income.

If you think offshore investing is for you, speak to a qualified lawyer, financial planner or CPA. Think twice, however, about talking to your banker. If you find yourself with existing unreported accounts or income, speak only to a lawyer. Financial planners and accountants are generally obligated to not disclose confidential client information but they can be compelled to answer questions in a formal investigation.

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MahanyLaw assists U.S. citizens protect their hard-earned wealth. We focus on global asset protection strategies. Many of our clients have unreported income, unreported offshore accounts or are undergoing an audit. From compliance work, to audit defense, to U.S. Tax Court litigation to defense of tax evasion prosecutions, MahanyLaw is a full-service tax boutique law firm. We work tirelessly to keep our clients out of jail and minimize their tax obligations.

From our offices in Milwaukee, Portland and California, we have protected the rights of people across the US. We also assist those with unreported accounts. Principal Attorney Brian Mahany can be reached directly at 414-704-6731 or via email at brian@mahanylaw.com.

(A discussion of fraudulent conveyances)

by Brian Mahany

It was inevitable - massive fraud in the government’s bailout program from 2008. The U.S. Troubled Assets Relief Program (or “TARP”) had it’s first major arrest. Charles Antonucci, former head of New York’s Park Avenue Bank, was indicted for fraud, embezzlement and misappropriation. What did he do? The feds say he attempted to take $11 million of bailout monies meant for the bank and spend it on himself.

Theft and fraud investigations are nothing new. But what noteworthy is Antonucci’s actions after the federal investigation began.  Knowing that he may be prosecuted and sued civilly for damages, Antonucci is alleged to have transferred his $348,000 home to his wife. On the same day he also “sold” his condo in Tampa to his son for $100. These transactions are what are commonly called “fraudulent conveyances” or “fraudulent transfers.”

Fraudsters frequently transfer assets - bank accounts, expensive cars and real property - into someone else’s name thinking that they can protect that property from seizure or a civil judgment. Unfortunately, that tactic often works.

Obtaining a judgment against a fraudster is usually quite easy. Often they will not answer complaints or comply with discovery demands for fear of incriminating themselves in a future criminal case. The bigger trick becomes collecting the judgment.

All states in the U.S. have adopted some type of fraudulent conveyance law. Those laws allow creditors (judgment holders) to pursue property transferred for less than proper consideration. Sadly, few lawyers have experience pursuing fraudulent conveyances. Billions of dollars of judgments go uncollected each year even though a properly trained lawyer could unwind these transfers and collect for victims.

In this case the transfers were so obvious that the courts will likely “unwind” the transfers to Antonucci’s wife and son and order the property to be sold and the proceeds used to pay any creditors. In many other cases, however, these transfers to family and friends go unchallenged.  The victim has a worthless judgment while the criminal still has his fancy yacht - that is, now his girlfriend’s yacht.

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MahanyLaw concentrates in asset recovery. Our fraud recovery lawyers understand fraudulent transfers and know how to find assets for victims.  We have participated in fraud cases throughout the United States and in the Middle East, Central America, the Caribbean and Europe.  Wherever a criminal may attempt to hide your money, our lawyers and former government special agents will do everything possible to get back your money.

From our offices in Portland, California and Wisconsin, Brian Mahany and MahanyLaw is ready to help. Call Brian Mahany today at (414) 704-6731 (direct) or email him at brian@mahanylaw.com.  We will answer your questions and give you a realistic assessment of getting back your hard-earned money.

by Brian Mahany

The term “clawback” is relatively new. In fact, you won’t find it in most dictionaries and even the on-line Wiktionary is quite vague in its definition; “Any recovery of a performance related payment based on discovery that the performance was not genuine.”  But ask the victim or former investor of Bernie Madoff or almost any other Ponzi scheme and the term will be well known.

Until a few years ago, the last victims to invest in a Ponzi schemes frequently had little hope of recovering any money. (For an excellent article on Ponzi schemes, see www.fraudsandscams.com)  The earliest investors in Ponzi schemes frequently get paid while the newer investors get nothing. Ponzi schemes rely on an ever broadening pyramid of new money coming in to pay off old investors. The base soon becomes so large that the pyramid collapses. The newest investors lose everything.

Until now.

U.S. courts are becoming increasingly sympathetic to efforts to “claw back” profits (and in rare cases, principal) from the earlier “winners.”  Is this fair? It depends on who you are.

For the losers in a Ponzi scheme, their only chance of recovery is getting some money from the earlier winners. The theory is that since the entire scheme was a fraud, allowing the earlier investors to receive profits is fundamentally unfair to the newest investors.  That sounds good BUT, many earlier investors, having no idea that the investment was a scam, long ago spent the profits they received.

The issue is likely to be litigated intensely for the next several years but clawbacks are being accepted with increasing frequency by the courts.

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MahanyLaw assists fraud victims throughout the United States recover monies taken by fraud. Asset recovery and fraud recovery is a unique area of law requiring a great deal of skill - skill in finding hidden assets and skill in collecting those assets for victims.

If you are a victim of a fraud or Ponzi scheme, give us a call. From our offices in Portland, California & Milwaukee, our asset recovery lawyers assist victims throughout the United States.  And when necessary, we will pursue assets anywhere in the world. To date our team has handled fraud cases in the Caribbean, Middle East, Europe, Central America and New Zealand.

Call partner Brian Mahany directly at 414-704-6731 or email him at brian@mahanylaw.com.

In January I wrote a piece titled “Do You Know Who Is Handling Your Money?”  That piece discussed how TV star Willie Adams (star of reality television show “Broke and Famous”) was now licensed to be a financial planner. Willie isn’t alone.

The newest entrant in my personal “Hall of Shame” is Kevin Trudeau.

Trudeau authored “Debt Cures: ‘They’ Don’t Want You to Know About.” Unfortunately. Mr. Trudeau has things he does not want you to know about either.

According to published reports, before writing self help personal finance books, Trudeau was charged with multiple counts of felony credit card fraud. Apparently he defrauded American Express out of $122, 735. This sum doesn’t include money swindled from Chemical and Citibank. Nor does it include the many people who paid $14.95 for his advice. According to Amazon.com, Trudeau has sold “millions” of books.

In fairness to Trudeau, he may not be just another common thief. At sentencing, his own lawyer cited a psychiatric report indicating Trudeau was disturbed. Very disturbed - mixed personality disorder and emotional disturbances. I am not sure what “disturbed” means in psychiatric terms but it doesn’t sound like he is fit to provide financial advice.

According to Trudeau’s mother, prior to stealing from banks, Trudeau was president of the Junior Clowns of America.

Whether a clown, thief or just plain crazy, Trudeau has no business writing books on personal finance.  Before you rely on a book or TV star turned financial planner for advice, talk to your accountant, lawyer or banker first. And never be afraid to ask questions.

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If you have already lost money to bad legal or financial advice, give us a call. We may be able to get all or a portion of your money back. Anywhere in the world.

MahanyLaw has offices in Portland, California and Wisconsin. We handle cases nationwide. Our asset recovery lawyers have represented clients in the U.S., Caribean, south america and the middle east. Call Brian directly at 414-704-6731 or by email at brian@mahanylaw.com