If you are not an experienced attorney, you probably will not have ever seen the information contained in this chapter. Moreover, you will not find it anywhere else. You would need this information for 5 reasons (if you are trying to recover a large sum of money):
The Big 5
1. If you ask your attorney to do the research outlined in the following pages, you will pay dearly for her time. Although she will probably have a law clerk or paralegal do it at a rate lower than that charged by partners, it is still cheaper to do it yourself.
2. It is time-consuming and labor-intensive. On the one hand, if it were a quick, in and out activity, I would suggest that you let the law firm handle it. Their experience allows them to go through all the behaviors much more cost-effectively. This type of research is slow and tedious. At some point, you will need to confer with counsel for additional guidance, but this chapter is designed to provide you with most of the information you need , whether you do your own research or hire an information retrieval specialist.
3. At the point where you ask your lawyer to intercede with legal maneuvers, you must be sure that you have located enough assets — attachable assets — to satisfy the debt, as well as the institutions in which those assets reside. She can file papers to freeze and seize assets. But if you are owed $5,000, and she attaches an account containing $500, you will still have to pay her legal fees and her filing fees. As well, you may have tipped off the bum who stuck you for the five k.
4. If you identify two or three institutions in which there are accounts and transactions that indicate routine criminal activity by your Subject, you are well on your way to sweet revenge, beyond just getting your money back. You could present the matter to a prosecutor. But take care of your own debt first. If you become suddenly consumed by an urge for justice, you may not get your money back at all. That’s because once a prosecutor has probable cause to believe that the monies in all those accounts are the result of unlawful activities actionable under the U.S. Code, he may ask a U.S. magistrate to issue a freeze order immediately. The Government will then use the funds and all transactions associated with them as evidence. This means that your money will be out of your reach for as long as it takes to obtain a conviction.
5. Finally, it is sound business practice as well as law practice to gather all the information that is reasonably available before making a decision to take action. Moreover, it is strategically sound to consider all information that is brought forward — and then to double-check it with multiple sources. [We wound up in a non-winnable war because someone failed to do that!]
This thorough gathering of information can be expensive. If you want to recover your funds, you may need to make a sizeable investment. You will be able to recover what you have spent if your attorney structures the petition for judgment to include all costs of collection and legal fees.
Nitty-Gritty: Tracing Bank Transactions
Banks are an important source of information. Your information retrieval specialist, Certified Fraud Examiner (CFE), or accountant cultivates these people to assist in various types of operations. There are 5 ways to obtain records from banks or other financial institutions:
1. Civil Summons
2. Criminal Summons
3. Grand Jury Subpoena
4. Search Warrant
And then there is Number 6, Personal Contact. A word of caution: Beware! Your lawyer would handle the first four methods herself, and retain someone for Number 5. She will not become involved with number 6 — and you should not either. Starting in the late 90′s there have been many criminal prosecutions for violations of banking laws. These violations resulted from release of confidential banking information through personal contacts, or “inside information.” So be really careful.
Your attorney will be using a third party to collect that information, a practitioner who deals above-board, in accordance with existing law. That information specialist can get you a list of banks where the Subject may be holding his cash (you know, the stuff that used to be yours), and usually, but not always, the account number and balance.
If you encounter someone who “guarantees” obtaining account number and balance, walk on. That party is using pretext; pretexting to obtain this information is a violation of Federal law. In legal and ethical transactions, banks may or may not give up that information to a third party. One more thing: If you check around, and find that the going prices for asset searches are in the mid-three figures, with NO guarantees of giving you what you want — those are the good guys. Then, when you find someone who guarantees results for fifty bucks, take a breath and move on.
Types of Bank Transactions
Basically, there are two types of banking transactions. First, there are those that flow through accounts, or account transactions: Deposits, Withdrawals, Debit Memos, and Credit Memos. Electronic funds transfers (EFT) will be either deposits or withdrawals.
The second type of activity is the non-account transaction. This includes loans, purchases or sales of securities (certificates of deposit, stocks, bonds, Treasury bills), cashier’s checks, money orders, traveler’s checks, cashing of third-party checks.
Flow of Transactions
Each transaction begins with a transaction entry point. This could be a teller, a memo entry from another department, or input from the cash services department. For example, the teller initiates a transaction when she receives a deposit, whether through mail or ATM, or directly over the counter. Account transactions result in the generation of several records. In the case of a deposit, those records are:
1. Teller tape
2. Deposit ticket
3. Item deposited
4. Cash in ticket
5. Credit memo
In the case of withdrawal, other records would be generated:
1. Teller tape
3. Cash out ticket
4. Debit memo
Each set of records establishes an audit trail that can be entered at any point, and that can be followed to provide a history of the date, time, amount, nature, and destination of the transaction. Destination means cash to drawee, check to drawee, check to account, etc.
These would likewise result in the generation of records, usually with a longer audit trail than the account trnsactions. Here are just two examples:
1. Loan application (eventually with results of a Consumer Credit Report)
2. Loan ledger
3. Correspondence file
4. Loan disbursement documents:
a. Teller tape
b. Copy of disbursed bank check
c. Credit memo
5. Loan Repayment Documents
a. Teller tape
b. Copies of checks
c. Cash in tickets
d. Debit memos
EFT’s likewise generate several documents that establish a permanent audit trail:
1. Application for wire
2. Federal Reserve Wire Memo
3. Swift Message Memo
4. Funds out documentation
a. Teller tape
b. Copy of check
c. Cash in ticket
d. Debit memo
and, at the receiving end ….
5. Funds In Documentation
a. Teller tape
b. Bank check
c. Credit memo
Notice that these transactions (along with other non-account transactions) have several things in common. There is always either a credit memo or a debit memo; some transactions, such as a wire transfer, result in both types of memo. There are the ubiquitous teller tape, and then copies of the checks.
Next Time: Proofing the Transaction, and more