Loosening Jurisdictional Logjams

Complex Global Investigations Often Slowed by Evidence-Gathering Bureaucracy

By Tim Harvey, CFE;Richard Hurley, Ph.D., J.D., CFE, CPA

MarchApril-Global-Fraud-Focus-Harvey     MarchApril-Global-Fraud-Focus-Hurley Global Fraud Focus 


Headline after headline began with “Madoff Trustee Sues ...” accountants, banks, companies and individuals across the globe. Irving H. Picard, the court-appointed trustee for Bernard L. Madoff Investment Securities, has been trying to work with governments around the world to discover evidence and locate assets. Many of you have had similar searches, albeit not on a billion-dollar scale. In this column, we look at the difficulties of trying to obtain evidence (and ultimately recover proceeds) of a crime from multiple foreign jurisdictions. 

Picard has a thankless job. He must act as judge and jury, accountant, auditor and fraud examiner while interfacing with U.S. civil and criminal procedures. He must discern those who have recoverable assets and those victims who have a legitimate legal claim to those same assets. Obviously, Picard has his critics. Unfortunately for him, nothing he does escapes the glare of the media and the scrutiny of the victims.Let us consider some practical difficulties faced by any examiner in his position. You must first have a thorough understanding of the investment business. Then you will have to discover when the fraud started, its size, duration and players involved.

Collecting documents in the U.S. might be relatively easy, but what about seizing assets or freezing accounts or securing evidence in the Far East or the U.K.? Then there are all those multijurisdictional disputes over conflicting claims. We’ve heard for years that fraudsters (and all criminals) ignore national boundaries. This historical problem, which encompasses territories, wars, religions and laws, has been addressed by groups of countries, including the notable 1969 Vienna Convention on the Law of Treaties.



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