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The Use of Dissolved Companies to Conceal Assets

A “dead” corporation can continue to acquire assets for years after it becomes legally defunct.

January 2016 | More Articles

 

As there are so many complicated and “high tech” methods to conceal assets, many investigators often overlook the more simple method – i.e., the need to also search for assets in the name of “dormant” or “dissolved” corporations.

Such entities are great places to hide assets, and here is why: When most people see that a corporate name is on the “dead list” at the Secretary of State or company registrar’s office, they put it out of their minds. However, assets acquired during the term of that corporation may be very much alive. Further, a dead corporation can continue to acquire assets for years after it becomes legally defunct.

These “dead corporations” of interest can have existed for many years before becoming dormant or being dissolved. However, with increasing frequency, we have found that persons often open a company, keeping it open just long enough to obtain the foundation papers and tax registration number, only to close it shortly afterward. In the short time that the company is active, the subject opens one or more “company accounts” by providing the banks with the necessary documentation to show that they are dealing with a “legitimate” company.

However, once the company is dissolved, the accounts are left open, and the banks do not ask for any additional proof that the company is still active. Thereafter, these “company accounts” can be used to “park” funds or act as “transfer points” for funds that the subject is seeking to conceal. In these dead corporations we have frequently found significant amounts of funds (i.e., in the tens of millions), art, antique vehicles, yachts, aircraft and real estate. Because these companies have been dissolved, most lawyers and investigators do not bother searching for assets under dead companies’ names.

A search for hidden assets should also include bank accounts under the name of dissolved companies with which the subject was involved. Our standard practice is to include property searches, vehicle searches, and searches for other assets in the name of any discovered dormant or dissolved corporations. You may turn up significant assets.

The cost of these additional searches is relatively small when you consider the potential gain. Never underestimate a debtor’s resourcefulness!

 

 

To discuss a corporate intelligence or financial investigation matter, or to learn more about Cachet International’s investigative resources in your jurisdiction, contact Michele Palmer by email or at 602-912-5730.

 

 
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Copyright © 2016 by Cachet International, Inc.

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