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Asset Protection
in the USA
by:
Ronald Edwards
When we surf through the web we see many
entities selling American corporations and other structures that they consider
to be called asset protection strategies. These run the gamut of corporations in
the states of Wyoming, Delaware or Nevada, trusts of various types and other
structures all based in the USA.
What is wrong here is that nothing in the USA can protect you from an over
zealous judge who feels your assets should be forfeited to satisfy some sort of
debt or perceived debt. You are subject to the mercy of some Judge. Now if the
Judge over steps his bounds you are faced with paying massive legal bills to
correct the situation in the appeals court. Ask some of these law firms that do
these asset protection structures what their rate per hour is going to be to try
and recover your assets on appeal. Figure on rates starting at $325.00 and going
up to $650.00 for a partner in a top drawer law firm in the USA. Ouch.
Litigation in the USA is too prevalent and expensive to allow one to comfortably
use this jurisdiction for preservation of assets. The legal expenses of
defending the asset protection structure can wipe out the assets.
Next problem is government confiscation of funds. Usually this is temporary
pending some court date but could be permanent in theory and/or practice. In the
USA some government agencies can confiscate funds without taking you to court,
thus no trial, no being judged guilty by a court of your peers, no due process,
no trial by jury etc. There are other government agencies that need to get a
court order to confiscate your funds and other assets but the courts tend to
listen hard to these agencies and usually give them what they want which is
going to be your assets. There are no really anonymous corporations in the USA.
There is no bank secrecy or privacy at all. There is really no secure way to
protect your assets from confiscation. Sure you might be able to go to court
later on after the confiscation and convince a judge to return all or some of
your assets but with what funds are you going to pay for your legal defense. Now
you have to convince a lawyer to take your case onhoping he can get the judge to
allow your money to be used to pay for your legal defense. These government
agencies don’t even want you to be able to pay for your defense. They will argue
that they are so sure of winning it is a waste of money to let you use the funds
to pay for a high powered law firm. How can there be asset protection in this
environment?
Let me explain what an Ex Parte proceeding is. Let us assume you feel you have a
good case in a court of law against a person or corporation. You hire a
reputable law firm and prepare a complaint with whatever evidence you may or may
not have. Next you motion the court for an Ex Parte hearing in the Judges
chambers in private before the other party even knows you are suing them. You
basically tell the Judge that you feel you have an excellent chance of winning
and you are most concerned that the defendant will attempt to flee with their
assets when the lawsuit commences. You then ask the court to freeze the bank
accounts, real estate and other property of the defendant so the defendant can
not flee with the assets. You of course post a bond to cover any damages in case
you lose. Now it is going to be an unlikely event that you lose since your
adversary now has all his money frozen so how is he or she going to pay for an
adequate legal defense. Essentially you are suffering as if you were bankrupt
all before you had your trial in court, and in this case even before you knew
anyone is suing you. If the defendant argues that he needs the money for defense
the plaintiff argues that it is going to be a waste of time and money to let the
defendant blow money that could go to them on a legal defense. So now the
defendant is essentially broke, how can he manage his business and retain
adequate legal counsel? Mind you all of this happened without the defendant ever
having a chance to defend himself in court. This is one tactic wealthy
corporations employ against small business people that get in their way. Don’t
let your lawyer tell you this is rarely done. It is a common procedure. Most of
the internet giants do this in their litigation, look up their court cases to
see it happening. Government regulatory agencies have a very similar way of
doing this in the court system as well. It operates slightly more openly but has
the same effect – frozen assets before you get your day in court.
Do you know what a John Doe lawsuit is? I will explain this unusual tool of
legal chicanery that as far as we know works in the USA. Let us say you are a
large billion dollar corporation and you feel you have been harmed in some way
but are not able to identify the party causing the injury. Say someone has been
violating copyright protected material of yours by distributing it. You file a
lawsuit in Federal Court against John Does 1-99 stating that you will identify
the actual defendants as their identities are uncovered in the course of
discovery. You send a clerk down to the courthouse and he has the court clerk
stamp the lawsuit and now this lawsuit is live. OK now you have the subpoena
power of the federal court at your disposal and there is no opposing counsel to
block your subpoenas and depositions. So you go about your merry way issuing
subpoenas for bank accounts, phone records, stock brokerage accounts, etc. all
very lawful USA subpoenas. You might even take a few depositions to get the
facts explained in more detail. The judge need not individually approve these
subpoenas for them to be valid. So basically you don't even need to sue a real
person or corporation to get to use the subpoena power of the US Federal Courts.
Remember the entity being served with the subpoena like the bank or stock broker
has no obligation to tell you the owner of the bank account that a subpoena was
served on them for your records and they could even be ordered to keep their
mouth shut so as to prevent flight with the assets. Another fine example of the
sheer lack of privacy in the USA whereby your bank records can be examined by a
stranger based on a lawsuit with nobody. If you haven't thought of it consider
what happens to your bank records after the law firm has them. Can they enter
them into the lawsuit and thus make them public or semi-public? Can they share
them with others? Could they even publish them on the internet? Good questions
to ask yourself now, not after something like this happens to you.
I know one can argue that their trust or corporation is not responsible for
personal debts and there are court cases to back this up, but then inquire as to
how much money it is going to cost you to defend the asset protection strategy
against aggressive collection lawyers who know just how to make it real
expensive for you so as to bring about a settlement. It is a legal jungle in the
USA and we can not any daylight in trying to protect assets in the USA.
Now we can talk about private detectives in America getting bank information,
credit card information, phone records etc. Go look at the ads on the internet
and call these private detectives up, they even take credit cards. We can also
go on to discuss identity theft from security violations concerning bank
accounts, credit cards, public records (Panama has no credit bureaus so identity
theft is of course not something frequently seen). If you vest your Panama real
estate in the name of an anonymous bearer share corporation how could that
possibly help someone do an identity theft on you? If your bank accounts were
covered by bank secrecy laws wouldn't that help insulate you from identity
theft? Panama is a much safer place legally.
In Panama lawyer games like those described above do not exist. Corporate and
foundation assets belong to the corporation or foundation. Tagging on personal
debts is extremely difficult to prove and there are tight statues of limitation
concerning such fraudulent conveyances to defraud creditors ( three years). USA
lawyers can not practice in Panama, they need to retain a Panama lawyer if they
ever wanted to do anything in Panama. Government agencies from foreign countries
have no levy, attachment or confiscatory powers in Panama. You and your assets
are much safer in Panama.
This article was
posted on November 20, 2006
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