Asset Tracing: Building a Financial Roadmap to Resolution

Often the goal of litigation work is to expose hidden truths, to find the man behind the curtain and uncover their secrets. However, you may be working from limited records or with a volume of data that seems insurmountable. A financial consultant can help organize these “bricks” of information, paving a coherent “yellow brick road” that leads your case to resolution: the Emerald City and home to Kansas. 

From Kansas to Oz: Tracing Assets at Every Stage

Asset tracing has many different applications depending on the current state of your case. You may have just received a tornado warning indicating potential problems for your client, whether Plaintiff or Defendant. In a pre-litigation state, you may only have the records for a single bank or a limited number of accounts. A financial consultant can evaluate these records and give a preliminary picture of financial activity. This insight can help identify potential claims, assess exposure, or shape legal strategies by evaluating what your client could have known or been expected to know. Your financial consultant can also give you an idea of where there may be gaps in your data and help identify additional records to request or next steps for a complete financial picture. 

If your house has already been swept up in the litigation whirlwind, and you are working your way through mediation in hopes of a safe landing, an asset tracing consultant can give you a clear picture of the circumstances in the case to help get to a quicker resolution.

For example, the Plaintiff might allege that the Defendant misappropriated funds for personal gain, and an initial glance at the records might show the following circumstances supporting this claim:

However, a full asset tracing of the involved accounts might reveal the actual transaction flow provided no gain to the Defendant, as the full amount was returned to the alleged victim’s account.

The results of the full asset tracing in this example are much different than the alleged fault in the case and could significantly impact strategy. This might cause a prospective Plaintiff to choose to focus on other types of misconduct or give the Defendant more leverage in a mediation. It could also open a new line of inquiry as to the relationship of the third party to the victim and the characterization of other transactions in the accounts.

Brick by Brick: Mapping Out a Strong Case

If you are preparing for trial in front of a “great and powerful” judge, asset tracing can help ensure your yellow brick road rests on solid ground. Involving a financial expert or consultant early in the case lets you acquire any missing bricks before discovery closes.

A financial consultant can also produce summaries and visuals to help in understanding the data and storytelling. One effective tool is a relationship map, which shows how all the parties, outside parties, financial institutions, and potential shell companies in the litigation are connected.

In the example above, money is traced from the Plaintiff to a company owned by the alleged perpetrator. The perpetrator’s company exchanges the funds with another company and the perpetrator’s personal bank accounts, which are then used at casinos and to purchase items such as cars and jewelry. The interaction with an additional company and the owner of that company would likely be cause for further investigation into the relationship and interactions between parties.

Making It Home With the Truth

After you have clicked your ruby slippers three times and a settlement has been reached or a judgment has been rendered, there may be additional steps to complete your journey and ensure the funds are paid. Your financial consultant can help reveal undisclosed assets or other financial institutions where funds may still be hidden.

A detailed transaction analysis could reveal large cash transactions used to purchase physical assets that were not made available for judgement, or property taxes paid on undisclosed properties. Public records searches could also reveal additional companies which may hold value. In Figure 3 above, this might involve investigating any benefits received by the third party (orange) involved in the scheme.

Conclusion

Next time you encounter a financial situation that seems to have been crafted by a financial wizard, a financial consultant can help remove the emerald-colored glasses and discover the truth of the matter. Using asset tracing, they can help unravel mysteries, discover other paths to investigate, and put together compelling visuals to help clarify your case for a mediator, judge, or jury—ultimately leading your case home to resolution.

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