The following is a guest post from Brian Mahany, an attorney and principal in Mahany & Ertl, LLC, a boutique law firm concentrating in fraud litigation, asset recovery and tax matters. I’m happy to post it here both because it provides a cautionary tale about what can happen when asset protection planning is done too late, and also because of Brian’s unabashed flattery regarding my blog in his opening paragraph. At any rate, Brian’s post follows:
We are big fans of Jeff Vandrew’s blog. His articles on the Uniform Fraudulent Conveyance laws are right on the money. We echo what Jeff has said many times before, the longer you wait to get asset protection help, the less options you have. A recent court case from Illinois shows just how true that advice is.
Before I begin the story, some brief background is necessary. We are an asset recovery firm. Our work is concentrated on unwinding fraudulent transfers. Too often the work is fairly easy because the debtor simply waited too long before seeking asset protection help.
The old adage that “An ounce of prevention is worth a pound of cure” is certainly true in the asset protection field. Fortunately, most people wait too long before they consult with an asset protection lawyer. Instead of engaging in risk management they find themselves in crisis management. Transferring assets after you are in trouble often is ineffective. Now, we learn that one court says it could land you in jail.
In October, the court indicted Peter Rogan, former CEO of a private Chicago hospital. Prior to the indictment, both the U.S. government and a local bank successfully sued Rogan for millions after the collapse of the hospital.
The story might have ended there until the government learned that Rogan formed a constellation of foreign corporations and trusts to conceal his assets. The moves were made after Rogan and the hospital were in trouble but before he was sued. They say he also lied to creditors in an effort to make it appear that he had little control over the foreign trust assets.
Although Rogan may have done many other illegal things, he is charged with felony conspiracy to obstruct justice.
Creating trusts to protect one’s assets is not illegal. Lying to creditors and playing hide and seek with assets after the government has obtained a $64 million judgment is not a smart strategy. Prosecutors say that cumulative effect of Rogan’s lies and complex scheme to conceal assets crossed the line from legitimate asset protection to criminal obstruction of justice.
His lawyer was indicted too.
The purpose of this post isn’t to suggest that post lawsuit or post judgment asset protection is illegal. It is much more difficult, however, and can often be unwound.
The lesson here? If you are serious about protecting your hard earned wealth, spend a little on prevention and consult with an asset protection lawyer as soon as possible.
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