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Five Tricks to Finding and Executing on Hidden Assets
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Five Tricks to Finding and Executing on Hidden Assets

July 1, 2013 Professional Services Industry Legal Blog

Reading Time: 10 minutes

So you finally, after months or years of litigation, obtained a massive judgment for your client.  You sent written discovery, compelled return of the fact information sheet and even deposed the defendant.  After all that hard work, it looks like you have come up with nothing to collect upon.  But wait!  Sometimes items you believe are not collectable are gems hiding in plain sight or items that logically should be there appear to be missing.  Utilize these five tips when searching for assets and you may stumble upon something you would have previously overlooked.

1. Start by asking the right questions and looking in the right places.  It is very important to broaden your search efforts to encompass every possible option for locating assets, remembering the cost involved in your efforts.  From search engines to asset reports to private investigators, making the most of utilizing the tools you already have is a top priority.  Review the following list for some options in performing asset searches.

a. Asset Reports:  The very first step is to use an asset locator search to get a listing of everything that is recorded in a public records database.  Such programs include LexisNexis and Accurint.  These types of reports will give you a general overview of items such as real property, motor vehicles and even insight into sports equipment that were previously or are currently owned by the defendant.  This is a great starting point for finding simple assets or information about the person that may lead to additional assets.

b. Search Engine Searches:  Doing something as simple as performing a Google search of a defendant’s name may bring up a myriad of usable information.  Generalized searches can lead to articles about recently acquired assets, funding opportunities or employment information not previously acquired.  For example, in a recent domestication action I was able to locate a web article about the defendant written by a company that had just agreed to provide a line of credit to the defendant to the tune of over $1 million.  Had I not taken five seconds to type the defendant’s name into a search engine, I may never have found out about the funding.  Do not underestimate the value of search engine results.

c. Private Investigators:  This option should not be utilized in every case, as the cost may outweigh the anticipated reward.  However, in the case of a large judgment after costly litigation, hiring an investigator to locate assets tucked away by a slick defendant may be necessary and just the trick.  Investigators have access to private or secured systems that provide information not otherwise obtainable, such as bank accounts and investments located outside the United States.

d. Depositions in Aid of Execution:  The easiest way to get all the information you seek in one sitting is to schedule a deposition in aid of execution of the defendant.  If the defendant is forthcoming, all the information you need can be provided in a neat and tidy package in one afternoon, at minimal expense to your client.  Check out my Blog article on preparing for and conducting a deposition in aid of execution for additional information on the subject.

2. Use social media sites to your advantage.  In this new age of people living online and sharing their entire lives with the internet, finding assets may be easier than you think.  For instance, pictures posted by a defendant may show specific assets in the background.  Or postings will talk about the defendant’s new boat or trip to Cancun or the amazing birthday gift received from a family member.  Sites like Facebook and Pinterest are covered in photographs revealing the inner-most details of people’s lives.  Taking a stroll through those pictures could be to your advantage, as mundane as looking at 200 photos of someone’s pet turtle and dinner entrée’s for the week may be.

These sites may also get you in touch with other individuals close to the defendant that could provide some useful information.  LinkedIn is a professional networking site that can set you up with an entire network of businesses and individuals affiliated with the defendant.  Just be advised when collecting on a consumer debt to remember the regulations set forth in the Fair Debt Collection Practices Act.

3. Create links between the information you have and information that is sought.  So once you have completed your asset searches and deposed the defendant, what do you do with all that information?  Sometimes at first glance there does not appear to be any useful information or collectable assets.  However, once you start connecting the dots, reading between the lines and putting the puzzle pieces together there may be something to all that jumbled information.

In one situation, a client of our firm was seeking collection on a judgment that the client had previously been told was uncollectable by another firm.  My first step was to perform an asset search.  Having no bank information and no deposition testimony because the defendant failed to appear at a previously scheduled deposition in aid of execution, I had to use a little creative thinking to piece together where assets may be hiding.  A search of the Florida Secured Transaction Registry found one UCC-1 lien filed against the defendant.  The lien was filed by a community bank against the assets of the business as security for a loan.  Since the defendant was a small business and the lien was filed by a small community bank, a quick search of the bank’s location led me to find that it was located only nine miles down the road from the defendant.  Putting two and two together, I garnished the bank and found an account there.  As of today, that client received the total amount of the judgment, including costs and attorneys’ fees, back from the defendant and the matter is closed.  Taking the time to connect the lien with the bank’s proximity to the debtor made a previously uncollectable judgment collectable.

Sometimes you need to step back from looking at each individual piece of information and look at the big picture.  Where is the defendant located?  What does he/she/it do?  For example, an individual with a sport fishing license must have at least one fishing pole, right?  A person with a hunting license likely owns a rifle or bow, correct?  Otherwise, why would you have the license if you had no ability to use it?  Taking each piece of information, thinking logically about what it must mean to have that item or operate that kind of business, will lead you down the path to additional assets.  You just need to step outside the traditional collection box to see where alternative paths may lead.

4. Focus on what may be missing, not just what you find.  Sometimes finding assets is as simple as focusing on the black hole.  By black hole, I mean the items that logically should be there, but somehow are not.  For instance, numerous bank account statements are produced by the defendant in response to a subpoena duces tecum.  Upon review of the statements, you find that the defendant spends approximately $50 per week at the local Texaco station.  Based on the weekly or so transactions, and the amount of money spent, it is likely that the funds are being used to pay for gasoline to supply a motor vehicle.  However, your asset searches did not list any vehicles.  Does that make sense?  Buying gas every week, but you do not have a vehicle?  The explanation may be as simple as the vehicle is titled in a spouse or other family member’s name.  But what if it isn’t?  What if the gasoline is powering an unregistered vehicle, or lawn or farm equipment that does not need to be registered, or something else?

You instincts tell you something is missing; you just do not know what it is yet.  That is the black hole.  That feeling that you are missing something, but you cannot quite put your finger on what or where it is.  Often times executing on a judgment means making a list of every asset, determining whether it is collectable and then executing or giving up.  If you step back, look at the entire situation as a whole instead of just a list of subparts, you may start to see the gaps, or black holes.  Filling in the holes means collection opportunities you may have missed while reading the lines instead of what was in between them.

5. Push hard against locatable assets and “hidden” ones may suddenly appear.  It may sound incredible, but sometimes attempting to collect on the difficult or potentially uncollectable items will cause the most magical of outcomes:  the appearance of items out of nowhere.  Let me explain in more detail by using a recent example.  A client came in with a new judgment that appeared to be uncollectable.  The defendants had few assets, were elderly and provided no collectable information at a deposition in aid of execution.  An extensive search found a parcel of real property that appeared to be unencumbered.  The use of the property was unknown and the levy process was more arduous than a simple garnishment action.  Further, there was a dispute over whether the property was co-owned with a family member of one of the defendants, which would require further litigation and partition of the property at sale.  However, as this was the only viable method of recovery, the paperwork was started and numerous telephone calls back and forth between parties ensued.  Then one day, out of the blue as if magic was involved, I get a telephone call that the property was very dear to the defendants and they had just enough, of course, money in a retirement account to the pay the judgment balance in full with all fees and costs.  Interesting how this information never came to light before, in the deposition or all the previous conversations.  But right when the property was about to be sold…alakazam!  Money appeared as if from nowhere and satisfied the entire judgment.

The world works in mysterious ways, right?  Well, recovering an outstanding debt can be just as mysterious, maybe even downright mystifying.  But every now and then, when you take a risk and do not back down, you too may see the magic in the world.

The most important tip I can provide is to not give up if you have not yet utilized all of the above techniques.  It is essential to weigh the costs involved with collection activity against the balance of the judgment and the likelihood of success, but do not quit just because the first search revealed nothing.  Take the time to check out alternative sources of information, read between the lines of what you find and push a little if necessary to get the information you need.  You never know what might happen.

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