For those creditors who have been in the unfortunate position of having a debtor suddenly disappear from the scene, an NACM audio teleconference on May 9, 2007 offered advice on how to relocate the creditor and his or her assets. The teleconference entitled, "Tips for Tracking down Deadbeats," was presented by Bruce Dubinsky, president of Dubinsky & Company, P.C., a nationally recognized consulting firm located in Bethesda, MD that specializes in providing expert witness and forensic accounting services. Dubinsky, a CPA and certified fraud examiner, has been involved in helping to locate assets for creditors for 25 years.
Trying to find debtors, and the businesses they control, after they have quietly slipped out of town to leave behind a pile of debts requires a methodical approach to searching for and finding them. Once debtors are found, the next step is to find assets they may have that can be used to satisfy the debts they owe to creditors. The creditor also must determine where in line he or she is in relation to other creditors who have a claim on any assets found. The best approach to take in such a search is not readily available in "how to" guides. "There is no one book or manual in how to track down assets," Dubinsky said. However, he pointed out that the Internet has made searching much more convenient. "You can easily do it sitting at your own desktop in your own office."
Debtors sometimes will close down a business, move to a new location and open up under another name, confounding creditors. "You can move the bricks and sticks and the next day you’re up and running with a new phone number and letterhead," Dubinsky said. Before deciding to dedicate the time and manpower or cost of hiring an outside firm to track down debtors, Dubinsky recommended a cost-benefit analysis be conducted first. If the debts owed aren’t large enough to justify the commitment of time and resources to try to get paid, it may be better not to pursue it. "If it’s a $3,000 debt, it may not be worth it."
"What clues are available that are going to lead you to track down the deadbeat?" Dubinsky asked rhetorically. He advised one the first places to start would be the credit application and credit file. He suggested creating a spreadsheet listing that the clues that are revealed during the search to find the debtor, such as names and addresses of owners and co-owners of businesses, banks where accounts and loans are held and any other pertinent information. Some of the found assets that may be used to pay debts include tangible personal property, copyrights, patents, royalty agreements, promissory notes and accounts receivable. Personal financial statements may offer information and clues on how to find a debtor, a spouse’s name, for example. He also said debtors will often use the names of their spouses or something of significance in their lives as acronyms for their new businesses. For example, a wife named Helen J. Smith may be the inspiration for a new business called HJS, Inc. "Fraudsters aren’t very creative." A tax return can provide valuable clues such as a spouse’s employer. Also, invoices may provide clues to the whereabouts of a missing debtor, such as delivery or warehouse addresses.
One of Dubinsky’s tips was to send mail with "address correction requested," which might provide a new address for the debtor. Or, contact the post office and ask if that person or business address has a new forwarding address. Searching public records can be quite easy over the Internet. Dubinsky pointed out that now about 50% of public records may now be accessed online. Hovever, a personal visit to various town, city and county offices may be required to obtain some information. "The offline public record searching is still important." He noted that there are about 43,000 public jurisdictions that store records in the United States.
Dubinsky offered teleconference attendees an array of Internet search engines and search sites that may be used to help track down deadbeats and their assets. He also noted that there are various ways debtors can hide the assets they have. Such tactics include putting assets into a spouse’s name and hiding assets in home mortgages, life insurance policies, traveler’s checks, overpayments to the IRS and offshore bank accounts. For offshore bank accounts, Dubinsky said, "Don’t waste too much time with locating overseas bank accounts. Even the FBI has a hard time getting that." Finding available assets of debtors is only half the battle. "In most cases, you’re going to have to file a lawsuit to get your money," he said. "You really want to work with a well-seasoned collections attorney."
Source: Tom Diana, NACM staff writer