How to Prove Illicit Payments in Cash

Look for significant, excessive or unaccounted for cash generated by the payer

The payer might simply withdraw cash, or cash checks that appear to be payable to others.  Cashed checks can be identified by “cash codes” stamped on the front of the check. The codes vary by bank

As noted above, a small business owner might inflate his draw and then pay cash from his personal accounts, or inflate payments to legitimate suppliers, who in turn pay the excess amounts to the recipient in cash, and so on.  Unusual cash disbursements on the books of the payer, without appropriate documentation, can indicate illicit transactions, particularly if the disbursements are tied to other evidence of illegal payments.

Look for invoices from suppliers or third parties that do not appear to relate to legitimate services, or for payments to fictitious suppliers, vendors or consultants

The owner of the supplier or other party, real or fictitious, might cash the payments to it and give the cash to the recipient or return it to the payer for payment.

Look for payments of questionable expenses or salary payments to ghost employees

The bribe payer can generate cash by over-invoicing for legitimate project expenses, or billing for fictitious expenses, such as unused travel or lodging, IT equipment or office expenses, and converting the amounts received to cash.

Match withdrawals or cash payments by the payer to cash transactions by the suspect recipient

Look for cash deposits or expenditures, visits to safe deposit boxes, the purchase of traveler’s checks or cashier’s checks, Fed Ex and other private mail deliveries, etc. at about the time of the cash disbursements.

Interview the payer

Ask about the date, amount, purpose and source of all cash transactions and how they were recorded for accounting and tax purposes.  Request the documentation.  Look for discrepancies.  It will help the case if the payer can’t or won’t explain the transactions, or if they are contradicted by other evidence.

 

Proof of payments in cash from the point of receipt 

 

Circumstantial proof of receipt of cash 

This method is most effective if used to corroborate the testimony of an inside witness (see Step Eight for advice on how to turn an insider).

Look for significant cash transactions involving the suspect recipient at or about the time of suspicious cash payments or withdrawals: did he or she spend or deposit large amounts, or use cash to purchase traveler’s checks, money orders or cashier’s checks, or visit safe deposit boxes?   Also determine if the subject spent cash in greater amounts than he had available from disclosed sources, such as bank cash withdrawals.

Use of cash (or hidden accounts) can be discovered by preparing a spreadsheet of the suspect recipient’s checks and credit card expenses over a period of time.  Note gaps in payments for recurring expenses, such as for food or gas, utility expenses, mortgage or loan payments.

Obtain records of significant cash deposits or transactions

Law enforcement agencies can access cash transaction and other reports, including those filed by banks, businesses, casinos, foreign travelers and others.  Suspicious Activity Reports [SARs] also might have useful information regarding cash transactions.  See the complete list of such forms under “Sources of information for the financial profile; from the subject,” above.

Interview the subject

An interview of the suspected recipient is necessary if you intend to prove circumstantially that he received illegal cash.

Ask about the source, amount, purpose, and date of receipt of all cash in his possession, and if the cash was recorded or reported for tax purposes.  Request to see the cash, copies of the bills, the records of receipt and tax returns.  Note discrepancies.  False answers might be admissible to show guilty knowledge and intent.

A typical explanation for the possession of large amounts of cash is that the subject hoarded cash for a lengthy period of time or received it from a relative.  This may be rebutted if copies of the currency spent by the subject are available by showing from the serial numbers of large bills [which can be used to establish the date of issue] that they had not been issued when the subject said he received them.

Claims of a cash hoard also can be rebutted by showing that the subject lived penuriously during the period he claimed to have the cash, incurred substantial debts, used high interest credit cards, failed to pay bills, etc.  Claims that the cash was received from family members can be rebutted by showing that their financial circumstances would not permit such gifts or loans.

Turn an inside witness, do a “sting” or surveillance

Payments in cash might require the cooperation of an inside witness (see Step Eight), a “sting” operation or surveillance.