The Strategic Advantage of Discovery Target Lists

When working with litigation or judgment enforcement counsel in the context of providing asset search work-product, it is essential to add value for counsel and their client. One effective way to do this is by providing a thorough discovery target list.

The discovery target list flows from the assets and asset leads found during the search process. Rather than simply reporting on the assets found, utilizing a discovery target list goes a step further, providing counsel with a road map for enforcement and collections.

The Anatomy of Discovery Target List

A discovery target list includes:

• The name of the target: Person or entity to be subpoenaed or deposed
• Contact information: Essential details for reaching out
• Reason for inclusion: Why they are considered an asset lead
• Suggested scope: What to request in terms of assets

In the case of subpoenas, the law firm issuing the subpoenas can then expand the document to use it as a subpoena tracker, adding categories such as dates when the subpoenas were issued, followed up on and when documents were received and reviewed.

Case Studies: From Initial Investigations to Comprehensive Recoveries

Uncovering Hidden Funds in Receivership Cases

In several receivership cases, we were tasked with finding and securing assets for the receivership estate. In some instances, our asset investigation located escrow agents for companies that had raised funds through investment banks. We included the escrow agents in our discovery target list and subpoenas and demand letters sent to those escrow agents revealed that funds were still available, left over after the company in receivership had essentially disappeared. These funds were ultimately transferred into the receivership estate.

Identifying Fraudulent Transfers in Hedge Fund Litigation

In a litigation matter with a judgment award, we conducted an asset investigation into the adverse party, which was a hedge fund. We identified the hedge fund’s main banking relationships and provided them to counsel in a discovery target list rather than a static asset research report that only includes the current assets. Counsel subpoenaed the bank statements, and a subsequent review and analysis revealed several large transfers from the hedge fund’s main onshore account to the hedge fund manager during the litigation. Counsel used this information as a basis to bring a fraudulent conveyance claim.

Asset Discovery Through CHIPS and Fedwire Subpoenas

The Federal Reserve Banks own and operate the Fedwire Funds Service, which serves as the primary domestic electronic funds transfer system in the United States. Fedwire is generally used to make large-value, time-critical payments, and obtaining Fedwire records can lead to discovering a target’s banking relationships that were not already known.

Like Fedwire, the Clearing House Interbank Payments System (CHIPS) handles both the transmission of funds transfer instruction messages among financial institutions and the settlement of the payment between the institutions. CHIPS is the United States’ main electronic funds-transfer system for processing international U.S. dollar funds transfers made among international banks. Because CHIPS handles many U.S. dollar-based funds transfers moving between countries around the world, subpoenaing records from CHIPS can lead to previously unknown international banking leads.

By leveraging the strategic use of a discovery target list, legal teams can significantly enhance asset recovery efforts and streamline the enforcement process, turning challenges into success stories. Contact us to learn how Weaver can support your litigation and judgment enforcement through effective asset search efforts.

©2024