Cognitive dissonance theory and the recovery of stolen assets.
The LUBRINCO Group has been quite successful in aiding in the location and recovery of lost and stolen assets, and, in the average year, we participate in the location and recovery of assets in the $600,000,000 – $800,000,000 range. Finding these assets is time-consuming work, and there are a number of things beyond the actual circumstances surrounding the loss that can happen to make the process more difficult.
The major impediment to the recovery of stolen and hidden assets is best explained through cognitive dissonance theory, which says that when there is a conflict, or dissonance, between belief and action, your beliefs will change. The classic example of cognitive dissonance theory at work is generally to be found in abusive relationships. To the outsider, it would seem reasonable that, when someone is abusing you, you would leave. In general, however, abused partners adjust their belief system and tell themselves that they are staying because they love the abuser so much: After all, if they didn’t love the abuser so much they would not put up with the abuse….
People who have had money stolen often develop this same kind of deep, near-religious belief that the money was legitimately lost, rather than having been stolen: These people wouldn’t steal from me!
Now, in a successful recovery, you generally figure out where the assets have been hidden, freeze the assets, and convince the courts to give the money back to the good guys. Obviously, the longer it takes to recognize that you have been robbed, rather than being the victim of the economy, or the longer it takes to decide your husband really should have more money than that, the more work it takes to trace the assets as they bounce around the world.
Because of this, whenever large amounts of money or other assets disappear, or if you suspect they might disappear, it is best not to wait too long before you start looking. And it is generally a good idea not to have the looking done by people that may be involved in the disappearance.
Once it is realized that there might be a problem with hidden assets (on rare occasions the money has been legitimately lost), you need to fund the recovery and begin the search. In divorces this can be a problem, because divorce attorneys sometimes don’t give much thought to nailing down the assets, and by the time they think of it, they have spent so much of the wife’s money that there is nothing left to invest in identifying the husband’s actual assets. Thus, in a divorce, it is best to start the identification process early, rather than later. Unfortunately, experience shows that in many divorce cases the spouse hiring you will fight you tooth and nail in the discovery process for which they have hired you.
When assets are simply taken, the victims can be left without sufficient remaining funds to attempt recovery. In one unfortunate case, the estate of a fairly wealthy man was put into the care of his attorneys, who apparently took as their own assets amounting to roughly three quarters of a billion dollars. Because even half a billion dollars buys you a lot of influence (not to mention death threats, homicide attempts, and general threats), the children were left with neither appropriate counsel nor the ability – or will – to recover.
When we are brought into these cases we calculate that it there is a 50/50 chance that the potential client will go forward with the case. If they are committed to recovering the assets, we put them together with an appropriate attorney (there is generally only a handful of appropriate attorneys, depending on where the cases were domiciled), and hopefully locate, freeze, and recover the assets.
In many cases, however, cognitive dissonance theory kicks in, and the potential client will decide either to walk away from the money, or will turn to the people who got them in trouble to help get them out of it. This is known in the trade as a reload: You shoot them once, then reload and shoot them again. This can happen with even sophisticated investors, and with losses in the hundreds of millions.