As high asset divorce attorneys, we regularly field questions about finding hidden assets in an Illinois divorce. When it comes to the breakup of high assets or high net worth couples, this is almost always a concern. The divorce process is supposed to entail full disclosure of assets by each party. In high asset divorces, it seems that one party often engages in deceptive practices, like hiding their assets, all in an attempt to avoid sharing parts of the marital estate with their partner. A forgotten asset is one thing, but when there is a deliberate attempt to avoid disclosure, what can a person do to guarantee that all the assets are disclosed?
Here are the top seven questions answered about finding hidden assets in an Illinois divorce: 1. Should I waive the discovery process in my divorce? First, don’t tell your attorney to waive the discovery process. People are in such a hurry and are so impatient that they often will skip the most important part of the case to get it over with NOW! We understand that the discovery part of the case can take time, and some people even describe it as painful, but it is a necessity. Each party has to accumulate three years’ worth of every kind of paper that has entered their home and it is time-consuming. People are already too busy, and now the thought of trudging up three years’ worth of bank statements, credit card statements, and other financial documents is just is too much. But when you waive discovery, you risk missing some vital piece of information. First, if your spouse “forgets” about the asset, the first inquiry from the court years after your divorce will about the formal discovery answers. Did your spouse lie on the formal answers? If so, you could potentially have a good case to re-open the judgment and re-allocate that asset. But what if you didn’t ask for formal discovery? The court may refuse your request to divide that asset because you could have discovered it and you did not. Why take the chance? 2. How do I find hidden assets during my divorce? A determination has to be made if you’ll use a forensic accountant or not. An expert in this field may be costly, but a forensic accountant who knows what she is doing will find the answers you need quickly. Your divorce attorney will work with many professionals whose knowledge can be utilized in such a situation. The expert will guide the discovery process by informing your lawyer as to what documents need to be gathered and what types of business reports will be the most useful. 3. Is it possible marital assets are being hidden inside a business? Assets are easily manipulated, especially in a high asset divorce. Business owners are always suspect since assets and/or income are easily hidden in a person’s business. Businesses that were once lucrative, suddenly start losing revenue during the divorce. There have been cases I’ve handled where I’ve asked the court to intervene and appoint a receiver to manage the business, just to make sure the accounting and money management were being done correctly. Business Expenses People also write off a lot of their personal expenses and call them business expenses, which lowers the revenue stream. Business owners will have payroll records for people that do not exist or might be paying their girlfriend an exorbitant amount of money for menial tasks. Businesses are a gold mine for questionable practices. Shielding Income For senior-level executives at a company, there are many ways to shield income. It is possible to carry over income into the next year or put the money back into the business for distribution later. They can delay a bonus or a raise. Hiding Assets with Family and Friends Often times friends and family help out with hiding assets or “buying” an asset for a much lower price than the asset was worth. After the divorce, the asset is bought back and money is essentially hidden from the unsuspecting spouse. When your spouse is invested in the process of hiding their assets, you will need professional help to either find it or prove to the court what has happened. An expert is likely needed to explain the scheme to the court so that the asset can be put back into the marital estate. 4. What will the Court do if I’ve conducted formal discovery and I later find out about a hidden asset? Google all the stories about the man who won the lottery, didn’t tell his wife, but then divorced her, and how the lie unraveled. It is really interesting what people will try to get away with. In most cases that I’ve handled where an asset wasn’t disclosed, the court will divide the asset between the parties. The person responsible for hiding the assets can also be ordered to pay attorney’s fees and other expenses associated with finding the asset. In settlement agreements, it is not uncommon for a provision to be inserted into the agreement that addresses hidden assets. Most of the time, the person who hid the asset would get less than half of its value, with the lion’s share going to the injured spouse. But that only happens when you actually find it later. 5. What are the penalties for hiding assets in a divorce? If a spouse is caught hiding assets, the court may require them to pay the spouse’s share of the assets to them. For example, if $10,000 in marital assets were hidden, the judge may order the spouse who hid the assets to pay $7,000 to the other spouse. Illinois is an “equitable state” and hiding an asset might just make the judge think that equitable means your spouse gets most of the hidden asset. 6. What if I know about the asset, but have trouble with the value? I see this problem all the time. Litigants are familiar with evaluating some assets, like their house, but are reluctant to hire other evaluators. People are used to having their houses appraised, but rarely want to spend the money to evaluate other things, like a gun collection or car collection. In one case, a rare bobblehead collection needed to be valued. The person collecting the sports car or the rare collection usually knows its value, but when it comes time to list the asset and its value on their financial disclosure, it is valued lower than it should be. I saw this once in a case with Precious Moments figures. The wife claimed they were worth about $20.00 apiece and anyone who sees them would likely agree. They are just a little statute of a girl or some other like-minded object, and my client (the husband) never paid attention to them. We’d almost agreed that their value was $20.00 apiece until someone else in my office pointed out that those could be worth close to a thousand bucks apiece. I couldn’t believe it, but it was true. One statute was valued at $750.00, and others were more. You should always have someone review a collection to value its worth, otherwise, you are leaving money on the table. 7. If I cannot afford an expert to find hidden assets in my divorce, what can I do? Even without an expert, it is possible to discover hidden assets in the divorce process. A careful review of the bank accounts is essential. If you aren’t the person in charge of paying the bills on a regular basis, you’ll want to look for money that should be deposited, and isn’t, and also for withdrawals of money, particularly cash. Bonus checks are easy to take and put into bank or investment accounts that you know nothing about. Make sure you send a subpoena to the employer to determine just how much money your spouse made. Review bank statements for large cash withdrawals or for expenditures you don’t recognize. It will get you started and you can determine if there is a problem with hidden assets or not. Review All Personal Tax Returns and Financial Accounts Review your tax returns critically. Although a lot can be done in cash, it is less utilized than ever before. Transactions leave a trace, but you need to know how to look for it. If your spouse purchased another home, one you didn’t know anything about, your tax return can reveal details about it. Same with investment accounts. Don’t let your spouse explain away the items you don’t understand. There is no shame in sitting down with your accountant and asking exactly what each line item means. You’ll need to learn about the IRA distributions, 1099’s and/or W-2s. There will be line items for bonds and CDs and even loans. Ask your accountant about monies that are carried over into the next year and how that impacts your bottom line. And if you are getting divorced in the middle of the year, or even the end of the year, make sure you know what deductions will be allowable to your spouse and how that will impact any refund. Review Business Tax Returns Business tax returns will detail how the gross income was reduced by expenses, and you’ll want to look at each and every one of them. Did your spouse write off a vacation as a business trip? What personal expenses are being paid by the business? All of these expenditures can add up, so it is important to review them. Issue Subpoenas Don’t be afraid to issue subpoenas. Don’t just ask for statements, but ask for the application. No one under-reports their income when they are asking for a loan on a home or their car. In fact, income can often be inflated to ensure that they qualify for the loan. Applications are great tools for cross-examination. In the subpoena, ask for all accounts in that person’s name. Oftentimes all accounts aren’t disclosed and the way you word your subpoena can impact what is received. Lastly, look for transfers between accounts. Make sure that you know all of the account numbers and questions any transaction going to an account when you don’t recognize the account number. Finding Hidden Assets Takes Time and Patience Searching for hidden assets can take a while. Make sure that you don’t rush the process and always conduct formal discovery. Even if you trust your spouse, going through formal discovery ensures you’ve uncovered everything. Your failure to do so during the divorce could preclude you from complaining about it later. If you are facing a divorce and concerned you are not fully aware of all financial matters in your marriage, it is important to get trusted legal advice. Contact Anderson & Boback to speak with an experienced divorce attorney regarding your situation and get answers to questions about finding hidden assets should you divorce. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/illinois-divorce/finding-hidden-assets-illinois-divorce/
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Dealing with hidden assets in a high-net-worth divorce is not an uncommon challenge. High net worth individuals often have multiple financial accounts, whether it be checking, savings, money market, investment or retirement accounts. Most people who have a lot of money and high net worth don’t simply have their money sitting in one pot – it is diversified. This can make tracking down all of someone’s assets very difficult in divorce, especially when they are less than forthcoming about what they own and have access to.
Finding Hidden Assets During the Divorce Process One of the common predicaments we see from clients is that they have no idea what their marriage’s financial picture looks like. How can someone enter into an agreement with another person awarding them assets if they don’t know what is in the marital pot? It is super important that the parties have full and fair disclosure of all assets and liabilities prior to settling their divorce case. And, for the spouse who is not privy to their marital finances, we have ways to ensure that they know what the “marital pot” contains, through the discovery process. Handling the Scheming Spouse When it comes to hiding assets, we have literally seen it all, from the spouse whose lifestyle is funded by their parents, to the spouse who deals in all cash, to the spouse who has all of their bank accounts held jointly with their parents. The truth of the matter is that these schemes are much more common than you’d think, especially when considerable wealth is involved. Having multiple places to stick assets away makes it even harder to track unless you are working with someone who knows where to look. Divorce Discovery to Find Hidden Assets When we run into a hidden asset situation such as those mentioned above, the first thing we do is issue discovery. We look at bank and financial records going back, on average, from three to five years, and sometimes longer. We may even skip the step of asking the spouse to produce the records and go straight to subpoenas if we know where the person banks/invests and we think they are likely to try and deceive our attempts at discovery. We will, in those scenarios, get the records straight from the source. HEAD STRAIGHT TO THE SOURCE WITH SUBPOENAS We will subpoena employers, investors, board members, banks, credit card companies, investment companies, retirement plans, the whole nine yards, to make sure we have a complete financial picture of the marriage. We can even submit a request to the IRS for Income Tax Transcripts if someone refuses to give us their tax returns, or if the tax returns they have tendered do not seem accurate, to verify what they submitted to the IRS (with their signature, which we can ask the Court to order). GO OVER FINANCIAL RECORDS WITH A FINE-TOOTH COMB Then, once we have the documentation, the next step is to go through every financial record with a fine-tooth comb. We look for large transactions, money going into and out of accounts we do not recognize, monies transferred to and from individuals, and anything else that is not along the regular course of day-to-day expenses. We also have our clients reviewing these documents in conjunction with us, as they are more likely to recognize if there was, say, a trip taken by a significant other they were not on, or jewelry purchased that they did not receive. Believe me, we’ve seen it all. SUBPOENA ADDITIONAL ENTITIES TO REACH UNDISCLOSED ACCOUNTS At this point, we would then issue additional subpoenas to any entities we saw in the discovery we received to try and see if there are any undisclosed accounts. If there are in fact hidden accounts, the guilty party is likely to lose favor with the Judge, at a minimum.
Is Discovery Always Needed in High Asset Divorce? Sometimes high asset couples may not need to go through the discovery process. There are spouses that are completely forthcoming about what they own and where their accounts are, or both of the parties have full knowledge of all of their assets and financial situation. In that case, we can always settle a divorce with a proposal that is equitable to our client without discovery. As long as the client is certain he or she understands their marital estate’s assets and liabilities going through discovery, subpoenas, and the like, may be avoided. Often times, however, a high asset divorce require someone to investigate and discover where all of the money is, how much is there, and what the spouse is entitled to. If that is the case, we are well-versed in obtaining the documentation to ensure our clients receive the best settlement in their divorce. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/high-asset-divorce/hidden-assets-divorce-finding-money/ Divorce breeds distrust. In today’s technology-driven society, distrust leads to cyber-spying. No doubt, when you are going through your divorce, there is often a compulsion to see what your spouse is up to. Some want to know if there is cheating and others just want financial information. It is important to know exactly what you can and cannot do however to avoid criminal charges. Lawyer Turned Pinkerton Detective Just after I left the prosecutor’s office, I took a job with Pinkerton. Allan Pinkerton opened his first office in the 1850s and the company is still around today. I was charged with selling Pinkerton’s services to lawyers. I told lawyers about the surveillance Pinkerton could provide and how detective services would help lawyers in their jobs. In order to fully sell the service though, I had to know the service. And so I became a Pinkerton detective-if only for a short time. I got to protect the Weiner mobile from the PETA folks, I got to dumpster dive and send a 50-pound flowerpot to a guy on worker’s compensation who had a bad back. I got to sit in the van and watch the professionals take pictures of that same man with the bad back pick up the 50-pound flowerpot and put it on his porch. Stuff like that. It was fun and exciting and I almost thought detective work would be better than the law. Back before we had cell phones and computers, spying on someone was done the old-fashioned way-by following them around. Following people around wasn’t illegal, but now with the internet and ease in which you can spy, some people are crossing the line and their behavior is becoming illegal. Spying on Your Spouse in an Illinois Divorce When Illinois implemented no-fault divorce, the need to catch your spouse cheating was no longer important. No one cared anymore if your spouse was a cheater. Now we have irreconcilable differences. But the law change hasn’t changed the person who still wants to know if their spouse is cheating, or the spouse looking for some kind of bad act by the other parent. Listening Devices Used to Spy on the Other Parent More and more, I see parents installing some sort of listening device on their children to spy on the other parent. Initially, of course, the devices were supposed to be spying on the children and not the spouse, but it is just too easy and tempting. We now see parents putting listening devices in the child’s teddy bear or on their backpack. These types of devices listen in on everything that is going on in the other parent’s home. And it’s illegal. Not only won’t you be allowed to use the surveillance in court to your advantage, but you could also be placing yourself into a criminal courtroom. You are not allowed to record a person without their knowledge, and when you do, you won’t be able to use the evidence. Recording a Person in Illinois Without Their Knowledge is Illegal Illinois Supreme Court Rule 219(d) provides in pertinent part as follows: (d) Abuse of Discovery Procedures. The court may order that information obtained through abuse of discovery procedures be suppressed. If a party willfully obtains or attempts to obtain information by an improper discovery method, willfully obtains or attempts to obtain information to which that party is not entitled, or otherwise abuses these discovery rules, the court may enter any order provided for in paragraph (c) of this rule. And Illinois Supreme Court Rule 219(c) provides in pertinent part as follows: In lieu of or in addition to the foregoing, the court, upon motion or upon its own initiative, may impose upon the offending party or his or her attorney, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of reasonable expenses incurred as a result of the misconduct, including a reasonable attorney fee, and when the misconduct is willful, a monetary penalty… Cyber-Spying through Use of Shared Property This seems fairly straightforward until you look at parties’ shared property. When you both own the car and you both use the family computer, how does the court then treat spying? One more than one occasion, I’ve seen the courts allow the spying if the asset is shared. You have a right to put spyware on your own computer as well as your car-since it is yours. In divorce court, unless your computer belongs to your employer, anything you own could be fair game for spying. GPS TRACKING GPS tracking devices are easily placed on your car. They are so small; it is hard to find them. They could be in the back seat under the rug, in your glove compartment or in the wheel well. Checking for this type of device every day before you drive away would be nearly impossible. But if your car will be parked in your garage (and your spouse isn’t living with you), you might want to have a professional look for any type of device to make sure there is no spy device, and then keep your car in the garage and make sure your spouse has no access to your car. SPYWARE IN THE BEDROOM Our firm dealt with a case where the husband placed spyware in his wife’s bedroom. She never saw it there, but comments her husband would make to her about her private dealings in the bedroom led to her hiring an expert to look for such a device. Once found, the husband denied putting it there. But the tracking device generally has the name of the company it goes from and some sort of serial number associated with the device. A subpoena to the company revealed who purchased the device-of course the husband. You would be allowed to surveil your own home, so there isn’t any problem there, but once he moved out and he continued to surveil, then it becomes a problem. Spying on Your Spouse Can Lead to Criminal Charges An order of protection case, which can be civil in nature and not criminal, turned into a criminal case when the woman found a tracking device on her car after she’d obtained the order of protection. Many types of situations can lead to criminal charges when you spy on another person. If you are going through a divorce, you might want to have your devices checked for spyware. Shared Devices and Knowledge of Passwords If during the course of your marriage, if it was common to use your spouse’s phone, you likely knew the password to get into the phone. If you were given permission to access the phone at one time, and that permission was never revoked, technically it isn’t spying when you go into the phone to check for emails, texts, and photos were taken. IPHONES, IPADS, AND “APPLE SHARING” One of my favorite cases involved a couple that shared multiple devices and used the same Apple password. Have you ever looked at your iPad and discovered your texts and email are shared on both your iPhone on the iPad? Apparently, the husband in the case had forgotten this. When he moved out, he took his phone, but his wife kept the iPad. She didn’t notice it at first, but then later discovered there were text messages on her iPad. When she opened those texts, she was able to see in real-time, the texting her husband was doing with his girlfriend.
Text Messages From Shared Devices Can Be Evidence My client, to her credit, didn’t really care about the girlfriend since she needed him to move on, but the content of the texts was disturbing. Her husband was plotting with the girlfriend to set her up for criminal charges so he could take possession of their child. He described how he was going to plant drugs in her car and make sure that they were found by the police. The details of what he was going to do were fairly elaborate. My client didn’t want to involve the police, but we did go in to get an order of protection. On the stand, the husband denied that he was plotting anything against my client. When faced with his own text messages, he cried foul and wanted to keep the texts out of evidence. But the court ruled that it wasn’t spying since they’d both set up the devices to be linked together. The wife hadn’t put on any spyware or spied at all; all she did was read the texts on her I-pad. This type of thing happens more than you know.
Family Sharing Plans and Spouses on Shared Phone Bill With family sharing plans and multiple phone lines on a single phone account, it’s very common for couples to have a shared phone bill. But, people who are on the same phone bill also cannot expect privacy. A phone bill will list each call made and each text, along with the number called. It shows what day the call was made and at what time. Want to know who your spouse is texting at 3:00 a.m.? It’s on the bill.
Facebook – the Favorite Spy Tool Then, of course, my favorite spy tool is Facebook. You cannot imagine the posts people make there. And it isn’t really spying when you are posting sensitive information to the whole world. If you have a custody case going on and you have a drinking problem, it just isn’t smart to post pictures of yourself guzzling large beers in a drinking contest. True story! I still marvel at that one.
Phone Tracking Mobile Apps Don’t forget about trackers on your phone. “Find My Phone” and other Apps used to find your phone when it is lost is also able to show your spouse where you are in real-time. Make sure you remove all of those types of location tracking Apps from your phone when one of you moves out. Text Messages, Voicemails, and Emails Is there a problem using data received directly from your spouse? Like text messages and emails? Absolutely not. In fact in court, anything either of you say is called a “party admission” and can come into evidence. Voicemails are also fair game. So don’t get mad and leave a string of nasty voicemails on your ex’s phone. Remember Alec Baldwin and his custody battle with ex-wife Kim Bassinger? How stupid do you think he felt the day after he left that voicemail tirade his then 11-year old daughter?
Do You Think Your Spouse is Cyber-Spying on You? If you are involved in a divorce and you become aware that your spouse has looked through your computer, read or intercepted your e-mails or otherwise eavesdropped on your conversations, let your divorce attorney know right away. There are certain civil remedies to which you may be entitled, and your attorney can assist you in filing the appropriate petitions and motions to obtain such relief. Save any evidence you have of the eavesdropping or snooping (videos, witness statements, etc.) as these may be useful in a criminal investigation. Ensure your attorney knows what information you believe may have been compromised, as he or she can take measures to keep this information excluded from court hearings. Consult A Divorce Lawyer Before Snooping Spying can be a murky area and before you engage in it, you should consult with someone. You are allowed to have a friend sit right behind your spouse and his girlfriend at a restaurant to overhear what they say, (how can that be considered eavesdropping?!!) but recording that same conversation can be a problem. It is always better to talk to your family law attorney ahead of time. Before you snoop, make sure that your activity falls within the bounds of the law. It is a lot easier to guide you before you engage in an activity that could lead to the exclusion of the evidence you worked so hard to get. More importantly, your lawyer’s advice can also keep you out of criminal trouble. And by all means, if you don’t have an experienced family law attorney to consult with, be sure to get one. Going it alone can have devastating and lasting consequences. Contact Anderson & Boback to speak with one of our experienced lawyers to discuss your family law case and questions regarding evidence obtained through spying. THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/illinois-divorce/cyber-spying-spying-on-your-spouse/ |
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