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Find hidden assets, keep them all

It is possible that if a spouse in a divorce hides assets from the other spouse, the court can award 100% of the hidden marital assets to the damaged party. Rather than losing just 50% of the assets, the bad faith action of hiding the assets can cause the case to award all of the hidden assets to the other party.

In this case from California, a spouse hid over $1 million in funds from the divorce court. Rather than split this found money between the parties, the judge gave it all to the spouse who was honest in the divorce case.

“She failed to reveal that she had $1.3 million. The judge, according to the Los Angeles Times, ruled that she had acted out of fraud or malice. As a result, he awarded the ex-husband all of the money. California is a community property state. The ex-husband would have been awarded half if she had disclosed it. But because she attempted to hide the asset, the judge awarded the ex-husband every penny.”

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Why do ponzi schemes work?

You would think that by now, investors would have heard about enough ponzi schemes so that there would be no new victims of fraudsters who put together now scams. Nevertheless, even today ponzi schemes successfully steal millions from new victims who sustain tremendous financial losses. A sterotypical example is a recent case from Texas, where a scheme represented as an investment into mortgages, extracting $22 million in payments from thousands of victims.

The reason that these investment fraud schemes continue to work is because humans allow the appeal of excess returns to distract them from performing even the most basic due diligence. True to form, this scam offered 30% returns on investments. The other factor common in many ponzi schemes is “affinity” relationships. Many scams are executed within church congregations, ethnic groups, neighborhood communities, and employer workforces. This element of the scam replaces actual due diligence with a follow-the-crowd mentality.

The third element common in most ponzi schemes is excess material trappings. The scammers will arrange to have excessively luxury vehicles, access to aircraft and affluent homes, and join exclusive clubs. This adds an element of legitimacy to the fraudster.

True to form, the randomly chosen scam listed above had all three elements.

“…the Wammel Group, guaranteed a minimum 30% annual return and that many victims were family and friends. Investigators say the men spent investors’ money for lavish expenses including paying $18,000 a month to rent a house in Frisco, pricey cars, jewelry and private school tuition. Prosecutors say Wammel used investment funds to pay for expenses related to a Rolls-Royce, a Ferrari and a Range Rover.”

When you are presented with a potential investment with outsized returns, vouched for by a distant friend, by a salesperson driving a luxury car, run. Or if you prefer to just lose a little money instead of your life savings, have us run a background search on the operation.

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Thinking of divorcing? Do this first.

At some point in the divorce process there will be a settlement or division of assets. No commpropmatter how smoothly or cooperatively you think that will go as of now, there will be much more conflict regarding splitting of the marital property.

The actions you take prior to initiating the divorce process, or even discussing it, will ensure that you get what is rightfully yours. There are 6 steps to take before you make known your separation intentions.

  1. Identify known marital property
  2. Search for spouses hidden assets
  3. Document recent financial activity
  4. Make copies of tax returns and loan documents
  5. Run an asset search on yourself
  6. Apply for a joint loan

Even if you are not completely sure about going through with the divorce, taking these steps will make your position more secure whether you go ahead with separation action or not. In many cases simply taking action on these will help make the decision to divorce or not more clear.

Let’s take a look at each of these actions and the purposes of each of them. You can use our free worksheet template (download here) to help with the process.

Identification of marital property. 

Start by creating a list of property and assets which are associated with the relationship. Include items owned jointly, and assets owned by each of you individually. If you know the date of acquisition you can write that and an estimated value of the asset next to the listing, but initially just make sure every item you can think of is listed. Keep this list running for days or weeks, and you will remember more items to place on the list. If you know the source of the funds for how the asset was purchased, also enter that into the space provided. If there are payments required to maintain ownership of the asset, list those in the “support” section. Those payments could be loan payments, interest, taxes, insurance, HOA fees, maintenance, etc.

Once you have this step completed, you will have a good picture of what the total value of the marital estate might be, and have it itemized to know which assets have high carrying costs. This knowledge might prevent you from fighting to keep an asset which has great expense to maintain.

Search for spouses hidden assets.

This is an important step to perform well in advance of a divorce. It is easier and cheaper to discover assets of a party when you have cooperative access to that person. You have certain reasons for considering a divorce. It may be due to mistreatment, dishonesty, poor contribution to the marriage, or disrespect of your well being. Those red flag indicators are not only factors to suggest that the relationship is not in your best interest, but also that the person is withholding information about finances or concealing assets. A good asset search performed when the person is not on the defensive may have different results than one performed in the middle of a contentious divorce. By comparing the results of assets before and during a divorce, you will be able to prove that assets were moved and concealed once the action was filed.

Document recent financial activity.

Take a look at the events over the last 12 months and save documentation of any significant financial events in your life. If there were any major purchases, loans, sale of items, or even vacations make copies of receipts, applications, and agreements. The records can come in handy during the divorce. In addition, if you need them for any purpose after a separation is complete you will know that you have the records in your possession and will not need to chase them down from third parties, or your former spouse.

Make copies of tax returns and loan documents.

Regardless of whether the tax filings are joint or individual, gather up returns and schedules going back at least 3 years, 5 preferably. The same holds true for any open loans. What you will be looking for is any over payment of taxes or loan amounts which was done intentionally in order to create a credit which can be retrieved at a later date.

Run an asset search on yourself.

You want be aware of any assets which show in your name, so that you can be sure to be assetscomplete in your disclosure if your case goes to court. Even if you leave off a small asset accidentally, it can make it appear that you are acting in bad faith. You may also discover that your spouse had put assets into your name without your knowledge.

Apply for a joint loan.

Find a reason to create a substantial loan application. This can be for pre-approval on a new home, home equity line of credit on your current residence, or even a business loan. The purpose is not necessarily to go through with the financing and creating a debt, but to create a paper trail of signed application by your spouse to document their statement of income and assets. By having them put into writing a formal financial application, you can create a written record of what they are claiming to have and to earn. Along with the application you will obtain actual copies of recent pay stubs. This way you will have collected all of this information during a period of cooperation. Even if the divorce action does not initiate until a later date it is often interesting to compare what the other party claims during a divorce.

Always get good legal and accounting advice for any important process, and coordinate your efforts or professional investigation with any legal assistance you are working with.

dividepropAt the moment that the community property is divided up by the court, both you and your spouse will not each be getting new assets, you both will be looking at the process as losing the half that the other party is retaining. Those are assets, property, and items which you have developed an ownership attachment to over many years and will be clinging to both emotionally and legally. The actions you take today will make that event more secure and less stressful to you in that moment.  – Active Intel Investigations


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Hiding assets in a divorce

conference1.jpgFamily law and divorce cases have more hidden assets than any ponzi scheme or fraud case. Both sides are looking to maximize their retained property in the divorce, and take action to minimize their disclosed assets and income. The average divorce case has an estate value of $580,000. All parties to a separation will be intending to obtain a maximum settlement for funding of their post-divorce lifestyle.

There are 8 common methods of concealing and reducing assets in a divorce:

  1. Diverting money to hidden accounts
  2. Concealing ownership of assets into another name
  3. Declaring lower value of tangible assets
  4. Misrepresenting current income
  5. Excluding known future income 
  6. Non-reporting of past diminished value
  7. Falsifying bank and tax records
  8. Use of affair as diversion of assets

The methods used by parties to a divorce are very often performed poorly. Divorcing spouses are not experienced financial scammers with experience and skill in fiscal fraud. The techniques deployed are frequently amateur in execution. Once discovered, they can bring deserved assets back to the marital property settlement, and demonstrate bad faith to the court process.

Get good legal advice from your attorney, and do not accept any financial disclosures or court discovery production at face value. Verify everything and expect that there is more to the story.


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Online payment scams and frauds

scam1There are always hundreds of scams online looking to get web visitors to send payments into their scam and receive nothing in return. The frauds take the form of selling products, investing in businesses, buying inventory, or partnerships. The presentations are often very professional looking, and promise some desirable result.

If you become a victim of such an online scam if it important to take action quickly. The information needed to pursue your lost money often disappears as the scammers transition from taking in new money, to hiding from investors, to then setting up the new scam. As soon as possible, take screen shots of the entire website, links in emails, and invoices. Capture any images and information on all pages, especially payment screens and contact pages. Terms and conditions pages are often re-used on other scams so grab those pages to identify copies text and possibly addresses. Capture not only the page text but also all metadata which discloses background coding and references to other servers. This is important because once the fraud gets more complaining victims than new customers, they usually shut down the site and go to another domain name.

A good investigation will run forensics on all of the captured data, emails, phone numbers, payment references, and identifying data hidden within website code.

Getting you lost money back not only helps restore your savings, but also makes the fraudsters slow down future scams. Most scammers rely on the fact the prior victims will take no action to recover their money, so they are confident that they can continue to operate with no consequences.

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Locating hidden assets

Debtors hiding assets create immediate loss for people who have a right to be paid or reimbursed. If you are a judgment creditor, or a victim of a fraudulent investment, finding the assets which are rightfully yours turns the asset into cash that should be in your pocket not the scammer.

Asset concealment normally takes one of 5 forms:

  1. Hidden bank accounts
  2. Vehicles titled in another name
  3. Real estate quit claim deeds
  4. Pre-paid taxes or fees
  5. Alternate accounts

No matter how good the scammer believes their system of hiding assets, there is always a paper trail for the source of the funds, or a record of maintaining the asset. Even high level narcotics traffickers who spend millions hiding their money leave a trail for seizure.

The amateur trickster trying to hide $50,000 in a divorce, or the business partner concealing $200,000, or even the online scammer who stole $8,000 is not going to cover all of their tracks.

The ACFE (Association of Certified Fraud Examiners) has an excellent resource for investigators and corporate officers looking to discover assets rightfully belonging to them. The PDF document (read here) is excellent instruction for any asset searcher.

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Common fraud against businesses hits Google and Facebook

Fraudulent invoice scams, or ghost vendors scam hits thousands of companies every month. Many clients we speak with were unaware of how common the problem is for companies of all sizes. This week, even tech giants Google and Facebook were found to have lost over $100 million to this scheme.

It is thought that larger firms have the resources to protect against this type of crime. The problem is that in large companies the complexity and volume of their payments to vendors is many levels of scale higher than smaller firms. Actually, it is much simpler for small and medium sized companies to protect against this type of loss. This is a good thing, since a loss to a smaller company can be catastrophic. While $123 million is an immense amount to lose, a company like Google can withstand the loss. For many smaller cap enterprises, even a mid six figure loss can mean bankruptcy.

A recent client came to us to perform due diligence on an investor who was being considered to be brought in to provide rescue capital for our client. As it turned out, the client was in financial trouble because the bookkeeper had embezzled $46,000 over the past year. This was enough to threaten the cash flow enough to place the firm in jeopardy.

The steps to prevent common losses from fraud or theft are simple and inexpensive. In many cases there is no cost if the company can do most of the legwork on their own.


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Hidden assets siezed

A businessman gave money to his sister to hide the funds in her bank account because “Wells Fargo might be conducting an asset search on us to try and recover the judgments. Just transfer what is needed to pay bills as they arrive.”

They owed Wells Fargo Bank approximately $1.1 million in outstanding loans. In this role, Borer allegedly received a $1.1 million payment related to a judgment from a Honduran court, and hid that with his sister.

U.S. Attorney Lelling’s office said in a release “Wells Fargo would not have settled for $50,000 had it known that Borer’s brother and then-wife had received $486,000 in cash from the Honduran judgment.”


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Accounting manager charged with embezzling more than $750,000

From The Post and Courier, “An accounting manager accused of embezzling from her Charleston employer was in court asking for a public defender Thursday, after federal prosecutors accused her of depositing more than $750,000 in two unauthorized bank accounts.

Haynes worked for the company as an accountant and human resources manager. She was “a longtime employee who enjoyed significant autonomy” in collecting money and paying bills, including the payroll, according to an indictment filed earlier this month.

Payments for ancillary services outside of regular management weren’t recorded until the money was deposited, so Haynes was able to divert those checks into the unauthorized bank accounts she opened in the company’s name without attracting notice, according to the indictment. Then, she used Community Management Group’s signature stamp to write checks to herself from the two secret accounts, according to prosecutors.”

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Former employee of Portsmouth Housing Authority is charged with embezzlement

From The Virginian Pilot, “A former housing authority employee was indicted Thursday on four counts of embezzlement a month after The Virginian-Pilot reported that the case had stalled.

Kimberly Ward, who had been convicted of embezzlement at Children’s Hospital of The King’s Daughters more than a decade ago, was hired last year as federal investigators were looking into weak accounting practices at the Portsmouth Redevelopment and Housing Authority.

Months later, the authority reported $8,000 in fraudulent charges to police and fired Ward. As the executive director’s assistant, she was one of nine people with an agency credit card, according to records assembled for the U.S. Department of Housing and Urban Development in October.”

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