GPS trackers are among the hottest topics in ethics discussions today. At least, that is my impression after a series of ethics lectures I’ve given around the country based on my book, The Art of Fact Investigation.

Map pin flat above city scape and network connection concept

We wrote three years ago about the need for caution before using one of these devices on someone else’s car, here.

They are powerful devices that gather up a ton of information that it would take thousands of dollars and round-the-clock surveillance to duplicate. Today, the trackers are probably among the fastest-changing areas of privacy law, and for good reason.

We know it’s illegal to get someone’s cell phone records, though many people still offer this service. (It’s still illegal. If they offered you drugs or contraband, would you buy it anyway?) Banking and medical records, similarly, are off-limits without the other person’s consent or a court order. Yet, in many states it was only recently that placing a GPS tracker on someone else’s vehicle was not seen as an invasion of privacy.

Times are changing fast. In 2011, the Supreme Court held in U.S. v. Jones that placement by the government of a GPS tracker on anyone’s car amounted to a Fourth Amendment Search that required a warrant. The court split over the reasoning, but gradually the concurrence by Justice Alito (joined by Justices Ginsburg, Breyer and Kagan) seems to be taking hold. They concurred that GPS trackers by the government need court supervision, but not because this amounted to trespassing but because people have a reasonable expectation of privacy that their every movement won’t be monitored that easily.

The Jones case didn’t address the issue of private parties slapping these devices on the vehicles of others, but the states seem to be following suit with respect to the “reasonable expectation” theory.

Among the milder restrictions is New York’s, which  added GPS trackers to its anti-stalking law. If you tell your estranged husband to leave any trackers off your car, he’s got to abide by that or face misdemeanor charges. As his lawyer who ratifies that illegal conduct, you could be up on before an ethics panel.

California and Texas have gone further: you just can’t put these trackers on someone else’s car – period.

In my view, that’s the way the rest of the states are probably going. Laws that restrict the placement of trackers to those that don’t drain the car’s battery miss the privacy point and people just won’t put up with this forever.

So, to be safe, put these trackers on a car only if the person authorizing the placement is the owner of the vehicle.

There are plenty of workable alternatives to using GPS trackers. Not as cheap, not as comprehensive, but still legal. We will go over some of those in the next posting.

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

One of the most powerful tools a spouse had to monitor assets or other activities is to look at the shared computer of the spouse under investigation. We have written before in When You’re Allowed to Look Through Your Debtor’s Computers and Phones that as long as a person can show ownership of the computer, anything on that computer is probably fair game to look at, subject to some exceptions.

Hacker in old warehouse.

Sending the contents of what you find to the cloud (a remote server controlled by someone else) is another question. A new case in the Sixth Circuit this month held that software that monitors keystrokes and content amounts to illegal wiretapping under both federal and Ohio statutes. You can read the case, Luis v. Zang here.

This case involved a technology called WebWatcher, which allows a person to monitor a computer’s activity. Where it got the company and the husband in trouble was that WebWatcher allows you to look at the material in nearly real time once the content of the computer activity is stored on the company’s server. The fact that WebWatcher appears captures the information contemporaneously is what turns this into wiretapping, the court held.

The critical distinction in wiretapping jurisprudence is between instantaneous access and access to information that’s stored. If all WebWatcher did was to store a record of the emails sent and received on the computer, that would not have been wiretapping.

The decision applies to the Sixth Circuit, although all the circuits agree that to have wiretapping you need contemporaneous capture of the information. Depending on the kind of software you use to log keystrokes and the transmission (if any) of that information, you could end up with what the Sixth Circuit calls wiretapping or just storage of information you have a right to see.

What’s certain is that it’s incumbent on any lawyer using such information to know how the program works. Just because it comes out of a small box you buy at a big box store doesn’t mean it will produce admissible evidence.

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

 

The debate so far over whether Apple should help the U.S. government execute a warrant to see what is on one of its phones has focused on the information of a dead terrorist and the prospective data breach (according to Apple) of millions of law abiding citizens.

The stakes are high, but lost in the discussion is the future of data retrieval to fight another kind of wrongdoing: deadbeat parents who won’t pay child support or greedy spouses who hide assets during and after divorce.prenups if apple wins

We spend a lot of time looking for such assets, and while we have generated lots of good leads, nailing the case often requires the production of bank accounts.

Imagine this: Husband handles all the finances of his businesses and gives Wife an allowance to run the home, pay the school fees and taxes. When Husband decides to end the marriage, he begins to divert cash taken out of the business to bank accounts held in the names of limited liability companies he has set up around the country. Some of the accounts are in Caribbean tax havens.

The court orders Husband to produce all financial records. He does, but they seem “light.” Husband is ordered to produce his phone as evidence, since some of his banking may be paperless. He hands over the phone but not the password. “If a dead terrorist has rights, so have I,” he proclaims.

Recall that Apple co-operated with law enforcement in handing over everything the terrorist had backed up on the i-cloud. It was just the material not backed up that Apple decided it should not have to help uncover.

What should wives like the woman in our example do to protect themselves against super-encrypted, paperless financial records available for the price of a smartphone?

One idea we had in our office was this: draft a prenuptial agreement that shifts financial burdens in the event that the entire contents of the phone are not backed up once a week. In the event of a divorce, once Husband can be shown to have stopped uploading the records to the cloud, he automatically surrenders his share of tangible assets the wife can find: homes, cars, shares of businesses.

Some states may frown on such an approach, but we will have to figure something out if millions of us (in a world in which Apple prevails) can go dark as to our financial records at the drop of a hat.

Side note: would we back Apple if the facts and company involved were a little different? What if Goldman Sachs built a super-secure bank vault miles underground in the desert? Hedge fund billionaires and Russian oligarchs use the vault to keep records that could prove tax evasion, insider trading, market rigging and a host of other financial crimes. The vault is booby-trapped to explode if anyone tries to break into it. Even if you get past that system, each individual box is rigged so that if anyone dries to drill into it, acid is released and destroys the contents.

When presented with a court order to open the vault, Goldman says, “No. If we break into one bad guy’s vault, the secret of how to disable it would leak out and someone else could break in. Our customers find this offensive.”

You wouldn’t want to ask anyone to steal bank account information about your client’s spouse. You would never ask for the theft of that person’s medical records. You would not try to break into his office to take the computer on his desk to see his work email.

So why would you delight in using information stolen from Ashley Madison? Why would you even endorse it, as many have, because it somehow gives wrongdoers what they deserve?

Where adultery is legal, disapproving of the activity is no reason to commit a crime. If the Ashley Madison break-in was OK, so was Watergate.

Of course, using information that is in the public domain is different from using information that you yourself have stolen. Newspapers in the U.S. routinely report the products of illegal leaks, but even journalists in countries outside the U.S. who do not enjoy First Amendment protections need to be careful about possessing stolen information.

The next time a newspaper (even in the U.S.) reports on a leak and writes that its reporters have reviewed (but not obtained) documents, you might ask why they didn’t make a copy. It could be because possession is worse in the eyes of law enforcement than a quick look at what someone else obtained.

With Canadian police saying that they intend to prosecute the leak of Ashley Madison’s information as a theft, just as they would go after a bank robber or a credit card hacker, we should ask ourselves what to do with the information that comes from the theft.

Is it admissible into evidence? Lots of information that is reported in the newspapers or on the internet every day would not be admissible, because it is hearsay and doesn’t fall into one of the many hearsay exceptions, or maybe because it violates the no-contact rule. Or, it was procured legally but in a way that bar associations would view to be unethical. For instance, recording a phone conversation is legal in many states if just one of the two people on the call knows about the recording, but many bar associations say lawyers should not record conversations unless someone’s liberty is at stake.

The search for assets would not likely take us toward the Ashley Madison database to begin with. But if one day a client asked about it, my preference would be to warn my client that this is stolen property and to let them look if they want (how can you stop them?) If my client were outside the U.S., I would warn them to proceed with even greater caution.

 

This week, the U.K. Supreme Court is reviewing the cases of Alison Sharland and Varsha Gohil to determine whether a spouse can reopen a divorce case in instances of fraud or misrepresentation after the parties have reached a settlement agreement.

Reopening divorce cases in instances of fraudSharland contends that her husband misled her into believing that his software company was worth a fraction of its actual value.  Gohil accepted a modest settlement from her husband in 2004, only to find out years later that her husband had been hiding tens of millions of dollars from her.  This all came to light as part of a criminal trial against Gohil’s ex-husband in which he was convicted of fraud and money laundering to the tune of £37 million.

Here in the U.S., it can be extremely difficult to reopen a divorce action once the parties have reached a settlement agreement.  The degree of difficulty varies from state to state, but in general, most state courts will only set aside a divorce settlement in a few limited circumstances.  Some states will allow a party a second bite at the apple if he or she can show deceit or fraud by their spouse, as in Sharland and Gohil’s cases.

This is where we come in.  Our clients or their lawyers hire us to help find assets that their spouses either under-valued or omitted from their statement of net worth altogether.  For example, a client might accidentally receive a bank statement for an account with her ex-husband’s name on it that he did not disclose during their divorce.  If he hid that account from her, what else did he keep secret?  We have found millions of dollars’ worth of undisclosed assets in divorce cases, assets like real estate, stock options, and ownership interests in companies or partnerships.  This information may help form the basis of an argument to reopen a divorce case on the grounds of fraud.

While it is certainly best to start looking for assets while a divorce is ongoing, all is not necessarily lost if you have already signed a settlement agreement when you find out about hidden assets.  Your lawyer can advise you on your chances of success, and can help you decide when the right time might be to stop relying on that net worth statement and start digging for what he didn’t tell you.

In an unusual move for a divorce case, a Queens judge added Benny Tal’s business partners as defendants in Benny’s divorce action because the three men had colluded to hide Benny’s assets from his wife Michal.  As Michal told the New York Post, “It’s like a dirty soap opera. There’s so much fraud going on, we now have a divorce proceeding involving a husband, wife and his two business partners.”

Hidden Assets DivorceBenny, along with his two business partners, owned a lucrative parking garage in Manhattan through a company called Kura River Management, Ltd.  As part of the Tals’ divorce proceeding, the judge ordered a valuation of Kura River.  Benny’s business partners obstructed the valuation after the appraiser discovered that Kura River had hidden at least $100,000 in cash from Michal and from the tax authorities.

In the meantime, Benny and his partners met with an attorney whose license had been suspended to discuss ways to hide Benny’s money.  They decided that the partners would buy Benny’s $1.6 million stake in the company for $250,000, in violation of the court’s restraining order.  Benny then promptly took the cash and ran.  When the judge had him arrested and dragged back into court, Benny claimed that he had squandered all of the money on bad investments.

We have seen countless cases in which the non-moneyed spouse (in our experience, this is often the wife) thinks that her husband runs a fairly straightforward, lucrative business.  Come divorce time, the husband says he’s destitute and the business is hemorrhaging money.  With some digging, you can often find out whether the husband may have taken steps to make his company look less profitable on paper.

In this case, we would have started by investigating whether Benny had any other companies he could have used to hide income from his parking garage business.  We would also have interviewed former employees, litigation opponents, or others who had done business with Benny and Kura River to ascertain how much cash business the company did, how diligently they managed the company’s books, and whether they had side companies or accounts that they used to hide cash.  Then, we would have taken a close look at the finances and lifestyles of his business partners.  We would also look for any real property, vehicles, aircraft, or other purchases Benny might have made so that he could plausibly claim that he spent all of his money on bad investments.   A good divorce lawyer can then use that information to send targeted subpoenas and recover Benny’s and Kura River’s hidden assets.

You wouldn’t think old bankruptcies are a place worth checking when hunting for assets. If someone’s bankrupt, it means they are essentially out of money, right?

Wrong, at least sometimes.

We have found all kinds of wonderful material when looking at bankruptcies. Some of it leads right to assets, and some leads to a non-financial asset known as leverage: good information you can use to extract a better settlement.

Financial assets and information. What kind of asset can you find in a bankruptcy? The exempt kind. When people go bankrupt they don’t have to hand everything over to their creditors. Some states allow an entire main residence to remain in the hands of the debtor after discharge. The other day, we found a large pension fund in an old bankruptcy. Just check the schedule of exempt property in the petition. Of course, the fact that someone had an asset ten years ago doesn’t mean they have it now, but what if that person turns out to have misled his wife about the kind of money he had access to during the marriage? Chances are that if the pension money is something an estranged spouse is just finding out about, that money could have been moved into other accounts, taken out, invested or used in some other way that could be reachable.

Suppose the married couple did all of their banking at Bank of America, and the accounts there are nearly empty. Then, it turns out that the husband had a large IRA on deposit at JPMorgan Chase just before marriage. Wouldn’t the records of that account be of interest during the time of the marriage? What happened to the money?

Leverage. Compare what the debtor presented as his financial situation with what you know about the debtor. Did he leave out assets you know that he owned at the time? Misleading a bankruptcy court is a serious offense. There is no statute of limitations on re-opening a bankruptcy, and knowledge that could get a spouse into major trouble with a court could help move negotiations along on a settlement.

The takeaway point about bankruptcies is the same for most other information in an asset search: Keep your search as broad and general as you can. You are searching for assets, but also information that will lead to assets. That could be anywhere, which is why a good asset search is not that different from a thorough background check.

Although a no-brainer when it comes to contemplating divorce, it’s remarkable how often couples forget about old bank accounts they thought had been emptied and closed, but turn out to be active and full of money.

This happened recently to one of our clients, who discovered a major cash purchase made by his wife when the store mistakenly sent her some correspondence about the purchase to their home address.

Less well known by couples but increasingly important is the need to take an inventory of email accounts. Just as bank accounts contain money you may want to get at, email accounts can reveal the location of money you want to protect, as well as financial information you may not be ready to divulge.

This issue came up in a New York courtroom this month: the wife and major breadwinner thought she had closed her husband’s email account when he moved out, but the account remained open.

Worse for her, the husband had set up both email accounts so that the wife’s account forwarded all her outgoing email to the husband. That setting remained in place long after the husband moved out. The only way she discovered the forwarding setting was that after closing her husband’s account for good, she began receiving notices that messages she sent could not be delivered.

She first ignored these, but when they continued appearing week after week, she carefully read one of the notices and saw that her email account had been trying to forward her outgoing messages to her husband’s now-dead account.

The result was that the wife brought an action against the husband for violations of the Federal Wiretap Act and the Stored Communications Act. The lessons here are pretty clear:

  1. Getting access to someone else’s email is under most circumstances illegal without their knowledge. In the case above, the wife originally may have consented to the forwarding arrangement but the judge has ruled that under the Wiretap Act the scope of her consent (whether it extended to post-separation forwarding) is a question for the jury.
  2. Reading the fine print on the internet is well worth your time. We’ve written before on our companion blog, The Ethical Investigator, about email headers in Digital Assets: Worth Money, but Also Great Providers of Information. But here, the consistent attempts by her account to forward email to a place she had not specified were there for her to see as long as she didn’t just erase the relevant message from the service provider.
  3. Email accounts are things of value, not so much for what they cost to maintain but what kind of information is held in them. If your account is jointly owned, the other owner can claim he has the right to the messages you have sent but not copied that other owner on. It should be commonplace when asking about the other side’s assets in discovery to ask about ownership of electronic assets.