For women wondering whether their ex-husband (or soon-to-be ex) is hiding assets on them, rest assured that you are not alone.

According to a new white paper put out by Francis Financial, a wealth-management firm that specializes in advising women, 63 percent of women the firm surveyed “felt strongly that their husband was hiding assets during the divorce process.” The firm says this was among the first such studies focusing on women who have divorced or are in the process of divorcing.

Where to begin if you are one of those women? The study said that many who thought they were being cheated out of assets “had to grapple with the decision of hiring a forensic accountant,” and this may be an advisable step.

But as we often tell our clients, a forensic account is someone you may wish to hire after you are sure you have looked everywhere for the missing assets. As we wrote last year in How Investigation Helps Forensic Accountants, “where we can offer help is to find entire new companies that Wife and her accountants (forensic included) did not know existed.”

Some basics:

  • We don’t start just by looking at what a woman thinks are the places her husband is hiding assets, because if you know where the stuff is, you don’t need us. If assets are hidden you may be surprised at where they turn up.
  • We always like to give our clients a questionnaire that asks for all kinds of information about the person we’re searching. What might he name a secret company? What was the street he grew up on? Many hedge funds and private equity firms turn out to be named for the childhood streets of their founders. I know this because I always ask where these firms get their names.
  • Don’t expect us to come up with lots of hidden cash. People hear “assets” and think “cash” because it’s the first asset listed on any balance sheet and the easiest to use once you get it. The problem is that in the U.S., it’s illegal to get bank account information without a court order. What we can do is find likely hiding places of cash, based on business relationships and other legal sources. One client gave us the home computer she and her husband used, and we found that he had visited about a dozen websites of asset management companies. These were ripe for subpoenas at the appropriate time in the proceedings.
  • You don’t have to find every last penny to get some satisfaction. Once someone knows we have uncovered a significant portion of their hidden assets, their settlement offer can improve quickly. Some women have the means and the drive to litigate for years. Others just want a fair deal and to move on with money sufficient to take care of them and their children. Either way, asset investigations and a good forensic accountant are often worth considering.

It may all come crashing down, but if it doesn’t the cryptocurrency market is your newest headache in trying to find hidden assets.

Long written off by many as a joke, cryptocurrencies are still dismissed by many as a bubble waiting to burst. Just the other day, the Wall Street Journal ran this piece arguing that Bitcoin (the largest and original cryptocurrency) is way overvalued.

Launched in 2009, Bitcoin was worth almost nothing for several years. At the end of 2013 it suddenly rose to almost $900, but then fell and never got back to that level until January of this year. Now, Bitcoin is worth $4,600, supposedly driven upward by residents of countries not thrilled by the prospect of devaluation of their home currencies, confiscation/destruction of other property, or both: Venezuela, Korea, and China lead the way, but you can think of other good candidates.

Some true believers in Bitcoin think it should be worth $250,000 to $500,000 in 13 years, based on the idea that by design it can’t be inflated like paper currencies, and assuming cryptocurrencies get to just five to ten percent of the world’s share of payments (and that Bitcoin has about half of that cryptocurrency share).

Most famous as a means for criminals to transact business with little trace, mention of Bitcoin has been enough to get you laughed out of the room in polite company.

But what if $4,000 today could turn into $500,000 in 2030? Would your spouse want to take a chance with $25,000 to have more than $3 million later in life? Especially when it’s hard to trace? If so, read on.

Cryptocurrencies are really nothing more than entries into a big database that record your purchase. The database uses something called blockchain technology, which ensures that the records are decentralized. The record is spread all over the chain and most importantly, once a transaction is confirmed it can’t be changed. Blockchain is for real, and many law firms are investing in it as the future of contracting. You can read more about its world-changing potential in the recent cover story of Fortune Magazine.

How can you tell if someone owns Bitcoin or another crypto? There is no ownership record by name, necessarily. In the U.S. many websites that will sell you bitcoin have to take your name and other identifying information, but they will let you send the bitcoin anywhere you want — no names required. Privacy at other sellers is higher. If you buy bitcoin overseas, the transaction can be completely anonymous.

For asset searches, the first thing to find would be evidence of dollars turned into bitcoin. Have there been bank or Western Union transfers to places named Coinbase (or anyplace with the name Coin in the title), GDAX, CEX.IO? Any cash coming in from such places to pay a few bills?

Are there any records of such currencies inadvertently left around or on the computer you and your spouse may have shared? These currencies are in the end just strings of letters and numbers that look like this: 1F5tAaz5x1HUXrCTLbtMDqcw6o5GNn4xqX. If you see such strings, cryptocurrency could be involved.

There are two ways people most often hold cryptocurrencies. Either on the website where they buy it, or on an electronic wallet (which is really just a mini-computer the size of a thumb drive that securely records their currency id codes). You may find such an electronic wallet, but more likely you will see evidence of computer traffic with one of the virtual wallets on the web.

Keep an eye on Bitcoin. If the optimists are right, there could be millions of dollars of it to get if you can find it. The higher it goes, the greater the chance that the kinds of people who like to buy gold will have cryptocurrency too.

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.

 

What’s wrong with using a forensic accountant in your hunt for a spouse’s hidden assets? Nothing, provided you hand that accountant all the pertinent information you can. We’ve mentioned the need for these professionals frequently on our site, and this Forbes article by Jeffrey Landers explains similar reasoning.forensic accountant divorce

The problem with forensic accountants can be timing. We are often brought into an asset search after a forensic accountant has been hired. The accountant has the sense that something is amiss but beyond being able to testify that the numbers don’t add up, things are at a standstill and the pressure to settle continues to mount.

Our firm is not made up of accountants, and we are not able to testify that the books and records of eight companies controlled by Husband are probably not reflecting all income generated.

But where we can offer help is to find entire new companies that Wife and her accountants (forensic included) did not know existed.

How can this happen? For the simple reason that forensic accounts are trained to look at what is in front of them and to decide if it makes sense. They can tell if money has been stolen, but are on less firm ground in deciding where that money went. What did it buy? Where might it be sitting today?

Our strength is in taking a fresh look at a person and trying to find everything he owns.

If our client tells us not to bother looking for assets outside a person’s state of residence, we look anyway. If our client tells us about a piece of property that was sold last year, we make sure it really was sold. If it was, we try to see who bought it, because it could be that Husband sold it to a company he, a friend or relative controls.

So by all means, hire a forensic accountant if you need one. Just remember to make sure an investigator with a wide scope has taken a look. No point in examining “all books and records” when there could be millions stashed in a company you know nothing about.

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.

In a dramatic divorce case unfolding in Southern California this week, Hydee Feldstein, a retired partner at a large law firm, accused her ex-husband Peter Gregora of stealing $20 million of the couple’s money over the course of their marriage.  Feldstein claims Gregora hid the money in secret offshore companies, investment funds, and, in by far the most straightforward method, stuffing cash into envelopes and leaving the money off of the couple’s tax returns.

hidden money divorceBefore she retired, Feldstein’s practice focused on finance and bankruptcy law.  She was the primary breadwinner in the family, and she stated in divorce documents that she entrusted her husband to handle their financial affairs.  She claimed that Gregora used this as an opportunity to drain the couple’s joint accounts.

Commentators have been incredulous that a partner who specialized in finance law at a major law firm could be so out of touch with her own finances that she lost track of $20 million of her own money.  As it turns out, research shows that Feldstein is not so unusual.

As we wrote about here, a study by Prudential explained that most women, including primary breadwinners, lack confidence in investing and tend to shy away from managing the family finances.  No matter how successful women are, they still often leave the big financial decisions up to their husbands.  In fact, 73% of men report being the primary financial decision-makers in their families.  A dishonest husband combined with a lack of oversight can open the door to mismanagement and, as is alleged in this case, fraud.

We have seen this first-hand in countless cases.  Smart, accomplished women come to us looking for money they earned, but which their husbands have magically made disappear.  These women often admit to us that they left all of their financial decisions to their husbands, and have never so much as glanced at a bank statement or tax return.

Even in these cases, all hope is not lost.  Our clients often have far more valuable information than they realize when it comes to tracking down hidden assets, even if they did not control the family finances.  For example, a client may tell us that her husband loves skiing in Colorado, which would lead us to look for a vacation property in that state.  Or she may know the name and address of one of her husband’s companies, which could lead us to a dozen other LLC’s that he kept hidden from her.  We are often able to find hidden companies, real property, stock holdings, and other assets through in-depth client interviews and our meticulous investigation process.