matrimonial asset search; divorce asset search; hacking computer; computer records; husband's computer; wife's computer

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.

A fascinating interview with the chief fact checker for The New Yorker in the Columbia Journalism Review here got us thinking about the distinction between checking the veracity of facts and finding new ones.

Our firm does both, dealing mostly with the former in due diligence and the latter with asset searches.asset search forensic accountant

The New Yorker’s Peter Canby said that people mistakenly think “the world is divided into facts and opinions, and the checkers just deal with facts.” The more complicated reality, according to Canby, is “fact-based opinions….The way you construct an argument, if there are egregious missing ingredients to it, then it’s something we bring up.”

It’s the reference to “missing ingredients” that got our attention, because an asset search is a hunt for just that: something you think should be there but isn’t. Sometimes people want to call in a forensic accountant to look for the missing assets, and sometimes those accountants succeed.

We’ve written before about the timing between investigation and forensic accounting, in How Investigation Helps Forensic Accountants. Our point there was that “where we can offer help is to find entire new companies that Wife and her accountants (forensic included) did not know existed.”

Of all the tricks in hiding assets, the one that forensic accountants have the hardest time with is finding companies with no paper trail linking them to the companies the accountants already know about.

It’s one thing if Husband’s real estate company rents space from a Nevada LLC, and that Nevada LLC turns out to be controlled by Husband.

But what if Husband has been able to sever all links between his known companies and his secret ones, in effect conducting a parallel business life?

Then, a whole new mindset takes over. We are not doing a forensic investigation, but a right-from-scratch asset search. We look not at the mystery company in the records and instead go out and track down a new company among the billions of facts on line and in paper registries.

It’s not verifying, but a different kind of exercise, and doing it right can be worth thousands or millions of dollars.

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.