Financial Fraud in Divorce

Financial Fraud in Divorce

When a couple goes through a divorce, there is bound to be some contention. One of the biggest issues that couples fight over is money. 

There are likely to be arguments over asset division. That is because there are usually some money inequities in the marriage. One spouse usually makes more than the other. Plus, there may be issues of inheritance, businesses, debts, or less common assets, such as cryptocurrency, beach houses, and sports cars. 

To keep more money for themselves, some people resort to hiding assets. They may think it is not a big deal, but hiding assets is actually illegal. When a couple divorces, all parties need to disclose assets. Concealing earnings or marital property or selling or transferring assets are all illegal activities. They constitute perjury, which is a crime that can mean fines and jail time. A person who hides assets in their divorce will definitely be looked at unfavorably by a judge.

If you think your spouse would never commit financial fraud, think again. Your spouse does not have to be a hardened criminal to consider it. In fact, a person with no criminal history at all may have no trouble committing this sort of crime. They just need three elements — opportunity, pressure, and rationalization. They will feel pressured to take advantage of the opportunity and then rationalize it, claiming that the act really does not constitute fraud. 

In any case, you need to be fully aware of your financial situation before you can come to a settlement in divorce. It is important to be on the lookout for red flags but also understand that just because your spouse may be showing one or two of these signs does not necessarily mean they are committing financial fraud. It is up to you to decide how to proceed.

Signs of Financial Fraud

Is your spouse hiding money, or are you just being paranoid? Is your spouse acting suspiciously? Here are some signs of financial fraud to look for:

  • Controlling behavior. If your spouse is a control freak when it comes to finances and is monitoring bank accounts constantly, then they may be trying to hide something from you.
  • Secrecy. If your spouse is hiding bank transactions from you and refusing to explain them, they may be committing financial fraud. 
  • Coercion. If your spouse is forcing you to sign legal documents that you do not understand, trust your gut. Do not sign them and contact your lawyer.
  • Excessive spending. If your spouse spends a lot of money on gambling, drugs, or other activities, then they are likely to commit financial fraud. 
  • Large, frequent cash transactions. If your spouse pulls large amounts of cash out of shared accounts, they are likely stashing this money somewhere else, like under the mattress or in a personal account. Be wary of this behavior.
  • Past financial infidelity. Has your spouse lied to you about money in the past? Maybe they lied about their income or hid a massive debt from you. 
  • Extramarital affair. If your spouse is having an affair, they are likely hiding evidence of money they spend on their new love. 
  • Giving money to friends and family. If your spouse is randomly “giving” money to friends and family, they are likely stashing cash in their accounts to hide it from you in the divorce. Nobody would give away money like that for no other reason. 
  • Less income. Your spouse may suddenly tell you that they suffered a pay cut or other drop in income and now cannot pay bills or sustain the lifestyle you once had. 

Steps to Take

If you think your spouse is engaging in financial fraud, you need to be proactive. Here are some steps to take:

  • Contact your lawyer. Your lawyer can review the numbers (or have a paralegal do it) and see if they match up. They will review all your financial statements and look for any signs of fraud. 
  • Identify your assets and debts. Now is not the time to feign ignorance regarding money matters. Get a hold of all your statements regarding bank accounts, credit cards, mortgages, stocks, retirement accounts, and anything else in your or your spouse’s name. Look for any deposits and withdrawals.
  • Hire an expert. If you have strong suspicions of financial fraud but cannot seem to uncover anything on your own, you may want to hire a forensic accountant. Forensic accountants are experts at finding hidden money. However, they do not come cheap. Expect to pay $10,000 or more, so unless you are fairly sure you will uncover more than that in hidden money, it will not be worth the cost.
  • Check your credit score. If you share credit cards, be wary of your account balances. Your spouse can run up a ton of credit card debt and leave you liable for it. Your spouse can also use your personal information to commit credit fraud. Therefore, if you have joint credit card debt, pay off the balances and close the accounts. 

Seek Legal Help

Money problems are common in a marriage (and divorce). Be aware of the signs and take the appropriate steps to avoid becoming a fraud victim. 

You do not have to deal with fraud and other divorce issues on your own. Broward County divorce attorney Scott J. Stadler can guide you through the process. Schedule a consultation with our office today by calling (954) 346-6464 or filling out the online form.