Divorce Asset Search

Financial issues in divorce can be complex, particularly when one party fails to report income or assets. Resolving such matters is more complicated when a divorce involves business owners, high-net-worth individuals, and families with personal trusts or foreign holdings. The most contentious cases often involve allegations of hidden assets and outright fraud.

In any of these situations, the spouse who has not traditionally managed the family finances can be at a serious disadvantage during settlement negotiations – unless the missing income and assets can be located through independent means.

An asset search by an experienced investigator can be a critical component for ensuring the marital estate is fully accounted and fairly distributed. The primary objective for an asset investigation is to identify undisclosed assets that are not otherwise locatable through ordinary avenues of legal discovery, such as demands for account statements and tax transcripts.

In addition to asset investigations during litigation, we also identify assets for judgment enforcement of spousal and child support.
 

Primary Areas of Investigation

During a divorce, both sides prepare a financial statement itemizing their individual assets and debts, as well as the joint property owned by the couple. On occasion, significant assets might be omitted, or account balances could be understated, in an effort to make one party appear less wealthy, and to prevent an equitable split of the entire marital estate.

To discover undisclosed assets, we conduct comprehensive financial investigations that cover an extensive range of personal financial holdings.

The typical scope of a divorce asset search includes:

• Personal Financial Accounts
  (Bank, Brokerage, and Investment Accounts)
   

• Tangible Assets
  (Real Property, Motor Vehicles, Aircraft and Boats)
  

• Business Interests
  (Including Shell Corporations and Special-Purpose Limited Liability Companies)

When dealing with individuals with more sophisticated or complex holdings, other avenues must also be pursued, such as identification of personal trusts, or commercial assets of privately owned companies.

Locating Financial Accounts

The most common types of assets concealed during a divorce include hidden cash, stocks, bonds and mutual funds. They may be entirely omitted from disclosure, or their true value may be misrepresented and underreported.

We can successfully locate undisclosed financial accounts. Our searches for bank, brokerage and retirement accounts are national in scope.

The primary financial accounts we identify include:

• Checking and savings accounts at banks, credit unions, and savings and loan associations.

• Brokerage and retirement accounts, including stock portfolios, mutual funds, 401(k) accounts, and individual retirement accounts (IRAs) held at top brokerage houses and mutual fund institutions throughout the U.S.

• Mortgages for parcels of real property.

Confirming the existence and current balances of financial accounts – and discovering accounts that were not disclosed on the financial statements – is often the most important objective of an asset search during a divorce proceeding.

Other types of financial accounts and instruments that can be identified include:

• Safe Deposit Boxes

• Certificates of Deposit

• Life Insurance Policies

• Company Benefit, Retirement and Profit-Sharing Plans

• Uniform Commercial Code (UCC) Financing Statements

• Military Pensions

When reporting the results of our account searches, we generally provide the approximate balance(s), as well as the name and address of the financial institution.
 

Case Study: Separating Fact from Fiction in a Financial Statement

The wife of a wealthy West Coast physician needed help locating assets after her husband – who had traditionally managed the family finances – filed for divorce. Our investigators located 15 brokerage and bank accounts with total balances of more than $1.5 million. We identified his ownership interests in more than 10 corporate entities, which owned commercial real estate valued at more than $5.0 million. We inventoried his classic car collection and determined titles of several vehicles, including his Lamborghini, had been transferred to a personal trust. 

The next step in the multi-phase investigation was even more fruitful. Forensic analysis was conducted on a laptop the husband had left behind at the marital residence, prior to moving out. The hard drive had been wiped, but we were able to recover many of the deleted files, which included account statements and accounting files. The recovered files showed exactly what the husband had omitted from his financial statements in the divorce proceeding, and how he had drastically altered the couple's historical financial statements before submitting them to the court. He’d claimed, in sworn testimony, to have negative net worth. Yet the investigation proved his true net worth (including his newly formed trust and corporate holdings) was nearly $10 million.

Discovering Hidden Assets

Beyond simply omitting assets from disclosure documents, more sophisticated methods are often used to actively conceal assets from being identified during divorce. There are many ways personal finances can be obscured.

One of the more common methods is to transfer assets to third parties – including family members, business associates, and paramours – for temporary safekeeping. Spouses may place investment certificates into the hands of a friend, for example; or they could liquidate the investment and transfer the proceeds into a new brokerage established under their friend’s name. Creating custodial accounts under a child’s social security number is another method for cloaking assets.

Spouses who own and control private businesses have more options for veiling assets. The transfer of significant personal funds into company pension, profit-sharing and 401(k) plans is one strategy. Making unnecessary ‘loans’ to the business – and then reporting a loss – is another. The valuation of a family-owned business can also be manipulated during divorce, adversely impacting the marital estate. Cash can be skimmed. Revenue may be underreported. Major contracts can be delayed until after a settlement is signed. Paychecks can be written for fictitious ‘ghost’ employees and then voided after the divorce, or family members can be added to the company books and receive payments for services that were never rendered.

Shell corporations and special-purpose limited liability companies are also utilized to conceal assets. Such entities may be domiciled in states such as Delaware and Wyoming where limited reporting requirements allow corporate owners to keep their names shielded from public disclosure. In some jurisdictions, corporate entities can be established under the names of ‘nominee’ officers and directors, to further conceal the involvement of the spouse. These entities can open online bank accounts or acquire other assets, such as real estate, without the spouse’s name appearing anywhere in the title history.
 

Coordination of Asset Investigation and Legal Discovery

Optimally, an asset investigation should be closely coordinated with other avenues of legal discovery, such as interrogatories, depositions and subpoenas, under the direction of a divorce attorney. If the asset search yields evidence of accounts at a previously unknown institution, then the transactional records should be subpoenaed; and review of those account statements may, in turn, present additional avenues of investigation to be pursued, such as identifying beneficiaries of suspicious transfers.

The initial stage of investigation and discovery during divorce proceedings is focused on identifying assets registered under the name and social security number of the spouse. If connections with corporate entities or private trusts are identified, then the second stage of investigation would involve identifying assets held by those entities. Similarly, if there is evidence of suspicious transfers, then the recipients of those transfers are appropriate targets for a subsequent phase of investigation.

The second level of investigation – identifying assets of related entities, and transfers to other parties -- has an added degree of complexity and higher threshold of evidence. For example, the court may decide it is not relevant if a spouse’s paramour recently bought a new house, unless it can be proven that the spouse’s assets were used to fund the purchase.
 

Case Study: Divorce Fraud and Spousal Non-Support

After the former spouse of a woman in North Carolina refused to make support payments for nearly a decade, she succeeded in obtaining a six-figure judgment against him. Our investigators conducted an asset search in support of her efforts to collect.

Her ex-husband had remarried, and recently divorced again, but during our investigation we determined he had gifted significant assets to his second wife shortly before their marriage ended. He’d also paid off her mortgage and ceded more assets in their divorce settlement, which was uncharacteristically generous.

Further investigation – including surveillance of the couple together on Christmas Eve – revealed his second divorce had been a sham intended to safeguard his personal wealth. He had hoped to shield his assets by giving everything to his second wife and then divorcing her, even though they continued to live as a married couple.

Testimony and documentation was presented by our investigator at trial to provide a complete accounting of the disputed assets and persuade the court that the transfers had been fraudulent.
 

Consult an Investigator

If you would like to discuss an asset search for a divorce or support proceeding, please complete the form below. You can also speak with an investigator by contacting our offices at 800-580-8755.