The Expert Podcast

Well, it's been quite a week for calls from clients. I want to talk to you about some of the developing trends we've seen for hidden assets and fraud against clients.

One of the fastest-growing types of fraud has to do with the concealment of assets in family law cases, probate cases, divorce cases, child support cases, and even litigation where there's a judgment against another party. The amount of concealment of assets is going through the roof.

Every single person who has some type of conflict, whether it's a divorce, death in the family, or lawsuit, finds that the other side is actively hiding assets. Some of the methods that are being used are relatively new, but a lot of amateur asset hiders are trying to get over the system.

For example, if you're going through a divorce, you split the assets, right? Settlement of property. If you have a bank account that has $100,000 in it, $50,000 goes to each person generally. Now there may be exceptions, and there are other things that could affect the community property, but what people are doing is, in advance of this divorce happening, they're taking some of the money from that account and putting it somewhere else. So now, instead of having $100,000 in the bank, you have $60,000 in the bank, so the other $40,000 gets hidden so you don't have to split it.

Same thing in probate cases: people are finding out that some relative died, they had property to distribute, maybe real estate, maybe cars, maybe bank accounts, and one or more of the other heirs, the other relatives, take some of these assets and hide them so they don't get distributed to the whole family the way they're supposed to.

The things they're doing to try to hide assets are so stupid because they can easily be discovered, but in most cases, they get away with it because no one looks.

They're doing things like doing a quick claim deed to real estate to try to get it out of the name of the person who died. They're putting money into crypto or trusts, which is easy to discover. They're putting money into prepaid tax accounts; for example, when they file their tax return, they'll pay an extra $50,000 to their tax bill even if they don't owe it, so now the money is not in their bank account, it can't be discovered in their bank account, and they figure they're getting away with it.

And then a year or two later, when the dust is settled, they go back to the IRS and say, Hey, I overpaid you on my taxes; give me my money back, but that activity can be discovered.

Another thing people are doing is putting assets in somebody else's name. They put a car in their grandmother's name, they put the house in their cousin's name, and even they put bank accounts in their business name, and that activity is not going to do anything to hide the asset as long as somebody's looking for it.

Part of the reason that people are getting away with this is that when the scammer goes to court or they go to their attorney, a lot of attorneys are telling people to go ahead and hide assets because no one's going to look for them.

They know that most people don't ever do an asset search, even in a divorce case. Most people just go by the financial disclosure form that you fill out for the court and turn it in. They just figure that's going to be true. In fact, some people think that since it's a court form and it comes from the court, it must be true.

Some people think the court does an asset search. What they don't know is that the form was filled out by the other side; it was filled out by the defendant or the counterparty. The court had nothing to do with accuracy; the person filled it in; they put down whatever bank accounts they felt like; they gave it to the court; the court just gave it to you; they didn't verify it, research it, certify it, or anything else.

Sometimes people think their attorney does it, and sometimes people think a forensic accountant does an asset search; they just look at records that were provided to them.

We're seeing so many people get scammed out of money that's due to them in a divorce, in a lawsuit, in a probate, or in a will because other people are hiding these assets very blatantly. They're not even trying to hide it. All you have to do is look and find them.

Now part of the reason they're doing it too is because their attorneys are telling them there's not going to be much consequence if somebody does an asset search and finds the assets; all that's going to happen is they're going to bring them back in to split up, smack you on the wrist, maybe pay a fine, and that's it.

Which sometimes can be true, but if your attorney files a motion to have the other side punished for it, maybe pay some of your legal fees, maybe give you some more discovery, a lot of times that's what attorneys will ask for. Remember, we're not lawyers; we're not giving you legal advice, but we do a lot of work for attorneys, and that's what attorneys tell us is a good strategy.

If you know the other side's lying, find out about it, get the documentation, file it with the court, and then ask the court not only to bring those assets back in so you get your fair share but also to punish the other party for doing it by maybe a fine, maybe a discouragement, or some other method of garnishment.

Hidden assets are like a plague right now. Everybody's trying to do it. I think that morals are going out the window, and people are just trying to hide everything they can to get their selfish more than fair share.