Case Studies: Family Law

#1: Business Valuation, Forensic Accounting, Discovery, Settlement

A law firm representing the non-moneyed spouse in a divorce retained Arxis to assist in identifying and valuing assets as well as establishing income for the moneyed spouse.  The marital estate consisted of a newly built home and non-control interests in two high profile businesses (high volume of cash) with celebrity control owners.  There was enormous pressure on the moneyed spouse to keep the divorce low-profile and away from the businesses.  The moneyed spouse was attempting to use that as leverage to make no disclosures and hide income.

Our client claimed that there were wall safes built into the home that contained enormous amounts of cash and jewels. There were also claims of an extravagant lifestyle.  The opposing counsel and experts denied all such claims and continued to play hide-the-ball.

At the direction of Arxis, subpoenas were issued to the lender on the new home (construction loan).  Additionally, copies of tax returns for the previous three years were obtained directly from the IRS and analysis was done on the income and expense declarations filed with the court compared to bank statements.  The result of comparing the loan application, the tax returns, and income and expense disclosures exposed a number of profound discrepancies.  For example, the tax returns submitted with the loan application, the I&E disclosures, and the IRS were all different.  Additionally, the income claimed in support of the construction loan was multiples of what was reported to the IRS or to the court.

Rather than explain these discrepancies, and many others, the moneyed spouse settled on terms that were very satisfactory to our client.

#2: Criminal Contempt – Charges Dropped, Family Court, Settlement

A husband had, for several years, ignored the legal process surrounding his divorce.  He admittedly failed to disclose assets, income, and significant economic activity in court filings and depositions. He had control of the marital assets and believed he could keep it that way.  Once the legal process began to close in on him he realized it was time to take the process seriously and “come clean.”

Arxis was recommended to him as the firm that “shoots straight” and had the credibility to communicate to the judge and opposing counsel that the litigation was now being taken seriously and that the disclosures were complete and accurate.  What followed was a series of meetings with opposing counsel and experts where full and complete disclosure was made.  The pending criminal contempt charges were dropped and the case settled.  Arxis was credited with providing the proper information in clear and simple terms that allowed all parties to recognize that the “games” were over and the case could be resolved with reliable information.

#3:  Business Valuation, Hidden Assets, Forensic Accounting, Settlement

In one of the more complex divorce cases many of the participants had ever seen 12 businesses were involved in a scheme to hide assets, mask true economic activity, and divert income.  Three accounting firms were retained to handle the forensic accounting that was required and each of them either gave up or were terminated because of their inability to understand and effectively sort out the data.

Arxis was the fourth firm hired and immediately began a painstaking process of “following the money.”  It became immediately obvious that the accounting records were incomplete, inaccurate, and purposefully manipulated to satisfy the goals of the divorce litigation.  Cash transactions for all 12 entities were recorded from source documents and merged into a single database.  Then the transactions were traced back to bank statements to verify date and amount of each transaction.  What emerged from the work was a true picture of what actually happened and the obvious observation that the records previously provided to the court were fraudulent.  The result was a settlement of the significant financial issues without a trial.