Found the Income!Asset Tracing in Family Law Cases

Type of Matter:
In a divorce matter the “in-spouse” who controlled family business, real estate, and all other assets claimed minuscule monthly income, poverty, and no records. His wife knew better and didn’t believe any of it.

Background:
After a lengthy marriage Mr. Husband decided to make some major changes in his life – including divorcing his wife. In the initial court filings, declarations of assets and debt as well as income and expenses are filed by both parties. In those disclosures Mr. Husband claimed minimal assets and poverty level income. He provided the filed joint tax returns for the previous several years to support his claims. These filings were contrary to the lifestyle described by his wife that included round-the-world travel, expensive cars, fine dining, and a growing inventory of real estate.

Arxis Work:
After Mr. Husband filed financial disclosures with the court, his wife retained an attorney to provide some guidance. The attorney immediately knew something was wrong and called Arxis for assistance. A demand for production of documents was prepared and sent out. Buried in Mr. Husband’s response was the claim that all (everything) accounting records were unavailable because of a stolen computer. His wife had a decision to make – accept his story and her “fate” (poverty) or pursue the case at great risk and cost.

She decided to borrow the money to proceed with the case and that began the process of issuing subpoenas to all banks, escrow companies, credit card companies, etc. Once the records began rolling in Arxis began a full reconstruction of the accounting for the businesses and their personal accounts. The accounting was being recreated to cover as much of the marriage as possible as well as the separation period. Thousands of transactions were entered, reconciled, analyzed, and categorized. As records arrived in response to subpoenas, more data was included in the accounting.

What emerged from all the work was solid evidence of substantial assets, the marital standard of living, and evidence of preemptive sale and/or transfers of assets in anticipation of the divorce. Perhaps the most startling development was proof of average monthly income that was within $500 of what our client told us it was going to be.

Result:
Our client took a significant risk to invest in a long and tedious forensic accounting process. That decision to move ahead with the accounting was vindicated when evidence was found supporting all her claims. The court was not happy with Mr. Husband. Likewise, he probably wasn’t happy with the court either as he was ordered to pay fees, sanctions, and sizeable monthly support – prospectively and retroactively.