Harrisburg Forensic Accountants Uncover Hidden Assets During Divorce

Experts examine financials for the red flags of fraud

During divorce proceedings, parties are obliged to produce financial statements that accurately report their assets and debt. However, not every party is honest and transparent when it comes to wealth they want to retain. Some resort to hiding funds, transferring assets, and even claiming phony debt. Savvy divorce attorneys can suspect when an opposing party is falsely reporting property, but how can they prove their suspicions?

Breon Associates, Accountants and Advisors, in Harrisburg has the answer.

Our team includes certified antifraud experts with specialized training in investigations. We know how to ask the right questions and spot the signs of fraud that most accounting services would miss. We support attorneys during discovery, in motions to compel the production of evidence, and at trial. We provide the insights and data you need to uncover hidden assets and obtain the financial settlement your client deserves.

How parties to divorce hide assets

Divorce can be bitter and acrimonious. Resentful parties will often go out of their way to frustrate their soon-to-be exes. Many feel justified in withholding property when they think they have a rightful claim to it. Some strategies for hiding those assets include:

• Denying the asset exists — A party has $50,000 in a separate bank account but doesn’t include that account in the financial disclosure. These accounts may be offshore where U.S. courts don’t have jurisdiction, or perhaps held as cryptocurrency.
• Claiming the asset has been lost or destroyed — “What, that old thing? Didn’t you give it to Goodwill?”
• Executing a fraudulent transfer — In this scenario, the owner sells an item to a relative or close associate for a price significantly below market value on the agreement that the associate will sell it back after the divorce is final. It’s illegal to do that and courts can nullify the transfer based on sufficient evidence.
• Claiming false debt — “Business was really slow last year, so I borrowed $20,000 from my cousin Charlie to make ends meet.” Debt that is part of the marital estate is shared, so the innocent spouse would lose $10,000 in distributed property.
• Inflating business expenses — Suddenly a family-owned business is incurring new, incremental expenses for goods, services, and capital improvements. To the extent these expenditures were approved by only one party and may be unnecessary or perhaps nonexistent, the other party could receive a reduced distribution in the divorce.
• Delaying a job promotion or compensation until the divorce is finalized — A promotion might come with benefits that would be considered property, such as stock options. Delaying the promotion or arranging for a bonus to be deferred could keep those benefits out of the marital estate.

Variations on these schemes can be very sophisticated. The longer a party has been contemplating divorce, the more time he or she has had to conceal wealth. It is more difficult to detect when small amounts are set aside over a period of time. Depending on the size of the marital estate, hidden assets can amount to a small fortune.

How our forensic accounts help in divorce litigation

Our forensic team supports attorneys in the different phases of litigation in several ways:

• Analyzing business activity, results, and value
• Calculating income
• Reviewing tax returns and other financial records
• Suggesting documents to demand
• Recommending lines of inquiry for interrogatories
• Identifying persons to depose and questions to ask
• Attending depositions, where we can provide follow-up questions in real time
• Appearing as expert witnesses

Parties who are hiding assets don’t readily surrender documents. Attorneys who seek those documents must file Motions to Compel. Armed with the information we’ve uncovered, a divorce lawyer can make a strong case that certain records are relevant and must be produced.