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Avoiding Fraud When Going Through a Divorce

Divorce is tough enough on it own – add potential fraud in there and you’ve got an even more stressful situation. It’s important to be on the lookout for anything suspicious in the family finances throughout the process of divorcing your spouse. No one wants to think about it but fraud can happen – in the form of hidden assets, misrepresentation, you name it. Educate yourself on these signs of fraud.

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Changes: Lifestyles…income…these can all change right before or during a divorce. Don’t ignore them. If you notice your spouse living above their means, suddenly wearing the latest fashions, sporting a new car, going on trips, etc., perk your ears up and start researching. Although it’s one of the more difficult aspect of fraud to prove, the small details can add up to a major red flag.

Here are some warning signs:

  • Inexplicable changes in your spouse
  • Change in confidentiality level
  • Pattern changes that point to worsening addiction
  • Mail that’s been forward to a new location
  • Change in daily habits
  • Secrecy while on computer
  • Catching your spouse in repeated lies
  • Increase in cash withdrawals
  • Concealment bank transactions

Whatever you notice, document it. If you wait too long, the money will be gone, along with your chances of tracking it.

Hidden Assets: If you discover hidden or missing assets, or misrepresentation of family income, you’ve stumbled upon two common areas of financial management that can funnel more cash to one spouse than another. The scenario is all too common: the divorcing spouse tries to win the trust of unsuspecting relatives and friends to help them hide money. They often max out credit cards and then try to blame it on the other spouse. Be wary when someone is trying to put blame on you where it’s not warranted. They may be trying to hide their own deceptions.

Irresponsible Spending: Dissipation is a kind of financial fraud that happens during a divorce dispute. One spouse spends money excessively and irresponsibly without telling the other. This depletion of marital assets is just plain wrong and amounts to theft. Keep an eye out for these situations:

  • Cash going to gifts and trips for extramarital relationships
  • Gambling losses
  • Cash loans to others
  • Sell-offs of assets for much less than the value
  • Failure to maintain marital property
  • Excessive spending, including business cash accounts
  • Foreclosure notices
  • Destruction of personal items

It’s tough to spot fraud. After all, who wants to think someone they once loved could do such a vile thing? Add in the highly volatile nature of domestic relationships, particularly one that involves child custody, and all those intense feelings and emotions can block you from seeing what’s really going on. Keep the number of a securities fraud attorney handy in the event you need someone who specializes in recovering losses for investors. Thomas Law Group has been recovering losses for investors since 1991.

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