Forensic Accountants Find Hidden Assets During Civil Litigation

Forensic accounting experts assess hidden assets and settle marital property disputes

Where did the money go? This is a question attorneys frequently ask when they are seeking damages from a defendant or trying to settle property claims during a divorce. The party under scrutiny should have ample resources, but they’re crying poor, hoping to force your client to settle for much less than expected, because of an apparent inability to pay. This happens often in civil litigation, where a defendant’s liability exceeds the insurance coverage, and in acrimonious divorces, where one party is using underhanded means to prevent a soon-to-be ex from taking a fair share of the marital estate. At North American Forensic Accounting, we are well aware of hidden asset schemes. Our experts help attorneys identify potential property and impute income, so their clients can obtain the recovery they deserve.

Finding hidden assets in civil litigation

When a defendant’s liability exceeds the amount of insurance coverage, a plaintiff’s attorney has to find assets to attach that might satisfy a verdict or allow for a fair settlement. This situation arises periodically in civil cases, such as:

  • Breach of contract
  • Personal injury
  • Professional liability
  • Wrongful death

Sometimes, the defendant is being transparent about their holdings, and simply doesn’t have the funds to satisfy a huge damage award. Other times, the defendant has made a conscious effort to defraud the plaintiff.

The question of hidden assets also comes up frequently in divorce cases when a dishonest spouse attempts to gain an unfair advantage in marital property division. Finally, petitioners in bankruptcy filings often hide assets to keep them out of the reach of creditors and bankruptcy trustees.

In all such cases, NAFA assists attorneys by determining if assets have been hidden.

Common hidden asset schemes

There a numerous ways for a person to hide assets, including:

  • Fraudulent transfer — Under this arrangement, the owner of an asset sells the item to an insider, such as a friend or relative, for well below market value, with the understanding the friend will sell it back after the crisis has past. Transferring an item for less than it is worth simply to defeat a creditor’s legitimate claim is a crime. When presented with compelling evidence, a court can “unwind” the transfer, voiding the transaction and returning the property to the original owner. A judgment creditor can then attach the assets for satisfaction of the claim.
  • Fake payments — A person can make payments, privately or designated as a business expense, that are not payments at all, but rather deposits into a secret account.
  • Shell companies — A person can set up an LLC in a state where ownership is not made public. Investments in the company are simply held for withdrawal later.
  • Privacy trust — A person can establish a trust to hold assets in the name of a trustee, so the grantor’s identity remains hidden. Placing the trust offshore, perhaps in an exotic location like the Cook Islands, provides an added layer of secrecy.
  • Land trust — Certain states, such as Florida, allow owners to set up land trusts to hold property, allowing the true owner to remain anonymous.

It often takes a high degree of skill to assemble the evidence an attorney needs to prove this type of fraud. Our NAFA team is comprised of forensic accounting experts who are up to the task. We help you substantiate your case of wrongdoing, so the court unwinds the transfer and makes the property available to pay your damage award.

Contact North American Forensic Accounting for help uncovering hidden assets for trial

North American Forensic Accounting employs a range of strategies to trace and identify hidden assets in support of civil litigation. To learn more, call us at 347-286-4860 or contact one of our offices online to schedule an appointment. NAFA serves clients from offices throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay Area.