The Moneyist: My brother’s soon-to-be ex-wife is embezzling money from their business. How do we find hidden accounts?
My brother is going through a divorce. It has been a long effort to negotiate a settlement agreement, but his estranged wife keeps asking for more money and changing it to her benefit.
I have good reason to believe that she has been embezzling money from the business account for years and stashing it away in private accounts. My brother doesn’t want to believe that.
However, there have been many “questionable” transactions on their accounts that simply state “transfer” without any information on where they went. She has been doing the books for years.
Is there any way to find out if she has money hidden away in accounts that she has not revealed during the discovery process?
Brother & Brother-in-Law
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By all means, give him advice on where to look for signs of suspicious activity, but ultimately it’s up to him to take action. Hiding assets prior to a divorce is, like placing withdrawals in a safe-deposit box, not so uncommon. It’s a high-risk strategy, and obviously not looked upon favorably by divorce courts.
Embezzling money could also lead to criminal charges, which may be why your brother is reluctant. He would need to hire a divorce attorney with experience in finding hidden accounts or a forensic accountant who knows how to sniff out the breadcrumbs from such accounts, should they exist.
“This can protect you from privacy laws which may prevent you from conducting these investigations on your own,” according to the law firm Johns, Flaherty & Collins. “It may also protect the information that comes to light through the investigation, so that it is legally admissible in court.”
“Check spam folders for emails or evidence that paper statements were sent to a PO Box. Also, look out for mystery expenses.”
“With the help of an attorney, you can subpoena many valuable records, including employment records, bank statements, loan applications and other account records,” the firm adds. “Do a search of public records online to determine possible aliases your spouse may be using.”
And if suspect transactions do exist? Bank statements will have large cash deposits and/or transfers to either mystery accounts — identified only by the last four digits — or Venmo or PayPal PYPL. Check trash and spam folders for emails or evidence that paper statements were sent to a PO Box. Also, look out for mystery expenses.
Bottom line: Your brother needs to have the willingness to pursue such funds, if he suspects financial malfeasance. One strategy is to pitch it not as an accusation of wrongdoing, but as “good practice” to have a thorough review of all financial transactions before signing the divorce papers.
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