Finding Waste in Divorce Cases

08

FEBRUARY, 2017

Nancy A Hetrick

As a CDFA® certificant, one of the responsibilities incumbent on you is ensuring full financial disclosure and clarity for our client whether we are serving as an advocate or a neutral. There are a few practices that you should complete on every single case, whether or not the clients ask you to, in order to ensure that the full financial picture is being revealed.

If you are working with a litigated case, you will typically be provided with 2 years of bank statements, credit card statements, and 3 years of taxes. In a mediated case, you might only get a month or two of the most recent and maybe only the last year of the taxes. Regardless, what is your process for reviewing those documents? Do you pull the bank balances as close to the date of division as possible and enter them into your software and move along? I hope not. It is imperative that you review, line by line, each one of those statements for irregularities and pointers to other assets that may not have been revealed.

In a recent case that I worked on, as I perused the bank statements, I noticed an unusually large number of ATM withdrawals. At first, it looked like it was a weekly withdrawal of $200. Then they started to pile up with multiple withdrawals in one day. Feeling like something was odd, I started a spreadsheet to track them and took special notice of the detailed description of each one. Did you know that if you take money from an actual bank ATM, the description will give you the cross streets of the machine. If, however, you take money from an ATM located at a specific company, not a bank, it will print the actual address of the business.

I continued to list all the withdrawals and to my surprise, when I started with the second bank account, there were even more! I documented them all and sorted by date and a very clear pattern of excess emerged with sometimes 4 or 5 withdrawals in one day for as much as $1600. I then googled the specific addresses and lo and behold – casinos. When I was done with the 2 years of statements, there was over $35,000 that had been removed from the accounts with no knowledge of the wife.

“In a recent case that I worked on, as I perused the bank statements, I noticed an unusually large number of ATM withdrawals.”

That’s just one example of what could show up. Usually it’s much less sinister. I almost always find payments to credit cards that have not been disclosed to anyone. This is usually just an oversight but has significant impact on the parties involved.

 

Here is just a small list of things to look for:

  1. Transfers to other accounts that weren’t disclosed.
  2. Payments to credit cards or loans that weren’t disclosed.
  3. Large balances of Airline miles or points that need to be valued.
  4. Large purchases with no explanations.
  5. Regular cash back amounts with every transaction could indicate a      cash stash somewhere.
  6. Safety deposit box maintenance fees – what’s in the box?
  7. Post office box maintenance fees – what mail is going there and            why?

 

Those bank and credit card statements are a treasure trove of information. Don’t just look at the balances and move along. You could be costing your client thousands of dollars!

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