Why Hiding YourAssets During DivorceIs a Terrible Idea

A Swiss businessman has been accused of stealing $25 million worth of artworks from his Manhattan home only days before filing for divorce from his socialite wife. Tracey Hejailan-Amon says she collected between 17 and 20 modern works including Andy Warhol’s 1966 “Self-Portrait” and Jean-Michel Basquiat’s 1986 “Saxaphone” with her husband throughout their marriage.  Then, in October, Amon’s art consultants “surreptitiously” lifted the collection from their $16 million Manhattan apartment and stashed them in a Queens storage facility while she was overseas.

Jean-Michel Basquiat's 'Saxaphone', one of the artworks in dispute.

Jean-Michel Basquiat’s ‘Saxaphone’, one of the artworks in dispute.

“These illegal and unlawful removals of the works of art is and was a strategic predicate for the service of a divorce action by Amon,” Hejailan charges in her suit. He later filed for divorce in Monaco. The couple did not have a pre-nuptial agreement, and Hejailan believes she is entitled to a substantial portion of the artworks.

A lawyer for Amon said that the collection is not marital property. It will now be in the judge’s hands to decide how the artwork – and potentially many other assets – will be split.

In another case, an Alaskan plastic surgeon didn’t want his wife of 28 years to receive any of his money, so he hid his money. In 2008, without telling his friends, family and workplace, he travelled to Costa Rica and Panama, opening bank accounts in false names and eventually moving over $4 million to the accounts. He didn’t reveal the assets or income to the court or his divorce lawyer. Once the divorce became final in 2011, he repatriated $4.6 million.

But his plan came undone when investigations by the IRS found he hadn’t paid tax on the income from the assets for four years and owed $600,000 in back taxes. He has been charged with tax evasion, fined $1.75 million in penalties and is facing a 95-year jail sentence.

In Australia, a 56-year-old physiotherapist from Sydney’s southern suburbs, facing divorce proceedings, was caught trying to deceive his estranged wife into thinking his practice was worth much less than its real value. But the physiotherapist was exposed when the wife’s solicitor hired a private detective to pose as a customer and visit the husband’s practice for some back rubs.  The trial judge decided the husband was trying to conceal his true income and gave him less than 10 per cent of the family home.

offshoreWays in which spouses might try to hide assets to avoid financial loss during divorce include:

  • Hiding it offshore, in foreign bank accounts
  • Creating a complex web of companies
  • Using trust structures
  • “Giving away” assets or dubious debts

The Family Law Act requires full and frank disclosure of the financial affairs of both partners who have to swear an oath and set out a complete statement of income, expenses, assets, financial resources and liabilities.  The duty of disclosure is ongoing, so if there are changes in parties situations or facts come to light that were hidden even years after orders were made, then it can be a basis for asking the Court to change orders. The court in recent years has been very harsh on people who have not fully and frankly disclosed their proper financial position.

We recommend that both parties settle a divorce in a fair and transparent way. A court battle is a time-consuming and expensive last resort, but if you think your former spouse is hiding assets, it’s important to get experienced advice.

Contact us today for your FREE, 10-minute phone consultation.