Tag: court fraud

Catastrophic Fraud After Divorce

Posted by Ron Kauffman on

Fraud can lurk in every divorce case. After the divorce ends, lawyers, professionals, experts, and judges have all moved on to other cases. That is the time many clients and their divorce settlements can be exposed to catastrophic fraud – as one Tennessee woman is reported to have discovered.

divorce fraud

Beale Street Blues

Lawyers act as fiduciaries to their clients during a family law case. Accountants, financial planners, and others can become fiduciaries after the divorce. In a fiduciary relationship, the  duties involved need not be strictly legal; they can also be moral, social, domestic or personal.

In 2003, Ms. Loveland received approximately $1.3 million dollars in connection with her divorce. Knowing that these funds would be vital to her future retirement, she sought out an investment advisor who could manage her assets as she claims she had no knowledge or experience with investments, securities, or financial markets.

Ms. Loveland met with her long-time accountant, who referred her to his friend, Mr. Lentz. She then agreed to allow Lentz to manage her assets. She alleges she informed him that she knew nothing about finance or securities, and that she was relying entirely on his discretion and judgment to manage her investments for her.

Mr. Lentz reassured her that he would take good care of her and would manage her assets in a reasonable and responsible manner, ensuring that she would enjoy some return on her investments while protecting her principal asset base.

However, Ms. Loveland discovered to her shock that Mr. Lentz filled out an Options Account Request Form, purportedly on her behalf, in which he allegedly indicated that her investment objective was “Growth” and that her trading experience was “Extensive.”

According to the lawsuit, Lentz allegedly used “DocuSign” to forge Ms. Loveland’s signature to the Options Account Request, and is also alleged to have cut and pasted customer’s signatures onto forms without their authorization, and arranged to receive Loveland’s financial statements on her behalf.

Last summer, after discussing employment prospects for roughly an hour, Lentz told her:

“now for the bad news . . . you have no money left, it’s all gone.”

Loveland’s divorce settlement of around $1.3 million is now worth around $7,000 and she has filed a lawsuit in a Tennessee federal court against Lentz and his companies.

Florida Divorce Fraud

I’ve written about various aspects of divorce fraud before. Interestingly, Ms. Loveland’s case is not about fraud against her ex-husband, but misconduct which occurred after her divorce, involving the loss of her $1.3 million divorce settlement.

What happens if the fraud is caused by a spouse? In Florida, courts distribute the marital assets, such as bank accounts, between parties under the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Some of the factors to justify an unequal distribution of the property include things like the financial situation the parties, the length of the marriage, whether someone has interrupted their career or an educational opportunity, or how much one spouse contributed to the other’s career or education.

Another important factor is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition or within 2 years prior to the filing of the petition.

Dissipation of marital assets, such as taking money from a joint bank account, happens a lot. Less common are scams like forging names and diverting financial statements. The misconduct may serve as a basis for assigning the dissipated asset to the spending spouse when calculating equitable distribution.

Misconduct, for purposes of dissipation, does not mean mismanagement or simple squandering of marital assets in a manner of which the other spouse disapproves, such as day trading stocks. There has to be evidence of intentional dissipation or destruction.

However, if the fraud is not from a spouse during divorce, but mismanagement of your divorce settlement by anyone who is not your spouse, you are limited to civil causes of action in civil court, as opposed to family court.

Going to Graceland

Ms. Loveland’s lawsuit alleges a lot of damages. She was forced to surrender a Long-Term Care policy that she paid premiums on since 2004 and surrender a $250,000 Life Insurance Policy in which she had invested over $18,000.00 because she can’t pay the nearly $5,000 premiums.

Loveland alleges that as a result of Lentz’ actions:

“now, at the age of sixty-four, forced to work long hours for Uber and DoorDash merely to make ends meet.”

Ms. Loveland has sued in civil court for violation of the Tennessee Securities Act, breach of fiduciary duty, negligence, among other causes of action, and is seeking punitive damages.

The Wealth Professional article is here.

False Abuse Allegations in Child Custody Cases

Posted by Ron Kauffman on

False allegations of abuse can be a form of alienation, and can occur during any divorce and child custody proceeding. Identifying warning signs, and knowing how the courts and laws protect against false abuse allegations, are ways to protect yourself.

False Abuse

False Abuse Claims

If a parent makes a false allegation against another parent to get the upper hand in court, they can badly undermine the parent-child relationship and use the court as a weapon to make the damage last longer.

How often do false claims happen? Accurate statistics are not known, but some have given estimates ranging from 2% to 35%. The wide range in the statistics can depend on several factors, including whether the child is reporting or a parent, and the audience.

Whatever the percentage of false claims, attorneys, judges, and mental health experts all know firsthand that it is a big problem in family court. Nothing can disrupt, sidetrack, or impede a case more than an allegation of abuse that eventually proves to be false.

Detecting a false allegation is critical because judges can be influenced by the accusation, even if it is not substantiated by the evidence. Sadly, a child custody decision could result in favor of the falsely accusing parent. Uncovering and exposing a false allegation is vital in making sure the offending parent is not rewarded for destructive behavior.

False allegations of abuse are often made during contentious child custody cases. One parent believes that he or she will gain leverage in the case by lodging an allegation of abuse against the other parent. More often than not, the allegation of abuse is a tactic used to alienate the child from the targeted parent. In other words, it is part of parental alienation. A number of steps can be taken by the targeted parent to beat the false allegation of abuse.

Florida False Abuse Claims

I have written on fraud in divorce and child custody cases before. False allegations of abuse can become the nuclear bomb of divorce and child custody cases, as Florida requires mandatory reporting of child abuse by judges and others.

There are protections and penalties for creating false abuse claims. For example, anyone who knowingly and willfully makes a false report, or counsels another to make a false report can be guilty of a felony.

In addition to criminal penalties, a false allegation can harm your child custody case too. When a court creates, or modifies a parenting plan, including a time-sharing schedule, the court must make the best interest of the child the primary consideration.

Determining the best interests of the child requires a judge to evaluate all of the factors affecting the welfare and interests of a child, including, but not limited to evidence that a parent has knowingly provided false information to the court regarding domestic violence, sexual violence, child abuse, child abandonment, or child neglect.

Self-Protection

As in all matters, protecting yourself requires some work. Try to collect as much documentation as possible to disprove the allegation. Typically these include emails, texts, photos and more.

Research hiring mental health experts who can address false allegations, parental alienation, and the particular facts in a case. Forensic experts are an invaluable resource to help you in court.

False allegations of abuse are considered parental alienation. The intent of the alienating parent is to disrupt a child’s relationship with the targeted parent. Alienation is at the heart of false claims.

The Psychiatric Times article is here.

Love, Divorce, and Fraud

Posted by Ron Kauffman on

Love has flourished during the COVID pandemic. So has divorce and fraud, as more consumers than ever report being scammed, according to new Federal Trade Commission data showing a record $304 million lost to love scams last year.

Divorce Fraud

Fraud is in the Air

The COVID pandemic has resulted in people staying physically distant, providing ample time and reason for unsuspecting people to look for relationships online and providing a lot of new reasons why scammers can’t meet you in person.

Downloading pictures stolen from the internet, your potential, future romantic partner has been building a false persona that seems just real enough to be true, but always having a reason never to meet in person.

They’ll often say they’re living or traveling outside of the United States because they’re working on an oil rig, or are in the military, or they are a doctor with an international organization.

Eventually, your love interest will ask for money. The impact can be big, with the median loss reported to the FTC being $2,500 — more than ten times higher than the median loss across all other frauds.

Why does your online romantic partners need the money? Some claim they need to pay for a plane ticket. Others to pay for surgery or other medical expenses, or to pay for a visa or other official travel documents.

Romance scams started on dating sites and apps, but many report that the scams originated through social media. Interestingly, some people are saying their biggest losses occurred when they believed the scammer had sent them money! What happened was these instances turned out to be elaborate money laundering schemes, such as for fraudulently obtained unemployment benefits.

Florida Divorce Fraud

Not unlike an online romance scam, I’ve written about various aspects of divorce fraud before. In Florida, courts distribute the marital assets, such as bank accounts, between parties under the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Some of the factors to justify an unequal distribution of the property include things like the financial situation the parties, the length of the marriage, whether someone has interrupted their career or an educational opportunity, or how much one spouse contributed to the other’s career or education.

Another important factor is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition or within 2 years prior to the filing of the petition.

Dissipation of marital assets, such as taking money from a joint bank account, happens a lot. Less common are scams like trying to cash stolen checks. The misconduct may serve as a basis for assigning the dissipated asset to the spending spouse when calculating equitable distribution.

Misconduct, for purposes of dissipation, does not mean mismanagement or simple squandering of marital assets in a manner of which the other spouse disapproves. There has to be evidence of intentional dissipation or destruction.

“And I don’t know if I’m being foolish”

Social distancing has complicated in-person dating. People are spending more time online. There is a general increase in the use of dating apps. And the pandemic has heightened the perceived credibility of requests for money—for, say, medical bills or car repairs to get to a vaccine appointment.

Protecting yourself can also be easy. Do a search for the type of job the person has to see if other people have heard similar stories. For example, you could do a search for “oil rig scammer” or “US Army scammer.”

Preventing fishy transactions has become easier in recent years as financial institutions and money-transfer companies have beefed up data analytics tools. As fraudsters change tactics, companies can adjust systems to adapt to new patterns, enabling quicker detection of suspicious activity or dubious customers.

That in part is how Western Union Co. has managed to stay abreast of fraudsters’ evolving tactics. Improvements in the company’s monitoring technology have led to a decrease in the number of romance scams reported at the company.

One thing that can’t be fixed by an algorithm: human gullibility in the face of possible romance. Which is why Western Union and competitor MoneyGram International Inc. say customer outreach and education is also key.

In addition to improved technology, MoneyGram also has a process to talk with customers flagged as potential fraud victims, which has helped reduce romance scams using the company’s services. If a requested money transfer is flagged as suspicious, MoneyGram might inquire whether the sender has actually met the intended recipient before completing the transfer. The company might also tell the customer that he or she could be the victim of fraud.

The reality is fraudsters are very good at identifying the kinds of psychological aspects that they can connect with their victims. They exploit those and become very practiced at it.

The Wall Street Journal article is here.

FTC consumer tips on spotting romance scams is here.

Divorce Fraud in Minnesota

Posted by Ron Kauffman on

Divorce fraud may be the reason a Minnesota judge rejected a proposed marital settlement agreement between Derek Chauvin, the former Minneapolis police officer charged in George Floyd’s death, and his estranged wife.

Divorce Fraud Minnesota

Fraud and Loathing in Minneapolis

Washington County Judge Juanita Freeman issued the order in late October declining the agreement, writing that a transfer of “substantially all” of one’s assets to the other in an uncontested marriage dissolution is a badge of fraud.

The Chauvin’s agreement apparently sought to transfer the majority of Derek Chauvin’s assets to Kellie Chauvin. The order said the couple’s agreement would transfer all the equity in their homes, funds in their bank and investment accounts, and all of Derek Chauvin’s pension and retirement accounts “except for the nonmarital portion of two specific accounts” to Kellie Chauvin.

State law encourages divorces to be settled without additional court involvement, but:

The court has a duty to ensure that marriage dissolution agreements are fair and equitable and says judges can deny an uncontested agreement between a couple if the transfer features badges of fraud.

She did not accuse them of fraud or provide any other details or motives for her decision. She did write the Chauvins’ can submit a revised agreement to be considered by the court, adding it must indicate which portion of Derek Chauvin’s pension and retirement accounts are nonmarital and “include a balance sheet specifically indicating the total dollar value of the debts and assets that are assigned to each party”.

Florida Agreements and Fraud

I’ve written about the Chauvin divorce before, and also about enforcing marital settlement agreements. Most family law cases are resolved by agreement, not by trial. A Marital Settlement Agreement is the method to resolving all of the issues, and is the final product of the negotiations.

A marital settlement agreement puts in writing all the aspects of the divorcing parties’ settlement. Topics covered in the Marital Settlement Agreement include the parenting plan and timesharing schedule, the division of the parties’ assets and liabilities.

A marital settlement agreement, entered into by the parties and ratified by a final judgment, is a contract subject to the laws of contract. In Florida, parenting plans and matters relating to the children must be approved by the family law judge. In addition, the judge is obligated to make sure child support is consistent with Florida’s child support guidelines.

Something is rotten in the state of Minnesota

Calling the judge’s ruling “rare,” local divorce attorneys in Minnesota said it adds to suspicions that Derek and Kellie Chauvin are trying to protect their assets.

This is just speculation, but it’s possible that the [agreement] was intentionally drafted to get assets out of Chauvin’s name in anticipation of a civil judgment against him from the estate of George Floyd. That may be what the court is getting at when it references ‘badges of fraud.

Other sources report that court documents highlight varied sources of incomes between the couple with Chauvin, 46, making between $52,000 and $72,000 per year as an officer. He worked as an off-duty security guard on the weekends at El Nuevo Rodeo dance club, Cub Foods, Midtown Global Marker, and EME Antro Bar.

However, Freeman wrote that under the agreement, Kellie Chauvin would have received all the equity in their two homes, all the money in their bank and investment accounts and all the money from Derek Chauvin’s pension and retirement accounts.

Funds from two of Derek Chauvin’s accounts that were earned before the couple’s 2010 marriage would have been exempt. Chauvin was a Minneapolis officer from 2001 until his firing this year. It’s unknown if the monetary amounts were listed in the agreement due to the heavy redaction. Chauvin has not begun drawing his pension, so that amount is not yet public information.

Several tax-related felony charges filed in Washington County this summer against the couple allege that they failed to claim $464,433 in joint income dating back to 2014. Derek Chauvin earned $52,000 to $72,000 annually between 2014 and 2019 as an officer. He also earned nearly $96,000 working security at businesses while off duty.

Divorces of convenience aren’t unheard of. They’re sometimes filed to protect assets when someone enters assisted living or is dealing with health problems that could result in exorbitant bills. Judges are compelled by law to ensure that divorces are equitable, but state law also encourages settlement agreements without additional court involvement.

It may be unusual that a judge would reject a stipulated agreement. Judges are happy to know that litigants have avoided any more administration of this case and a trial, which is really time-consuming.

The Chauvins could submit a revised agreement. If no revised agreement is reached and approved, the case could be tried in court. Theoretically, Judge Freeman could also divide the assets as she deems fit and is empowered to do through state law.

The Star Tribune article is here.

 

Divorce Fraud

Posted by Ron Kauffman on

There are many ways for spouses to commit divorce fraud, especially during the proceeding. A Texas man was just found guilty of forging his wife’s signature on divorce papers — while giving himself a small break on support, and adding a couple weeks to summer visitation. What can be done about divorce fraud?

The Texas Divorce Fraud Case

According to reports, her husband, Brian Kimmell, had been staying at her residence when in October he went to court, without her, to file the divorce papers.

Although the 10-year marriage had ended in separation, they maintained a civil relationship for their son and she believed he had traveled up from San Diego – where the Navy had stationed him – in order to attend their son’s football game.

About eight months before Brian Kimmell allegedly forged his documents — social media posts showed that he had gotten married to another woman even though he was still married to her.

The unsigned divorce papers had Brian paying $1,000 a month in child support. In the forged copy the amount was reduced to about $700.They had agreed to him taking their son for a month each summer, but in the forged documents he had their son for a couple weeks more.

When Cassie Kimmell heard that the case had stalled, she said she called a Navy official and Naval Criminal Investigative Services agents met with Port Orchard police investigators and turned over handwriting samples from Brian Kimmell.

The samples were sent to the Washington State Patrol Crime Lab and were analyzed by a handwriting expert who wrote in reports that it was “highly probable” that the signature on the divorce document was not made by Cassie Kimmel, and that Brian Kimmell “probably” signed it instead.

Divorce and Fraud

In Florida divorce papers, such as judgments and marital settlement agreements can be set aside on various grounds, including fraud. Divorce fraud has become very common, and I’ve written on the subject before.

In certain cases, Florida allows you to challenge and vacate or modify a marital settlement agreement if the agreement was based on things like fraud, deceit, duress, coercion, misrepresentation, overreaching.

Additionally, Florida courts have allowed challenges to agreements where the marital settlement agreement makes unfair or unreasonable provision for the challenging party given the circumstances of the case.

Judgments are another area of fraud, especially in light of the Texas divorce fraud case. The thinking is that cheaters should not be allowed to prosper, and it has long been central to our legal system.

Florida rules of court expressly allow you to get some relief from a judgment if it was the product of fraud (whether intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.

Extrinsic fraud is conduct which prevents you from presenting your case. This is usually done by keeping you away from court; falsely promising a compromise; ignorance by an adversary about the existence of the suit or the acts of the plaintiff; fraudulent representation of a party without his consent and connivance in his defeat; and so on.

Intrinsic fraud, on the other hand, is fraudulent conduct within a case and pertains to the issues in the case. For example, false testimony in a proceeding is intrinsic fraud.

Courts have available to them all kinds of sanctions, in a wide variety of shapes, attempting to encompass the virtually limitless ways people in divorce manage to misbehave.

Back in Texas

After the divorce was reversed, and then completed again with Cassie Kimmell’s actual signature, Brian Kimmell received no visitation with their son and has to pay $1,300 a month.

He also was tagged with about $32,000 of additional payments to Cassie Kimmell, which comes on top of paying legal fees for the second divorce and the criminal case.

Reached through an attorney, Brian Kimmell wrote in an email to the Kitsap Sun that his career had ended and he lost his rights to see and speak to his son despite having to continue to pay child support.

All this and I still don’t even know what for. I never used to think something like this could really happen to a person. Needless to say, my eyes have been opened.

On March 1, Brian Kimmell pleaded guilty to the first-degree perjury charge and was sentenced to six months of home detention, which he was authorized to serve at his residence in Texas.

The King5 article is here.