Tag: divorce settlement

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.

Depp Divorce and Extortion

Posted by Ron Kauffman on

The Johnny Depp defamation trial against his ex-wife, Amber Heard, took a turn towards divorce – and possibly extortion. According to sworn deposition testimony introduced in court, after filing for divorce Heard demanded Depp sign divorce papers and comply with her list of demands. Could a settlement letter be considered extortion?

Divorce extortion

On Strange Tides

Heard filed her petition two days after Depp’s mother passed away. At the trial, Heard’s lawyer reportedly said her client was afraid of Depp, but wanted to keep the matter private. Heard’s team was reported to have said they avoided arranging for Depp to be personally served with legal papers at one of his movie premieres.

Heard’s lawyer allegedly wrote:

“Amber wishes to work quickly towards a private and amicable resolution of all matters, but she will need Johnny’s immediate cooperation to do so.”

Heard then demanded Depp sign divorce papers and comply with a list of demands. Heard wanted him to allow her to use the black Range Rover in her possession and for him to make the payments, exclusive use and possession of three units owned by Depp in a Los Angeles building, that he continue to pay the bills, attorney fees forensic accountant fees.

A couple of days later, Heard filed for a restraining order against her then-husband claiming she was the victim of repeated domestic violence.

Florida Extortion and Divorce

I have written about divorce and extortion before. It is easy to cross the line from harmless threats to the crime of extortion. The fact remains that in Florida, it is a second-degree felony to threaten to expose another for the commission of any crime or offense for one’s own pecuniary advantage.

There are several examples of how this happens in divorce. One which comes to mind, is taxes. It is not uncommon for spouses to threaten to report the other spouse to the IRS for underpayment of taxes unless money is paid to keep the silence.

Another very common extortion technique in Florida is to issue a threat to report a spouse to immigration officials. One spouse will to use the threat of deportation unless money is paid in a settlement. This was more common during the previous administration when the country cracked down on illegal immigration.

Extortion also happens when signing settlement agreements. For example, spouses sometimes threaten that if the other spouse does not sign the settlement agreement, the other spouse will tell the children about infidelity, or something else to ruin what reputation the spouse has.

“Why Fight When You Can Negotiate?”

– Capt Jack Sparrow

Depp is suing Heard for defamation arising from a 2018 Washington Post op-ed. The article, Depp alleges, insinuated he was the perpetrator; the Oscar-winning actor claims the column made him lose job opportunities.

The letter that Heard’s divorce lawyer sent to Depp’s divorce lawyer was reportedly seen online and mentioned physical injuries Depp allegedly inflicted on Heard and noted that there were many witnesses. It mentioned a domestic violence temporary restraining order, which Heard had not yet sought to keep the issue out of the media spotlight.

Heard’s lawyer reportedly asked Depp’s lawyer to let Heard live rent-free in their apartments while Depp continued to pay the mortgage and utilities in exchange for allegedly keeping their divorce out of the media spotlight. Depp was promoting “Alice in Wonderland” at the time of the couple’s separation. The letter then listed Heard’s demands, concluding:

“We are indeed hopeful that we can swiftly work out mutually acceptable short and long term solutions outside of the public eye.”

Amber Heard’s divorce lawyer’s letter was shown in court last week as evidence in the defamation trial. Depp himself testified in court over four days about their tumultuous relationship and break-up. By the time the divorce was finalized in early 2017, Depp was on the hook for more than $14 million, according to Edward White, Depp’s business manager, who also testified.

Heard pledged to split the $7 million between donations to the ACLU and a children’s hospital. But an ACLU executive who testified this week said it received only $1.3 million of the promised $3.5 million in her name, and that $500,000 of that money actually came from Elon Musk, who Heard dated following her breakup with Depp.

The Insider article is here.

 

Transformer: Marital Settlement Agreement

Posted by Ron Kauffman on

Actress Megan Fox and her estranged husband Brian Austin Green are transformers: changing from married to single after finalizing their marital settlement agreement. The settlement agreement should resolve all of the parenting and financial issues raised in their divorce.

marital settlement agreement

More Than Meets the Eye

Actress Megan Fox, 35, is one of the stars of the Transformers movie franchise. Her husband, David Austin Green, 48, is also an actor, best known for his portrayal of David Silver on the television series Beverly Hills, 90210

According to many reports, the couple did not have a prenuptial agreement before getting married. This means that, under California law, they will have to divide all of the community property they acquired during their decade-long marriage.

Details about the marital settlement agreement are murky. It is unclear whether either one of the parties will be paying alimony or child support, though the divorce documents refer to a settlement being agreed upon outside of court.

Regarding parenting, the couple agreed to share joint legal and physical custody of their three children, a highly contentious issue for many couples, but a demand which Fox requested when she initially filed for divorce in November 2020.

Fox will also get her legal last name changed back from Green. News reports indicate both Fox and Green have moved on. Fox has been in a highly publicized romance with Machine Gun Kelly since mid-2020, while Green has been dating “DWTS” pro Sharna Burgess.

Florida Marital Settlement Agreements

I’ve written about agreements before. 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 (called “equitable distribution”), alimony, child support, payment of attorney’s fees and costs, and any other items to which the parties have agreed.

A marital settlement agreement entered into by the parties and ratified by a final judgment is a contract, subject to the laws of contract. The enforceability of contracts in Florida is a matter of importance in Florida public policy.

Marital Settlement Agreements in Florida are treated differently than prenuptial agreements. There’s a good reason for the difference in treatment, and it turns on the adequacy of the knowledge of the finances involved.

The adequacy of knowledge can be plausibly raised only when an agreement was reached by people in conditions of mutual trust and confidence and who are not dealing at arm’s length – such as when you are negotiating a prenuptial agreement.

But once you are involved in divorce proceedings in court, you are dealing at arm’s length and without the special fiduciary relationship of unestranged spouses. Questions about the adequacy of your knowledge of finances don’t really exist when you are in court and have the opportunity to take financial discovery.

Hope and Faith

The couple had a rollercoaster relationship from the start. After meeting on the set of “Hope & Faith” when Fox was just 18 in 2004, they were engaged and living together by 2006. In 2009, they made a “mutual decision” to end their engagement only to be re-engaged and married by the end of June 2010.

Four years and two kids into their marriage, Fox stated very publicly that there was no “intimacy whatsoever” with her husband during a red carpet interview. Fox has been in a new relationship with Machine Gun Kelly consisting of a  whirlwind of PDA’s and selfies.

Her soon to be ex-husband Green confirmed:

“I’ve never met him, but Megan and I have talked about him. They’re friends at this point, and from what she’s expressed, he’s a really nice, genuine guy, and I trust her judgment.”

The Fox News article is here.

 

Family Law Mediation During the Coronavirus

Posted by Ron Kauffman on

With most of the country in quarantine, many people are discovering that family law courts are open, but mostly for zoom hearings. Now, family law mediation has gone virtual too. Mediations join such other legal proceedings as depositions, motions, hearings, arbitrations as part of the zoom world.

meeting

Mediation During the Quarantine

Mediation is generally a requirement in divorce and family law cases if you want to ever proceed forward with trial. It is customary for parties, their lawyers and experts to meet in-person at the mediator’s office, or one of the law firms involved.

Meeting together is an advantage in that it gets parties and their counsel together with one objective in mind — settle the case. There is an unspoken “dance” that occurs in that parties engage in substantive discussions for a period of time.

Many times, a mediation does not settle until after dinner is ordered. When the mediator is in the other room spending time with one side, the other side is left to talk about the case (or often whatever else is on their minds). There is a lot of downtime.

With social distancing amid the coronavirus, family law cases and divorces have to do their mediations virtually. They have become successful, and perhaps it will have some lasting impacts afterwards.

Florida Family Law Mediations

I’ve written about mediation before. Under Florida law, the parties to a divorce and most other family law cases must attempt to resolve their difference through mediation before their case can proceed to trial. In many cases, mediation can be used earlier in the process to resolve all outstanding disputes before either party has filed for divorce.

In divorce mediation, the parties and their attorneys meet with a neutral mediator – sometimes together, sometimes separately – to try to negotiate a settlement agreement.

Ideally, both the mediator and the attorneys should have enough experience to anticipate what will happen if the case goes to trial. Drawing on that experience, they can help the parties negotiate an agreement without any need to have a judge decide the issues for them.

At mediation, you will discuss issues that are highly personal and emotional, in a confidential setting. Accordingly, there are many factors to think about when choosing the right family mediator.

Tips for A Virtual Mediation

Before starting the mediation is the best opportunity to perform a test run of the zoom app, webex, gotomeeting, google meet, or other apps you have, to test for connectivity issues for your virtual mediation. The mediator should identify the protocol and policies regarding virtual mediation.

Given the complexities of family law cases, it is common to have separate confidential caucus meetings between the mediator and the parties. In some cases, we have meetings with the mediator and the two lawyers and experts in advance of the mediation.

One of the good things about virtual mediations is the lack of having to travel to mediation, park your car, and find restaurants. Because of that, there can be a substantial cost savings associated with virtual mediations.

It is easy to present exhibits and documents in a mediation on zoom. Each attendee has the ability to share their screen to show documents and walk through any presentation.

Usually, the mediator puts each party into a virtual break-out room where the parties wait for the mediator to come to them to talk about their case. There is usually a lot of downtime for the other side at that point.

If you settle your case, the mediator will want everyone to sign an agreement or some type of term sheet of the conditions of settlement. In very complex cases, the mediator may have asked your counsel to make drafts.

How do you sign electronically? In virtual mediations, electronic signatures may be applied to the document through docusign, adobe e-sign or a similar product.

Despite the coronavirus, courts and law offices are open virtually, and cases are being settled at mediation every day.

The National Law Review article is here.