Attempt to Hide Funds Leads to Tax Conviction for Ex-Husband

Honesty is not just the best policy during a divorce, it’s the law. Financial information listed within a Statement of Net Worth or produced in response to a discovery request must be complete and accurate. However, some divorcing spouses choose to disregard the laws by hiding assets, hoping to secure more favorable property division, maintenance or child support terms. This might not only backfire during the marriage dissolution process, but could have criminal consequences.

Multimillionaire Todd Kozel was sentenced to five years in prison for tax evasion stemming from a scheme where he secreted stock in his oil company and other assets in an account on the island tax haven of Jersey. Mr. Kozel had transferred the money in 2010, shortly after learning that his then-wife, Ashley, was divorcing him. During their contentious divorce, Todd was eventually ordered to transfer stock to Ashley, but delayed and moved money to a different location in order to conceal the Jersey account. When Todd and his new wife attempted to purchase a $12 million apartment a few years later using funds from the Jersey account, the scheme unraveled and Mr. Kozel admitted he had opened the Jersey account to keep assets away from his ex-wife.

You might not be dealing with millions of dollars, but there are things you should remember as you unwind financial ties during a divorce:

• Be forthright and accurate — At the outset of the divorce process, each party must file a sworn, notarized Statement of Net Worth detailing their financial holdings. Failure to provide accurate information could result in legal sanctions and an adverse ruling in your divorce.
• Document any asset transfers thoroughly — A marriage dissolution proceeding could take months, or even years. Everyday obligations continue and emergencies could arise that require significant financial transfers. To avoid problems, make sure you document and explain substantial transactions so you are not accused of misconduct.
• If you suspect something, say something — Should you suspect that your spouse has hidden accounts or is possibly engaging in fraudulent asset transfers behind your back, let your attorney know immediately, so steps can be taken to protect your interests.

During negotiations and litigation relating to property division, child support, spousal maintenance and other aspects of New York divorce, Jakubowski, Robertson, Maffei, Goldsmith & Tartaglia, LLP delivers strong advocacy. We serve clients throughout Nassau and Suffolk counties and can answer your questions about financial disclosures and methods of determining if your spouse is being dishonest about their assets.