You receive a call from your attorney asking you to make an appointment with his secretary because he wants to meet with you regarding documents he has received from your husband. Your husband had filed for divorce six months before and had also sought spousal support from you shortly after the petition was filed. Your lawyer had argued that spousal support during a divorce proceeding was intended for the sole purpose of maintaining the status quo pending the division and distribution of the community assets. Given the fact that you both lived a very simple lifestyle and drove inexpensive cars, it did not take much to maintain the lifestyle attained during the marriage, and your husband's salary as an engineer with the city was more than adequate to maintain his.
Your husband's lawyer had insisted that it was a matter of money only, and since income from your dental practice was much greater than your husband's, as matter of law, the incomes of both parties should be considered when figuring the right amount to be paid to your husband.
You and your husband — and your respective attorneys — both had filed their arguments, and the matter was set for a court hearing.
While you were waiting for the hearing date you received a notice from the U.S. Internal Revenue Service (IRS) stating that the income on your joint tax return for 2007 was understated by more than $100,000 — and, therefore, you currently owed a very large sum, plus penalties and interest, for that year. The attached explanation showed that your husband had cashed out a retirement fund of one hundred and twenty five thousand dollars and had not reported it in the total income for 2007. You sent a copy of the notice to your attorney and he immediately contacted your husband's attorney to request that the upcoming hearing be continued until an explanation as to the whereabouts of the one hundred and twenty five thousand dollars could be ascertained. Your husband's attorney refused the request. However, at the hearing your attorney informed the Judge of the IRS letter and pointed out that Petitioner's Income and Expense Declaration, signed under penalty of perjury and filed with the court, could not possibly be accurate if he had taken the funds from his retirement account. He asked the court for a continuance to pursue the matter point before a decision on spousal support could be reached. The judge agreed and continued the hearing for three months after reminding you that if spousal support was granted it would be retroactive and your client could face a substantial lump sum payment. Your lawyer said he understood.
Your lawyer immediately sent out what he referred to as discovery and had gotten responses. You make the appointment with his secretary for the next day. You arrive at his office and you can see that he is excited. He shows you a large stack of papers and tells you that he sent out interrogatories and request for documents and had received this stack in response. Without showing you the documents, he starts asking you about your knowledge of the market for gold, silver, and other precious metals. You tell him that you know nothing about gold or silver except for the few pieces of jewelry you have at home. He tells you that you had better start learning that market right away, because, based on the documents he had received in response to his request, it appears that in November 2007 your husband had cashed out a retirement plan from a former employer and had received approximately $100,000. The following month, December 2007, he had started buying gold, silver, and palladium, a member of the platinum group of metals. He continued to trade in these items throughout 2008 and 2009 before he filed for divorce.
Your lawyer tells you that while you were investing in real property and including your husband's name on each deed you acquired, he had been steadily investing in precious metals behind your back. When the real estate market crashed and the recession hit in 2008, your husband had already acquired a substantial portfolio of precious metals. While your real estate investments fell to the point where the mortgages were all higher than the fair market value of the properties, the value of precious metals soared, as the rich sought these commodities as the best investments in these troubling times. Your lawyer pointed out that all these investments were made with community funds and were therefore community assets in which you were entitled to at least one-half. He also tells you that on a number of occasions your husband had used aliases and given fictitious addresses when making his purchases. This indicated an attempt to hide the true ownership of these assets, and, in essence, defraud the community.
Your lawyer tells you that he is going to call the opposing counsel and ask him to withdraw the request for spousal support since the responses to the interrogatories and the documents requests had revealed the fact that your husband's statements in his Income and Expense Declaration, as well as his schedule of Assets and Debts, were clearly perjury and intended to mislead the Court. He also informs you that he wants to discuss with the opposing lawyer the possibility of a quick settlement in this matter because the California Legislature and Courts take a very dim view of the deliberate filing of false declaration regarding assets in divorce proceedings. The Legislature had made divorces easy to obtain and wanted to the process of division of assets and debts as painless as possible. To this end the courts were strict about honesty in asset disclosures by both parties to a dissolution. He tells you that he is aware of cases in which the party attempting to defraud the community had been forced to turn over the hidden assets in their entirety to the other party.
You are shocked at the revelations of your husband's hidden wealth because you had always been the one to handle financial issues during the marriage. Frankly, you did not believe he had any interest or aptitude for handling money, and the fact that he was making sharp investments in metals when your investments in real estate were tanking comes as a total surprise.
Your lawyer makes the call to opposing counsel on the speaker phone, and you can hear their conversation clearly. Your husband's lawyer agrees to withdraw the spousal support request and your lawyer tells him that you want more than this. You want a settlement of the division of assets issue as soon as possible or you want to notify the judge of your husband's perjury and clear attempts to hide his assets while claiming an interest in yours.
The opposing counsel tells your lawyer that he had never been informed of these assets by your husband before the petition was filed. It was only after he was shown the IRS notice that you husband became nervous and began to reveal his secret investments, he says.
Your husband's lawyer ends the call by pointing out that "a letter from the IRS isn't always bad news."
Sounds familiar? What's your story?
Write me at: rlowe542@aol.com
Website: www.richardlowelawoffice.com
Richard Lowe, Esq. is a contributer to Carib Press.
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