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Detecting Hidden Assets During Divorce Michael Stutman and Philip Segal
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ABOUT US
Michael Stutman
[email protected]
646-688-4748
Founding partner Michael Stutman’s prestigious career spans three decades around the globe. He has been leading his peers, and is sought out as an expert in matrimonial law. Michael’s depth of knowledge not only on current family law but the way it is evolving combined with his strong resilient courtroom presence provide a winning edge when handling settlements and trials for his high net worth and notable clients.
Mr. Stutman takes a straightforward approach instilling a level of trust and confidence at a time when people need it most. From heading up the New York matrimonial practice at the firm that handled Princess Diana’s divorce to authoring two books on divorcing in New York and speaking at the nation’s top Universities, Michael is known for taking the time to explain the intricate divorce process and all of the options. He arms his clients with everything they need to make important decisions.
Some of Mr. Stutman’s most notable cases include one in which a wife received 100% of marital property, another in which his client’s right to use captured computer files was upheld and most recently in a matter where Michael prevailed in having a New York Court recognize and enforce a Father’s rights in a Singapore child custody arrangement—with the Mother being found in contempt and ordered to pay the Father’s expenses and counsel fees.
Michael has served terms as both the Vice President and President of the American Academy of Matrimonial Lawyers, New York Chapter. He is also a Fellow of the Academy and serves on its National Board of Governors. He is again serving a three-year term on the prestigious Matrimonial Law Committee of the City Bar and has served two three-year terms on the Trust, Estate and Surrogates Court Committee of the City Bar. He is the co-author, along with Grier Raggio, of ‘How to Divorce in New York’ and he is the author of 'Divorce in New York'. Since 2008 he has been certified as one of the Best Lawyers in America and has been listed in the annual Super Lawyers publications since its inception in 2006 and is rated AV Preeminent by Martindale-Hubbell.
Michael is regularly sought after by numerous media outlets to comment and provide insight concerning legislation and notable cases.
Jason Advocate
[email protected]
646-688-4776
Jason A. Advocate is a founding partner with more than 20 years of experience in complex matrimonial and commercial law. A native New Yorker who won’t back down, Jason is known for protecting his client’s privacy at all costs. His diverse background of complex commercial litigation provides a level of knowledge into corporate and financial matters that levels the playing field from the start in high net worth cases.
Mr. Advocate works to make sure that every client’s immediate and long term needs are met, even when up against a side that refuses to budge. A strong strategic litigator whose career has seen him go up against some of the nation’s leading corporations, he can’t be deterred. He aggressively fights for his client’s rights and their future.
Jason received his Bachelor of Arts degree from Brandeis University where he graduated magna cum laude and went on to earn his Juris Doctor from the prestigious New York University of Law.
Mr. Advocate has extensive trial experience, but he tempers that with negotiation skills that attempt to keep his clients out of the court room. He is a certified mediator and knows how to settle cases, but when all else fails, he knows how to win a trial.
Mr. Advocate is a member of the bar in New York and New Jersey. He is also admitted to practice in the United States District Courts for the Southern and Eastern Districts of New York and the Second Circuit Court of Appeals. He works to further legislation and issues among his peers through the Association of the Bar for the City of New York and the New York State Bar Association. Jason also shares his vast legal experience on cutting edge legal matters as a lecturer at numerous institutions.
Dana Stutman
[email protected]
646-688-3484
Founding partner Dana Stutman is a leading matrimonial attorney known for her profound financial expertise providing her clients with a decisive edge. This unparalleled combination of an accounting and litigation background sets her apart from her peers in negotiations and the courtroom.
Dana takes the time and extreme care to develop a unique strategy based solely on each client’s personal journey. Her compassion and unique arsenal of knowledge drives Dana to find new and dynamic solutions for even the most complicated and unmovable case.
Dana Stutman received her accounting focused business degree from Tulane University before changing her career path and attending Yeshiva University's Benjamin N. Cardozo School of Law. Notably, while at Cardozo, Dana was part of the "The Innocence Project," team, a famously effective legal initiative that examines DNA evidence to reverse wrongful criminal convictions. She has clerked for Justice David B. Saxe (now appellate judge), allowing her to litigate as a law student for the New York State Attorney General's office. Dana also worked with New York litigator Michael Dowd, an expert on battered-women's cases; and clerked for the appellate judge Richard T. Andrias in the matrimonial division of the State Supreme Court. Her distinguished career has had her making partner in the first seven years at one of the top firms in the country and named in the annual Super Lawyers publication since 2009.
She is a Fellow for the American Academy of Matrimonial Lawyers and serves as treasurer for their New York chapter as well as serving on a number of committee’s within the legal community including the Association of the Bar of the city of New York as well as the New York State Bar Association.
Kari H. Lichtenstein
[email protected]
646-688-4416
Kari H. Lichtenstein is a founding partner with twenty years of experience in family law and is known for her compassion and unwavering support of her clients. Through her experience in family law and her background in social work, Kari has developed a deep understanding of the emotional impact a divorce can take on all involved.
Kari takes special care to find ways to lessen the toll on her clients as they go through this arduous process. Her empathetic approach and forethought can be seen whether she’s representing her client in settlement negotiations or advocating for them in court. Kari never backs down from a fight, but she prides herself on helping her clients navigate through the emotional storm of a difficult divorce.
Ms. Lichtenstein received her undergraduate from the University of Michigan and her law degree, cum laude, from Loyola University Chicago School of Law.
Ms. Lichtenstein is a member of the Family Law Section of the New York State Bar Association and served as a member of the Matrimonial Law Committee of the Association of the Bar of the City of New York. Kari’s notable career has seen her regularly listed in the annual Super Lawyers publications.
Kari is also certified in Family and Divorce Mediation.
Valerie Tocci
[email protected]
646-688-3482
Valerie Tocci represents individuals and families in all aspects of matrimonial and family law, including divorce, custody, spousal and child support, equitable distribution of property, pre-nuptial, post-nuptial and divorce agreements, post-judgment matters, hearings and trials. Valerie is a litigator with extensive courtroom experience, and previously worked at two of the premiere Manhattan matrimonial boutique firms concentrating on aiding high net worth families navigate the divorce process. Prior to devoting her practice to family law, Valerie served as a criminal prosecutor in the Eastern District of New York and Queens County District Attorney’s Office. Valerie also served as Court Attorney to the Honorable Esther M. Morgenstern, New York State Supreme Court Justice, in both the Kings County Family Court and the Queens County Integrated Domestic Violence Court, a unified court part handling matrimonial, family court and criminal cases simultaneously, which she helped to establish. Valerie's work with victims of crime and domestic violence gives her a unique perspective on the emotional challenges facing families dealing with divorce.
Valerie is a founding member of the Associates Board of New York Legal Assistance Group (NYLAG), a not-for-profit legal services agency providing representation to low income individuals. She is the co-author of Divorce Settlements Funded By Proceeds Of Fraud: Good News For Innocent Spouses' New York Family Law Monthly, Vol. 13. No. 1, September 2011. Valerie has a B.A. from the University of Michigan. While an undergraduate, Valerie completed the general course at the London School of Economics and Political Science. She received her JD from the Benjamin N. Cardozo School of Law, where she was awarded the Heyman Corporate Governance Fellowship. She has also received specialized training from the American Academy of Matrimonial Lawyers in family law matters.
Andrea Berkowitz
[email protected]
646-688-3482
Andrea is a seasoned matrimonial attorney, practicing exclusively in the areas of matrimonial and family law since 2004. As of a child of divorced parents, Andrea grew up understanding the full impact that a divorce has on the entire family. Through that lens, Andrea developed a holistic approach to her practice, attending to each client's unique needs and developing legal strategies custom tailored to achieve their goals. While Andrea understands that a client's best interests are often served by staying out of the courtroom, having started her career prosecuting child abuse and neglect cases, she is a skilled courtroom advocate and litigator when it is necessary to litigate a case.
Andrea joined SASL at its inception in June, 2016. Prior to joining SASL, Andrea worked at several preeminent matrimonial law firms in Manhattan where she represented clients in all aspects of family and matrimonial law including equitable distribution, spousal support and child support issues, custody and access, pre-nuptial and post-nuptial agreements. Before devoting her practice to matrimonial law, Andrea was an attorney for the Administration of Children’s Services where she represented the Commissioner of Social Services in child abuse and neglect cases.
Andrea is a member of the New York City Bar Association and the Family Law Section of the New York State Bar Association. She received her B.A. from Arizona State University and her J.D. from Hofstra University School of Law, where she served as editor of the Hofstra Law Review. Andrea currently lives on Long Island with her husband and their two sons.
Katherine A. Chesnut
[email protected]
646-688-4364
Katherine A. Chesnut has concentrated on matrimonial and family law for her entire legal career. Prior to joining Stutman Advocate Stutman & Lichtenstein, LLP, Ms. Chesnut worked as an Associate for Advocate & Lichtenstein, LLP. She has also served Sanctuary for Families as a legal fellow.
Ms. Chesnut received her Juris Doctorate degree, cum laude, from Fordham University School of Law and her Bachelor of Arts, magna cum laude, from American University. Katherine is admitted to practice law in New York and New Jersey. She is a member of the New York County Lawyer’s Association Young Lawyer’s Section and the New York State Bar Association and the Irish American Bar Association of New York.
Joel Ba?uelos
[email protected]
646-688-4754
Joel Ba?uelos is an associate of the Firm. He brings almost a decade of experience and a level of detail that ensures nothing escapes his team. Prior to joining the Firm, from 2011-2016, Joel was an associate at an international law firm where he handled commercial, matrimonial and family matters in the appellate, trial and family courts. Prior to that, from 2009 to 2010, Joel served as Law Clerk to the Honorable Allan L. Gropper of the United States Bankruptcy Court for the Southern District of New York, during which he handled matters involving fraudulent conveyance litigation, commercial and contract disputes, and plan confirmations.
Joel received his J.D. from Fordham Law School, where he was an associate editor of the Fordham Journal of Corporate and Financial law. Prior to attending Fordham Law School, he received his B.S., magna cum laude, from the University of Denver, Daniels College of Business, where he was a member of the Honors program.
Joel is admitted to practice in the state of New York, and is a member of the New York State Bar Association. Joel is also a member of the New York City Bar Association where he is appointed to sit on the Lesbian, Gay, Bisexual & Transgender Rights Committee.
Jacqueline P. Itani
[email protected]
646-688-3493
As an Associate at the firm, Jacqueline is known for guiding her clients through complex issues, while zealously advocating on their behalf and serving as an effective and compassionate counsel. She takes incredible pride in prioritizing client needs above all else and applying her unique skills to each individual case. Jaqueline aims to settle disputes as amicably as possible, but is not afraid to litigate on her client’s behalf when necessary.
Jacqueline received her Juris Doctor from Benjamin N. Cardozo School of Law with a concentration in Matrimonial and Family Law, where she was a member of Cardozo's Law and Literature Journal. Jacqueline also participated in an Intensive Trial Advocacy Program to solidify her litigation strategies and skills.
She completed a fellowship at the Children’s Law Center, and interned for the Honorable Matthew F. Cooper in the New York Supreme Court, Matrimonial Part. Notably, Jacqueline drafted the winning Appellate Brief in Counihan v. Bishop, where the non-biological mother of a child born to a same-sex marriage was awarded standing as the child's parent to seek custody and visitation. Additionally, in the matter of Chue v. Clark, Jacqueline successfully petitioned the Court on behalf of her client, a resident of Singapore, to recognize the parties’ foreign Judgment of Divorce and hold her client's ex-wife in contempt of Court for her violation of visitation terms of the custody order.
Jacqueline is licensed to practice law in both New York and New Jersey and is a member of the New York State Bar Association, Family Law Section. Jacqueline is also certified in Family and Divorce Mediation.
Jessica Friedrich
[email protected]
646-688-4340
Jessica Friedrich is an Associate at the firm who works on a broad spectrum of cases involving a variety of issues. She is known for her client-focused approach, adjusting her practice to the needs and circumstances of the case at hand. She is committed to being available to her clients and a passionate advocate for each.
Jessica received her Juris Doctor from Fordham University School of Law, where she was a member of the Fordham Intellectual Property, Media and Entertainment Law Journal. Jessica was also a competitor for and editor of the Fordham Moot Court Board where she honed her litigation skills.
Jessica is admitted to practice law in New York and New Jersey and is a member of the New York County Lawyers’ Association and the Irish American Bar Association of New York.
She earned a Bachelor of Arts in Journalism and a Bachelor of Science in Sports Management from the University of Georgia.
Stutman Stutman & Lichtenstein, LLP
135 West 50th Street, 18th Floor, New York, NY 10020 | 25 Roslyn Road, 1st Floor, Mineola, NY 11501
Main Number: 212-226-6624
Copyright ? 2017 Stutman Stutman & Lichtenstein, LLP
MICHAEL STUTMAN, HEAD OF FAMILY LAW AT MISHCON DE REYA NEW YORK LLP, LAUNCHES NEW BOOK
Release Date:
06 November 2013
Michael Stutman, Head of Family law at Mishcon de Reya New York LLP, last night launched his second book: ‘Divorce in New York’.
The launch was marked by an event at KTCHN Restaurant in New York, attended by over 100 guests.
Written in a clear question-and-answer format, the book provides straightforward information covering all aspects of divorce. It discusses how New York itself can be a third party in a divorce; its unique practices and state laws must be thoroughly understood. Michael is certainly qualified to offer such advice: a native New Yorker, he is currently Head of Family Law at Mishcon de Reya New York, President of the American Association of Matrimonial Lawyers, New York, and has been certified as one of the Best Lawyers in America for five years running.
Commenting on the launch, Michael said: “If this book gives anybody a lessened level of anxiety, it has accomplished its goal. Anxiety is nobody’s friend and is even less so in a divorce proceeding.”
Alex Boyle (Assistant), Joel Banuelos (Associate), Michael Stutman (Partner), Jennifer Deutsch (Paralegal) and Valerie Tocci (Associate).
New York state law dictates that in any marital action "in which alimony, maintenance or support is in issue, there shall be complusory disclosure by both parties of their respective financial states." The law is expansive, mandating extremely broad disclosure regardless of whether or not there are any "special circumstances" warranting court intervention.1
A complete sworn statement of net worth is usually the initial vehicle by which the parties disclose to one another the assets, incomes and liabilities at stake in a marriage that is going to be dissolved. There are 12 asset categories, ranging from bank accounts to tax shelters, patents to jewelry and artwork. 2 Attorneys must certify the accuracy of the contents of the net worth statement. Hiding assets to prevent the trial court from making an equitable distribution of property supports a finding of economic fault.
3 Once that finding is made, the court must consider the missing assets when making its distributive award. 4 Even if assets turn up after trial, courts have the discretion to re-order valuations in light of new evidence.
5 Zealous matrimonial lawyers will therefore want to do everything they can to make sure no assets are hidden. What they may not realize is that not being zealous enough may expose them to litigation:
The failure to discover large assets is among "the most fertile legal malpractice inquiries" against matrimonial attorneys.6 Therefore, attorneys cannot just assume that the other side has fully provided all of the necessary information to ensure a fair distribution of marital prope rty. Instead, they must doggedly investigate whether the opposing party has been honest or not.
If there is suspicion that assets remain uncovered, attorneys may need to retain the help of professional investigators trained in computer forensics and asset searching. Investigators are able to thoroughly search the public record for any ties between the opposing spouse and property, companies or other assets that may have remained undisclosed. The depth and breadth of an investigator's efforts may mean the difference between a client who feels his or her attorney did not do enough and one who is satisfied with the thoroughness of efforts to uncover assets on his or her behalf.
Watch for Red Flags
Some of the signs that assets or income are being omitted from the net worth statement are fairly obvious. For example, is the spouse living beyond his declared means? The opposing side will furnish credit card statements, which are then reviewed to see whether the spending patterns match the supposed income. A modest income coinciding with extravagant spending is the pattern to watch for.
Other times the smell of misconduct is stronger. In one case reported in 2008, a husband concealed substantial assets,failed to provide an accounting ordered by the court, twice submitted an incomplete accounting during the trial, submitted inaccurate net worth statements, and used an attorney's escrow account to secret assets. A significant portion of the hidden money was spent on relatives and their businesses. There were also undisclosed interests in a variety of limited liability companies (LLCs) and partnerships.7
The most dangerous asset evaders are the ones who present no red flags at all. Assets such as shares in an LLC that holds commercial property will be difficult or impossible to find using internet searches. LLCs are supposed to appear on a tax return but we may not get to see this if the person we are investigating is a tax evader or if the investigation is preliminary and the spouses have filed separate returns. In such cases, investigators may resort to public record and database searches that associate names of individual debtors with their secret companies.
How could such a process work? Here is an example. Mr. Smith takes $800,000 of bonus money accumulated over several years and forms a company, and with two partners buys a rent-producing building with it. It could be discovered that Mr. Smith owns the company and then a search could be conducted for the property that company owns. If Mr. Smith were clever, he would have a lawyer receive all the correspondence for the company in order to keep his name off of it, though his name may still be associated with the property's address. The authors have experienced cases in which careful owners like Mr. Smith nonetheless sign mortgage documents--one reason among many not to rely on abstracts and databases but to go after the documents themselves. This takes time and patience at the courthouse, but can often be worth it.
Generally, though, there are signs that a spouse is hiding assets. Matrimonial attorneys need to make sure their clients know what thsoe signs might be so that they can provide the necessary information for an efficient and effective investigation.
Among the red flags to consider are:
? Secretiveness about financial affairs. This may include not providing any information about property or investments, as well as hiding income sources or denying access to receipts for expenses.
? Secretiveness about travel. Does one spouse have only vague or no knowledge of where the other one goes on business or no-spouse trips with his friends? Leaving only a cell phone contact number without the name of the hotel he will be staying at is particularly worrisome since he could then be anywhere.
? Traveling to countries that are known as safe havens for people interested in hiding assets. Frequent trips to Switzerland should raise suspicion, but travel to countries known for their relaxed banking laws or their status as tax havens, like Nevis, the Cayman Islands or the British Virgin Islands may also be a sign that assets are being hidden overseas.
? Denying a spouse access to a computer used for financial transactions or storing financial records. This could include keeping the computer password protected, or locking it or the hard drive in a location to which the spouse has no assets.
? Complete control by one spouse of all bank and investment accounts as well as insurance policies. Does the spouse refuse to share account numbers or passwords?
? Renting a P.O. Box so that account statements, bills and property records are not intercepted in the mail.
? Renting a safety deposit box to store property or company records, including deeds to homes or cars, as well as undeclared jewelry or artwork.
? The sudden decision to hire a new attorney or financial planner for business or personal matters.
? Owning multiple cell phones. While this is generally assumed to be a sign that the spouse is being unfaithful, it may also be a sign that he is hiding assets. A phone that the other spouse does not have access to ensures privacy for business calls or calls from attorneys or financial consultants.
? Claiming that business or investments are suddenly suffering severe losses and yet his expenses remain the same.
? Depleting cash resources by investing in jewelry, cars or artwork. These purchases could be hidden and sold for profit after a divorce.
? Reluctance by one spouse to introduce the other spouse to any colleagues from work. All of these point to the need for a full examination of the spouse's assets.
The Role of Technology
The computer and Internet have both facilitated the hiding and detection of assets, but not as much as many people think.Money can be transferred at the touch of a button from anywhere with an Internet connection, but there is still going to be a record of the transaction available by court order. Where technology helps the asset concealer is that there is less paper to be left lying around. Obtaining a forensic examination of a computer (whether used at home as a "family" computer, used by one spouse as "his" or "her" computer, or as an employer's machine utilized by the employee spouse for personal, albeit unauthorized transactions) is beyond the scope of this article.
Looking for assets electronically is enormously helpful, but many attorneys mistakenly think that trips to courthouses and records offices are now a thing of the past. Not only is this not true, but even when we do use computers, Google is only one of our many ways to find assets. Usually, Google searching is not even close to the most helpful technique.
Back to Mr. Smith and his concealed $800,000 interest in his partnership: The LLC Mr. Smith formed will probably not be findable on Google because if it has a common name, there will be a multitude of extraneous results to look through before reaching the desired result. The link between Smith and the LLC will also not be found on Google because Google does not have access to the credit reports, utility bills and mortgage documents that proprietary databases do.
Arguably one of the most critical things to understand about Google is that it is not a neutral index of the Web, but rather a profit-making business. A "good" or "useful" result for someone looking for "Smith property" may not be our Mr. Smith's little building in New Jersey. Instead, Google would want actual or potential advertisers named Smith Properties, per this example, to occupy the top results upon the site's search.
When lawyers appear surprised by this, the advice is: Google yourself and see how much about your own life you can find. Can you find all of your own assets? Or people with whom you have lived and worked? Perhaps all of your relevant litigation? Google will be no more forthcoming with Mr. Smith's information than it is with yours. If there is precious little information about you on Google, why should information about Mr. Smith be any easier to come by?
Ethics and Best Practices
Lawyers on both sides of an asset search often confront a particular set of ethical considerations.
If a matrimonial lawyer learns that a financial statement submitted to a court contains a material omission, and that client perpetrated a fraud on the tribunal, that lawyer must call upon the client to rectify the material omission.
If the client refuses, the lawyer mayneed to withdraw the financial statement.8 While the lawyer may not go so
far as to declare the statement to be fraudulent (because doing so could violate privilege), such a withdrawal is among the biggest red flags out there.
For the asset-searching lawyer, it is critically important to instruct an investigator on the ethical boundaries that differentiate a law-abiding attorney's agent from hacker Lisbeth Salander in The Girl With the Dragon Tattoo.
To begin, obtaining bank and cell phone records without judicial authority (whether court order or subpoena) is simply not permitted, even though there are plenty of investigators who will claim to be able and willing to do so. Medical records provide their own thorny issues courtesy of HIPAA. (Health Insurance Portability and Accountability Act.)
Another area in which investigators can get their principals in trouble is when they "pretext" and pretend to be people that they are not when approaching interview subjects. While "dissemblance" is allowed,9 lawyers may not knowingly make a false statement,10 or "engage in conduct involving dishonesty, fraud, deceit or
misrepresentation."11
This extends to the use of social media. Gone are the days when lawyers and their agents could invent Facebook characters out of thin air in order to "friend" anyone on Facebook to gain access to restricted identities of friends and information posted on the "wall." Now, throughout the country and according to the New York
City Bar, "a lawyer may notuse deception to access information from a social networking webpage."12
The trend toward specializations in the practice of law is mirrored by the trend towards specialization in the businesses that support the practice. Asset tracing is no longer a stepchild of discovery, but a full-blown specialty.
Michael Stutman is a partner of Mishcon de Reya New York, where he heads the family practice. Philip Segal is anattorney and founder of Charles Griffin Intelligence, and an adjunct professor at Benjamin N. Cardozo School of Law.
1. Domestic Relations Law (DRL) §236(B)(4)(a).
2. Statement of Net Worth, DRL §236. The assets include not only marital property, but separate property and property that may be protected by a prenuptial agreement as well.
3. Blickstein v. Blickstein, 99 A.D.2d 287 (2d Dept. 1984); DRL §236[B][1][c], [5][d][1]. Cf., Griffin v. Griffin, 115 A.D.2d 587 (2d Dept. 1985).
4. Harrell v. Harrell, 120 AD2d 565 (2d Dept. 1986); Contino v. Contino, 140 A.D.2d 662 (2d Dept. 1988). 5. Lukacs v. Lukacs, 238 A.D.2d 483 (2d Dept. 1997).
6. Andrew Lavoott Bluestone, "Matrimonial Litigation and Legal Malpractice," NYLJ, May 21, 2012.
7. Doscher v. Doscher, 54 A.D.3d 890 (Sup. Ct. Nassau County 2008).
8. New York Rules of Professional Conduct, Rule 3.3(a)(3).
9. NYCLA Committee on Professional Ethics Formal Opinion No. 737, issued May 23, 2007. 10. New York Rules of Professional Conduct Rule 4.1.
11. Id. at Rule 8.4(c).
12. New York City Bar Formal Opinion 2010-2.