Texas divorces and the red flags of financial fraud

Texas residents should be aware of the warning signs of financial fraud in a marriage. This type of activity most commonly occurs when family assets and income are intentionally misrepresented or hidden from the other spouse. This can lead to an unfair division of assets during the divorce in which one spouse does not receive the property to which they are entitled. Concealment is one of the elements that separate fraud from a simple financial mistake.

Financial experts are often consulted during a divorce to conduct a forensic investigation into potentially fraudulent behavior and uncover any evidence of concealment. The greater the assets that are available, the easier it is to conceal them through corporations, unfunded trusts and safe deposit boxes. Some of the most common red flags for financial fraud in a marriage include secrecy, strange mail patterns, lying, concealing information about financial transactions and increased withdrawals from a joint bank account.

There are three major elements present when someone with no criminal history commits fraud. He or she must first perceive an opportunity to commit fraud, feel pressure to perpetuate fraud to solve a problem, and rationalize the indiscretion as necessary. Dissipation is a common type of fraud that occurs within divorce when one spouse wastes marital assets without the consent of the other spouse. Other common types of fraud include forgeries, loan fraud and general misappropriation of assets.

For those going through a high asset divorce consulting a family law attorney may be the best way to determine if financial fraud has occurred. An attorney may recommend consultation with a forensic accountant who can conduct an audit of the household finances to find evidence of fraudulent activity. If such activity has occurred, legal action to restore lost assets to the marital estate may be pursued.

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