Divorce & Hidden Money: Filing Letters Rogatory & Lawsuits Over Offshore Assets

This 14th post in the “Divorce & Hidden Money” series focuses on an ex-husband who lived offshore and had not paid child support or spousal maintenance for decades.  In such situations, letters rogatory might be filed to help gather evidence about any assets hidden offshore.  If assets are hidden offshore, another remedy may be filing a lawsuit alleging assets have been fraudulently transferred.

For thirty years the ex-husband in Janet O. v. James O., slip op. 51985 (Sup. Ct. N.Y. County, October 17, 2006) had not made one single child or spousal maintenance support payment.  By living in places like Barbados, the Dominican Republic and Mexico, the ex-husband had offshore asset protection and could hinder enforcement proceedings brought for his ex-wife &/or their three sons.  After the divorce, the ex-husband remarried and adopted his new wife’s two daughters.  Meanwhile, his ex-wife and three sons were relegated to a life of hardship, poverty and public assistance.

One of their sons even had to quit college to become a construction worker to support the ex-wife.  Likely to have little practical effect on the absconding ex-husband were: the seizure of New York bank accounts, income tax refunds and lottery winnings; the denial of new and renewed passports; driving license restrictions and the referral of cases for criminal prosecution.  See generally N.Y. Dom. Rel. §§ 244; 244 (a) – (d) & 245, Family Court Act §§454, 458-a, 458-b & N.Y. Civ. Prac. L & R § 5241.  Given the ex-husband’s default for decades, the Janet O. Court did however, indicate it would seek the ex-husband’s extradition.

FILING LETTERS ROGATORY

Although it was not financially feasible for the above-mentioned ex-wife, a letter rogatory, (a.k.a legal assistance request or letter of request), might have helped her situation.  In some cases, letters rogatory can be effective against a divorcing spouse or non-custodial parent hiding assets offshore.  By filing letters rogatory, one may search for secret bank accounts &/or collect financial evidence from witnesses residing offshore.  Letters rogatory are often sought pursuant to The Hague Convention, Taking of Evidence (1970) No. 20.¹  A New York court may issue a letter rogatory to a foreign court as contemplated by Fed. R. Civ. P. 28 (b);  Fed. R. Civ. P. 4(f)(2)(B); &/or N.Y. Civ. Prac. L & R 3018.  N.Y. Civ. Prac. L & R 3108 for example, says:

Rule 3108. Written questions; when permitted. A deposition may be taken on written questions when the examining party and the deponent so stipulate or when the testimony is to be taken without the state. A commission or letters rogatory may be issued where necessary or convenient for the taking of a deposition outside of the state.

SUING FOR FRAUD

Business entities; family members; gatekeepers including attorneys; etc., may hide assets as the nominees, (“intermediaries”), of a divorcing spouse or non-custodial parent. Nominees hiding assets can sometimes be sued for fraud pursuant to New York State’s version of the Fraudulent Conveyance Act codified at N.Y. Debt. & Cred. Law  §§270-281.  The Court in Bloomfield v. Bloomfield, 721 N.Y.S. 2d 15 (1st Dept 2001) mentioned this kind of lawsuit over the alleged fraudulent transfer of marital assets.

It may also be possible to join nominees hiding marital assets as “necessary parties” to a pending divorce.  Schmidt v. Schmidt, 472 N.Y.S.2d 26 (2d Dept 1984) (transferees of marital property joined to divorce case); Solomon v. Solomon, 523 N.Y.S.2d 900 (2d Dept 1988).  As the Court has additionally indicated, joining a non-party to a pending divorce can be necessary to prevent the dissipation of marital assets.  See Panish v. Panish, slip op 50881(N.Y. Sup. Ct. Suffolk County, April 15, 2005) (constructive trust imposed on marital residence).  Furthermore, the right to recover an asset might possibly be lost if a nominee or other party hiding assets is not sued at the time of a divorce.

Such was the case in Jackson v. Brinkman, 2006 slip op 50015; 814 N.Y.S.2d 561 (Sup. Ct. Kings County, January 6, 2006), where an ex-husband alleged that a marital residence had been fraudulently conveyed to his former mother-in-law.  The Court in Jackson found the ex-husband was barred on res judicata grounds from seeking a recovery because he had not sued his former mother-in-law as part of his divorce.

¹The Hague Convention Taking Of Evidence courtesy of The Hague Conference On Private International Law.

By Fred Abrams | Published February 25, 2015 | Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Divorce & Hidden Money, Financial Institutions, Hidden Money | Tagged asset recovery, bank account search, bank search, offshore banking | Comments Off on Divorce & Hidden Money: Filing Letters Rogatory & Lawsuits Over Offshore Assets