1. Bankruptcy, Divorce and Tax Fraud

2. Understand how perpetrators fraudulently conceal and transfer assets and income in bankruptcies and divorces. Define tax fraud and be familiar with common tax fraud schemes. Identify consequences of tax fraud Understand the nature and consequences of divorce fraud 3. Bankruptcy is the legal process allowing a debtor to work out an orderly plan to settle debts, liquidate assets, and distribute them to creditors Fraud is common in the cases of bankruptcy, divorce and tax because assets are taken away from the individual and given to someone else Divorce and bankruptcy fraud can be both criminal and civil matters Tax fraud is a criminal matter 4. Investigating and testifying Serve as an examiner in bankruptcy cases Investigate debtors financial affairs and prepare investigation reports Recover assets for divorce and bankruptcy cases Be a private investigator and find hidden assets 5. Bankruptcy or divorce resulting from fraud Bankruptcy or divorce used to perpetrate fraud Bankruptcy or divorce used to conceal fraud 6. Committed against the government or tax collecting organisation IRD estimates $82.6m income tax shortfall based on undeclared income in 2012 177 tip offs a week about concealed earnings 513 cases investigated 414 cases with discrepancies 44 prosecutions 7. New Zealand works under a voluntary compliance system 8. https://www.youtube.com/watch?v=5ItLq9wJlwU 9. A number of tax positions can result in shortfall penalties Not taking reasonable care Gross carelessness Unacceptable tax position Abusive tax position Promoter penalty Evasion Voluntary disclosure can help to reduce penalties 10. Income shifting or sheltering Income deferral Accelerating the use of losses or credits Creating or inflating expenses Changing the character of receipts or outlays 11. Scott Anderson and Paul William OConnor Allowed fictitious expenses to be created and offset against income 14 charges of tax evasion Both sentenced to three and a half years jail Brent Gilchrist Sentenced to 10 months home detention in July Now providing tax advice again 12. One party may feel cheated by the proceedings Hire an investigator to locate the assets Steps to prove fraud: 1. False representation made by the other party 2. Defendant had knowledge or belief that the representation was false, or made the representation with reckless indifference to the truth 3. Defendant had the intent to induce plaintiff to act/refrain from acting in a particular way 13. Wife won $1.3m in the California state lottery on Dec 28, 1996 Files for divorce 11 days later Husband was declared bankrupt in 1998 after his business folded Misdirected mail meant for his now-ex-wife Got a court injunction Judge awarded all winnings to the husband 14. The defendant hid assets so that they didnt have to be shared or taken away The values assigned to assets were unrealistically low Both allegations result in an unfair divorce settlement 15. Fraud is common in the cases of bankruptcy, divorce and tax because assets are taken away from the individual and given to someone else Issues such as tax morality, and where the line is between tax evasion and tax strategy are becoming more important Divorce fraud often occurs when one party hides assets or assigns low values to distort the settlement value 16. Thank you