We are often asked what if my ex lies about his assets. In this episode, Tamsin is joined by forensic accountant Raymond Davidson. They discuss what things might arouse suspicion and how a forensic accountant might help to find hidden assets.
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Raymond Davidson
With more than four decades of experience, Raymond Davidson is one of the most highly regarded Forensic Accountants in the UK. He is a Fellow of the Institute of Chartered Accountants in England & Wales and a member of the Academy of Experts. He provides investigative and litigation support to both solicitors and members of the public direct in relation to both Civil and Criminal matters. Of particular note is his extensive experience in investigating hidden assets where he is able to transfer the skills honed on criminal matters to those relating to divorces.
Raymond is instructed to act in a number of different capacities but more commonly as a party appointed or single joint expert. He provides assistance in settlement negotiations and has given expert evidence in Court.
www.davidsonsforensic.co.uk
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Tamsin Caine
Tamsin is a Chartered Financial Planner with over 20 years experience. She works with couples and individuals who are at the end of a relationship and want agree how to divide their assets FAIRLY without a fight.
You can contact Tamsin at tamsin@smartdivorce.co.uk or arrange a free initial meeting using https://bit.ly/SmDiv15min. She is also part of the team running Facebook group Separation, Divorce and Dissolution UK
Tamsin Caine MSc., FPFS
Chartered Financial Planner
Smart Divorce Ltd
Smart Divorce
P.S. I am the co-author of “My Divorce Handbook – It’s What You Do Next That Counts”, written by divorce specialists and lawyers writing about their area of expertise to help walk you through the divorce process. You can buy it by scanning the QR code…
Transcript
(The transcript has been created by an AI, apologies for any mistakes)
Tamsin Caine 0:06
You’re getting divorced and you think that your spouse is hiding assets from you or not being completely honest on the form E, and you think there is more marital assets or there are more marital assets than have been disclosed, it can be really, really worrying and you can wonder what on earth you should do about it. In this episode, I’m going to speak to an expert forensic accountant, and to have that conversation about what can be done, what can you do, what can your solicitor do? And at what point should you bring in a forensic accountant? I hope you enjoy the episode, I think you’ll find it really useful. So let’s jump right in.
Hello, and today I am so pleased to be welcoming Raymond Davidson, who is as you’ll see from his picture, if you’re watching us on YouTube, a forensic accountant. So let me introduce him to you properly. Raymond is a fellow of the Institute of Chartered Accountants in England and Wales. He is a member of the Academy of experts, which sounds very fancy, and he’s been specialising in forensic accounting and litigation support work in relation to criminal and civil matters for over 30 years. I’m not sure he looks old enough for that perhaps he was at primary school when he started. His experience extends across multiple industries and sectors and he is regularly instructed to investigate hidden assets in both divorce and criminal matters. Raymond, welcome. Thank you so much for agreeing to do this podcast with me.
Raymond Davidson 1:42
Thank you very much, Tamsin, for giving me the opportunity to talk to your listeners.There’s a it’s a very interesting topic. And hopefully, your listeners will find that of interest.
Tamsin Caine 1:55
Absolutely, certainly will, because one of the questions in my line of work working with clients who are going through divorce or ending a civil partnership, one of the most common questions is, well, how, how do I know that my ex is going to tell me the truth? How am I? How am I to know that they’re going to disclose everything? So I guess my first question to you is going to be just that. So how would somebody know if their ex was hiding assets?
Raymond Davidson 2:31
Right? Well, just to give you a bit of background, a bit more background, I’ve been involved in forensic accounting for over 30 years. The work I do is criminal and civil work. In the criminal sector, I’ve done a lot of work in relation to hidden assets. But more recently, I’m getting approached by members of the public and solicitors in relation to hidden assets in the civil sector, particularly in divorce, and also in relation to crypto assets, which I’ll come on to a bit later. So the usual scenario is I get contacted by a member of the public, and they believe that their spouse is dealing in crypto, and what they believe that they’ve got other hidden assets, and they really want to get to the bottom of it. I also get contacted by solicitors asking the same. So it’s, it’s from different angles. I also get approached by members of the public when there’s a an allegation of hidden assets against them, so that they want assistance to rebut that allegation. But I think what your listeners need to be aware of is that the courts don’t allow individuals or solicitors to go on fishing expedition. So there has to be more than just a suspicion of hidden assets. So just going back to your original question, which is our spouse, know if an ex has been hiding assets, the usual place to start with is the for me. The for me is a form that both spouses have to complete on divorce, and it really summarises the assets and liabilities and the income of each spouse. And also another point of approach is to look at bank statements and credit card statements. The beauty of it for me, is not what’s actually on is what’s not on it and being an accountant of many years. I have considerable experience of reading between the lines and identifying areas that may require further investigation. So that’s the approach that I take when trying to identify in methods But the problem is that with the for me, unfortunately, only 12 months bank statements are supplied. So quite often, my work involves going back further than 12 months. But there are other indicators of hidden assets. And I’m not going to go through all of them. But just as an example, the sort of things that I come across our mail being directed, so that important documents are going to another address, it could be that passwords have been changed to accounts or investments, it could be that a spouse has been locked out from running a jointly or managed business. Again, assets can be transferred into the names of family members, either temporarily or permanently. It could be that your ex is investing in cryptocurrencies. And, again, I’ll come back to that a bit later. And your ex could suddenly change their mind about the divorce and ask to try again to enable them to get their financial affairs in order. And another one I come across is that ex is getting involved in high purchase high value purchases with the intention of recouping money post settlement. So those are some of the red flags that I come across, in dealing with divorces
Tamsin Caine 6:55
There’s quite a lot to unpack there as
Raymond Davidson 6:59
well, there are a lot of indicators. And it’s really trying to spot things that are going on, you may consider them as being normal behaviour, but there may be things that are outside the norm. And it just gives you food for thoughts as to what’s actually going on in your financial affairs with your eggs.
Tamsin Caine 7:26
Yeah, absolutely. Just Just before we move on from this, it if you think your ex is is hiding money, do you need to suspect that it’s a substantial amount? In order to get somebody like you involved? Or? Or is it just you’ve kind of seen these red flags that you’ve just taken a stroke, and therefore it’s worth investigating a little bit further from that?
Raymond Davidson 7:55
Well, the main issue that spouses come across is the issue of proportionality, because there’s obviously a cost involved when you get experts involved, whether they be solicitors or forensic accountants. So if you believe that there’s an asset, with a value of up to say, 5000 pounds, it’s really not going to be cost effective to get an expert involved, or even a solicitor involved. But having said that, some of the smaller value assets when they are thoroughly investigated, can lead into trails, other assets that may have been hidden. And again, I’ll come back to that, perhaps a bit later. So the answer is that you shouldn’t get too hooked up on assets with a modest value. But you’ve got to bear in, you’ve got to keep in mind the cost of investigating the potential for hidden acids.
Tamsin Caine 9:03
Sure. And I guess from what you’ve just said, sometimes they’re 5000 might turn into 50,000. And therefore it it was worth investigating. But I guess that’s not always the case.
Raymond Davidson 9:15
No, not always. But I’ll hopefully have the opportunity to talk to you about one or two cases that we’ve been involved in in the past. And there were instances where we were told about an asset that only had a modest value, and it turned out it was a significant assets.
Tamsin Caine 9:39
Oh, that’s worth staying tuned for if you’re listening definitely. So how can assets be hidden during a divorce? Is that something that that happens? Is it commonplace?
Raymond Davidson 9:53
Yes, because when spouses get divorced is not something that they thought about overnight, it’s usually something that has evolved over a period of time. And spouses will plan ahead for a potential divorce. And, unfortunately, and it’s something that spouses need to be aware of. So again, coming back to the point about the for me, unfortunately, you only get 12 months bank statements that inform me. But the real there are opportunity opportunities to go back and request more information. And, again, I’ll expand on that perhaps a bit later. But in terms of spotting what’s been going on, in the in the lead up to a divorce, the sort of things that I’ve come across in my work are a gifting of assets to family and friends. It could be transferring money, or shares, either temporarily or permanently. It could be manipulating business accounts so that if you’re in business with your ex, or you had you were in business with your ex, the accounts have been manipulated to show a level of performance under what was actually achieved. It could be that there are fictitious liabilities included to depress the value of the company or that there are false claims of monies being lent to third parties, which would be a claim against the business. So other things I’ve come across our secret banks and savings accounts. There are different and payments of bonuses and commissions. When an ex is being employed, they part of their remuneration package may be the receipts of bonuses and commissions. So there is the opportunity to go to the employer and ask for those to be deferred. It could be that one of the ex has failed to declare income on tax returns. So there may be income that the spouse isn’t aware of. It could be that an ex is denied the existence of an asset. It could be shareholdings, it could potentially be intellectual property, but the ex owns personally in a particular company using crypto currencies, this is a very big area. It’s an area that I’m getting instructed on more and more, particularly in the last two years.But the thing about cryptocurrencies is not to get too hooked up on how they work. The thing about crypto currencies is there, were probably one of the easiest assets to find and to trace. It’s a fallacy to think that crypto assets is one of the easiest ways to hide money from your spouse. There is a trail. But the terminology can get very confusing. But what I say to members of the public to enable them to understand the basics of crypto is that a wallet is like a bank account, you’ll have a public key, which is like the account number, you’ll have a private key, which is like the pin number that you have on your personal bank account. There are things called exchanges and they’re just effectively brokers that transact the cryptocurrency. And there is something called a blockchain, which is just effectively a digital ledger, which records every single crypto transaction and it records every crypto transaction that’s ever been made since crypto was invented. So there is a permanent record there that can be used to trace acids. And I’ll talk about at the end, maybe if we got time about some of the examples of tracing crypto, other things I’ve come across in relation to hidden assets and divorce are setting up trusts. trusts can be a notoriously complicated individuals can hold assets offshore. It’s not illegal to hold assets offshore, but it makes it difficult to trace them and value them As I mentioned before, individuals do plan for divorce, unfortunately. And it’s not been a known for individuals to take out regular rounds, some amounts of cash, small denominations and accumulate that over a period of time and hold that cash. And also, including debts that don’t actually exist. Another way of hiding assets is deliberately devaluing assets to show a much lower value than they’re worth. And finally, another one that I come across is assets being held for or claiming that assets are held for third parties when they’re not actually being held at third parties. So there’s lots of things that I’ve come across in the hidden acids, investigations that I’ve undertaken over the years. And it’s really keeping an open mind and following up all the potential indicators.
Tamsin Caine 16:07
Okay, it’s frightening what lengths people go to, to avoid, to avoid sharing things fairly with their with their spouse. So what steps can be taken to find these hidden assets? I mean, if it feels a bit like there will be different steps for different types of assets and some of those that that you’ve been through, I can only imagine it incredibly difficult to to get gain access to the the evidence and to find those hidden assets. So what where do you start?
Raymond Davidson 16:43
First and foremost, your listeners need to be aware that it’s my understanding that any improper transaction that’s taken place, in the three years leading up to the divorce can be actually reverse. So it’s just because something’s happened in the past, it doesn’t mean that it’s a done deal, and it’s irreversible. But my advice to your listeners is, if a spouse believes that there is a hidden assets, then they should speak to their solicitor and advise them accordingly. And then the solicitor takes the decision whether instructing a forensic accountant is warranted. And that’s where I get involved. So most of my instructions are direct from solicitors, but I do get approaches by members of the public. But for a solicitor, there are a number of options open to them, they can request additional disclosure, I touched upon it a few minutes ago about the for me and only being able to get hold of the last 12 months bank statements initially. In my view is if you’re if you’re undertaking a forensic investigation, coming a minimum of six years bank statements is a must. So if there is good if there are good grounds for believing that there is a hidden asset, then the solicitor really needs to go for copies of six years bank statements and six years credit card statements. Other things that solicitor can do are to apply to the course for a search and seizure order. But that’s expensive, and also the hurdles to get over that are high. The courts will not allow a search and seizure order, unless there is compelling evidence that there is the there are hidden assets. Another thing that a solicitor can do is apply for a freezing order against that particular asset to stop it being disposed of or dissolved. Another thing a solicitor can do is a back a transaction or expenditure. If it’s extravagant and it’s a lifestyle expense. But even when a divorce is finish, it can always be reopened at a later date. If it’s found that a divorce transaction has been undertaken, that has been done deliberately to try and pull the wool over the eyes of their spouse.
Tamsin Caine 19:53
Okay, so there are lots of options open to to the solicitors and you mentioned that sometimes you are instructed directly by members of the public. And an earlier still, you said that couples shouldn’t undertake or divorcing spouses shouldn’t undertake their own investigations, because that’s not that’s not allowed. But presumably, looking through the 12 months bank statements on receipt of the for me and seeing if there were any kind of undisclosed transactions to bank, other bank accounts, would allow suspicion, presumed spouse is able to do things like that.
Raymond Davidson 20:36
Yes. If you’re not getting a forensic accountant involved, you can undertake your own review of bank statements. And if you see transactions, going from one account to another, and you’re not aware of the destination of those funds, your solicitor can request clarification from your ex’s solicitor as to the destination of those funds. So you don’t have to go to the cost of employing a forensic accountant. But quite often, the descriptions on bank statements are not clear that the misleading particularly when it comes to crypto transactions, they’re almost impossible to identify. Because there’s a lot of jargon there. So you really need a trained eye to look through bank statements and credit card statements. But certainly transfers to bank account and the bank accounts that you may not be aware of, are quite easy to identify. And you’re you’re perfectly at liberty to go to your solicitor and query that and that will be queried with the with your exes. System?
Tamsin Caine 21:50
Absolutely. And I assume the same goes for transfers into contributions into a pension scheme from the bank account with anteus games not been not been spoken off or not been disclosed on for me. And and same with ISIS investments and the like as well.
Raymond Davidson 22:06
Yeah, certainly, I was going to come on to a few cases that I deal with. But one of the cases that I’m currently working on is a lady who married at the German national, he moved from his employments in Germany. And she is now aware that there was a pension fund in Germany. And there’s also a German bank account that she wasn’t aware of. So there’s a German bank account funding this pension fund. And she wants to get to the bottom a bit. So we are investigating that at the moment. We’ve had to use the services of specialists to deal with asset tracing overseas. But it’s an error. But overseas track asset tracing is also an area that we get involved in from time to time.
Tamsin Caine 23:03
Wow. Right. So this is the bit that I’m really looking forward to. So can you give us some examples of some cases that you’ve worked on and how you’ve had some, some positive outcomes?
Raymond Davidson 23:14
Yeah, just on that from previous points in relation to what spouses can and can’t do? It’s very important that spouses don’t start rifling through their exes, drawers and laptops, looking for information, because it’s just prohibited, there is a case law that prohibits that and you could get yourself in difficulties, if that is discovered. So, if you if a spouse does have belief that there are hidden assets, then they should go to the solicitor, and then the solicitor will request disclosure from the other side. So I would definitely say to spouses, do not go through your exes papers, unless they are voluntarily provided to you, and you’ve had copies that have been provided to you and you retain those copies. So just coming back to cases that we deal with.We get involved in a lot of cases that involve, as you just mentioned, looking at bank statements and credit card statements identifying unusual transactions and some of those unusual transactions lead us into identifying other assets that a spouse may not have been aware of, could be purchased of assets. It could be transfers of monies from one bank account to another bank account, or into credit card accounts. but a spouse wasn’t aware of. But as I just touched on a few minutes ago, we’re doing a lot of crypto work. And there are a lot of crypto transactions going through individuals, banks, bank statements and credit card statements. So you really need a trained eye to identify those. So we do a lot that type of work looking through bank statements covering six year period, we may go further than just trying to identify suspicious transactions, we may actually analyse the whole of those bank statements into different categories. And then the spouse can identify areas that just don’t look right. And they require further investigation. So that’s, that that’s the sort of case again, getting involved in quite a lot. I meant attached on the pension fund case involving the German national. That’s the case that we’re on with. But in the last two years, we’ve done a lot of crypto cases in relation to hidden assets. And the usual scenario is that a spouse knows that their ex has been dealing in crypto, so it’s not hidden. The fact that they’ve been dealing in crypto, it’s just that their spouse has said that, or whatever reason, that crypto asset isn’t available, it couldn’t be that we’ve had explanations that the individual was hacked, and they lost all the crypto which was untrue. They invested the crypto in a business venture and the business venture veiled. And that was found to be untrue. But the usual scenario is that an ex has crypto, they say the value of it’s about four or 5000 pounds, and they tell their ex, it’s really not worth investigating further, because of the small balance on the crypto. We had such an instance about a year ago, where an individual disclosed that he had a wallet that had only about four or 5000 pounds worth of crypto on it. So we investigated that we looked into the wallet and without going into the technicalities of it. We looked at the history of the transactions that had occurred, we went through the whole of the period since well, that’s certainly the last six years following transactions. And we’ve identified that there have been crypto, that being taken out that wallet and put into another wallet. And then we identified that wallet, and we investigated that one. And we found that money had been transferred from that wallet into another Wallet. So we went from wallet to wallet to wallet to wallet. Eventually we found a wallet that hadn’t been disclosed that had nearly half a million pounds in it. So this individual was a he was in the computer industry was very tech savvy. So he knew what he was doing. He’d been dealing in crypto for 15 years, and obviously made arrangements in anticipation of potentially getting divorce and those assets. So as you can imagine, the spouse that we were instructed by was very happy with the outcome. And a court order was made against that individual for non disclosure of that asset. So that was a that’s an extreme example, but we do get involved. In cases where there are other wallets that haven’t been disclosed with smaller amounts of money on them. All the crypto has been used to purchase assets that haven’t been disclosed, or the crypto has been transferred to a friend’s wallet. Because what the crypto can only be grace. If it’s transacted through what I refer to as one of the exchanges. They’re effectively the brokers who buy and sell crypto. So if crypto is transferred from one wallet to another wallet, and the person who receives that crypto doesn’t deal in it, he doesn’t buy or sell. He can just sit on that wallet and there’s no
It’s very difficult to get a transaction history on that particular Wallet. So there are specialists out there that can assist in identifying the destination of where crypto assets have gone to. And we use them from time to time when things get really complex. But what we need to start with are the exchanges that individuals have transacted through. And if you’ve got a wallet address, then you can identify the exchanges. And once you go to, once you use the powers that the solicitor has, he can go to he or she can go to an exchange and read requests. The KYC checks that no your client checks or the money laundering checks that have to be undertaken, when a crypto account is opened, that can be disclosed to the solicitor and the owner of that particular asset can be identified. So there’s lots of different ways of tracing crypto, and we’ve been involved in a number of cases, particularly in relation to divorce over the last two years.
Tamsin Caine 31:22
Wow. That’s it. That sounds quite some work. You mentioned about some examples of business assets and how businesses were used and the accounts kind of manipulated for want of a better word in order to, to hide assets or to make up liabilities or to kind of hide things in their accounts from from their spouse, if you’ve got any examples where where you’ve worked on cases like that.
Raymond Davidson 31:56
Yeah, definitely. With the divorce, the spouses are either employed, or they’re self employed. So when they’re employed, it’s pretty straightforward. You look at the earnings of that particular person, and that is brought into the divorce settlement. If one or both of the spouses are self employed, there’s usually a business assets involved, whether a peaceful trader partnership or limited company. So when there’s a business asset that has to be valued that comes into the pot when it comes to the settlement. And we’ve been involved in valuations, business valuations for businesses as small as efficient shoot shot, right up to large groups of companies with Overseas Interests. So when you’re valuing a business, we usually get involved in valuing a limited companies usually unknown and manage private limited company. I’ve been a chartered accountant for many years, we’ll go into exactly how many years but being an accountant, I’ve been involved in auditing, preparation of accounts, preparation and management accounts, tax returns, I’ve seen it all. And I can read between the lines, I can look at a set of accounts. And I can identify things that just don’t look right, and can read a balance sheet and profit loss account. And I can provide the solicitor with areas to investigate further. And as I touched on earlier, there are things that individuals can do to manipulate the value of a business, such as overstating their liabilities or understating the value of assets. It could be under declaration of income. They’ve been doing work off the books and take it in cash. So there are a number of ways that business valuations can be manipulated. And if you’ve got somebody who is in the financial sector, it’s pretty it’s quite easy for them to do that.
Tamsin Caine 34:21
That’s horrendeus, isn’t it? It’s okay. I’ve certainly seen some cases like that over the last few years that I’ve been working in this area. And Raymond, believe it or not, we’re coming to the end of our time together, which I’m fairly disappointed about, because it’s been absolutely fascinating speaking to you, is there anything that we’ve missed out on that we that we should have, we should have mentioned?
Raymond Davidson 34:46
Well, what I would say is that people shouldn’t get paranoid. It’s not every divorce, there are hidden masters. It’s actually quite a rarity because there are penalties for hiding assets and, and completing an incorrect form E. So it’s the minority of cases that I get involved in. And really your listeners should only go down that road, if there is a firm belief that there are hidden assets that could be that spouse has said something in the past, and it’s just rang a bell, in the, in your listeners heads, and that’s when things should be pursued, but really use your solicitor to make the inquiries on your behalf because they have much stronger powers than you have. And if it really gets messy, then get a forensic accountant involved, who’s got experience of dealing with investigating hidden assets? In particular, investigating cryptocurrencies, because, unfortunately, that’s the major area at the moment. There’s always been historic hiding of bank accounts. But crypto is the growth area at the moment.
Tamsin Caine 36:16
Fantastic great advice that Raymond so yeah, not to get too paranoid and not feel that that just because you’re getting divorced, your ex will definitely be hiding assets because as you say it is it is a rarity. Thank you so much for joining me today. I know there’s going to be a lot of people listening to this and fascinated by what you’ve had to say. So really appreciate it. Thank you. Thank you for joining us and we’ll see you soon.
I hope you enjoyed the episode of the Smart Divorce podcast. If you would like to get in touch please have a look in the show notes for our details or go onto the website www.smartdivorce.co.uk. Also if you are listening on Apple podcasts or on Spotify and you wouldn’t mind leaving us a lovely five star review. That would be fantastic. I know that lots of our listeners are finding this is incredibly helpful in their journey through separation divorce and dissolving a civil partnership. Also, if you would like some further support, we do have Facebook group now. It’s called ‘Separation divorce and dissolution UK.’ Please do go on to Facebook, search up the group and we’d be delighted to have you join us. The one thing I would say is do please answer their membership questions. Okay, have a great day and take care!