We all know London is expensive: Apparently $48.6 million is not enough for a now single mom to live on.
Last week Heather Mills announced she is employing a team of forensic accountants to prove her ex, Sir Paul McCartney, is a billionaire, not just a multimillionaire as a U.K. High Court declared. "We all know he’s worth £ 800 million ($1.6 billion)," she told reporters following her divorce ruling last month. "He's been worth £ 800 million for the last 15 years.” What's at stake? More money for Mills, as long as she can prove her ex is hiding assets.
Mills' forensic accountants will probably reconstruct McCartney's financial statements and transactions. "Forensic accountants are often ex-IRS examiners and will have an easy time thwarting amateurish schemes by following the money just like Woodward and Bernstein,” says David Gardner a financial advisor in Boulder, Colo. If it turns out McCartney did conceal some of his wealth, there could be legal repercussions. In a divorce decree each spouse has to sign an affidavit declaring all of their assets. Intentionally withholding account information is fraud and violators are subject to criminal penalties. Also, in the U.S. falsifying a financial affidavit in divorce proceedings is considered perjury.
So where will Mills' team of number crunchers look for hidden money? MainStreet talked to some experts to learn how dodgy divorcing partners stash cash (or other assets) illegally. Here's what we learned:
"You could use hidden accounts in Switzerland, [Lichtenstein] or Luxembourg," says Gardner, referring to three countries whose privacy laws keep any information about you or your account confidential. Swiss banks are among the strictest in the world and the secrecy does not lift for divorce or tax evasion. Withholding income or assets information is not a crime in Switzerland, says Cary Carbonaro, a financial planner with Family Financial Research in New York. "The most common options are offshore bank accounts in the Caymans and Swiss numbered accounts," says Carbonaro. "Most of that is to hide money from the government, but it would work for a spouse."
Laundered Funds Through A Business
Giving money to friends and relatives is a way to hide money, says Morris Armstrong, a financial planner in Danbury, Conn. "If [you are] a business owner [you] could pay [your] secretary, consultant, or lover an exorbitant salary... with the expectation of sharing it in the future," says Armstrong.