Be the attorney you dreamed of being. Jump start your career with Tully Rinckey PLLC: http://www.tullylegal.com/careers/ July, 2015 - This course will be led by Tully Rinckey PLLC Partner Mario Cometti, Esq. Mr. Cometti will draw upon his experience as a former partner in a New York City law firm representing high net worth individuals in complex divorce proceedings to assist attorneys of all levels of skill and experience in improving their legal knowledge regarding discovery procedures and techniques. Mr. Cometti will provide guidance to attorneys on the Civil Practice Laws and Rules and other applicable laws in the context of discovery and successful strategies for finding hidden assets. Mr. Cometti will also provide insight into the potential penalties and remedies when a party fails to comply with discovery demands.

1. 1
Mario D. Cometti, Esq.
Tully Rinckey PLLC
441 New Karner Road
Albany, New York 12205
518-218-7100
mcometti@1888law4life.com
Finding Hidden Assets in a
Matrimonial Case
©2015

2. 2
About YourPresenter
©2015
 Tully Rinckey PLLC Partner
 Mr. Cometti concentrates his practice on Family and Matrimonial Law and Civil
Litigation.
 Prior to joining Tully Rinckey, Mr. Cometti was a partner at a civil litigation firm
with offices in Fairfield County, Conn. and New York City.
 Mr. Cometti has extensive experience representing parties – including high net
worth individuals – in complex divorce proceedings.
 He also has represented health care systems and provider groups as a
consultant in the ever-changing field of health care law and, when necessary, in
litigation against insurers and payors for the in various types cases such as
contract disputes and with respect to the recovery of fees.
 Mr. Cometti received a juris doctorate from Tulane Law School a bachelor’s
degree from Fordham University.

3. Framing the Issue
 Before an action is commenced, each spouse can transfer any
property titled in their name
Le ibo wits v. Le ibo wits, 48 3 NYS2d 46 9 (App. Div 1 9 8 3)
During marriage neither spouse has a vested interest in the marital
property apart from interests accompanied by legal title.
 If it’s in your name/title, you can give it away
 A spouse is not a “creditor” until a judgment of divorce has
occurred.
“Creditor is any person having a claim whether matured or unmatured,
liquidated or unliquidated, absolute fixed or contingent.”
NY De bt. & Cre d. Law §27 0
3
©2015

4. 4
You Know you are going to have a problem-
Red Flags based upon behaviorand past actions of
Spouse
 Past history
– Did the spouse exert excessive control over financial
matters, such as hiding or denying you access to bank
information, statements, and online access.
– Did the spouse withhold details of transactions or only
advise your client of them after the fact.
For example are there large expenditures or asset purchases without
your knowledge (Cars, real property etc.)
– Did the spouse have a history of deception: falsus in
uno , falsus in o m nibus . (Affairs, lie s abo ut de bt e tc. )
©2015

5. 5
Red Flags during the Pendency of Divorce
Proceeding
 Is there a pattern of inconsistencies between the financial
disclosure forms and the supporting documentation (Bank
account numbers etc.)
 Are there incomplete and/or unsigned financial disclosures. Is
there a reason someone is afraid to sign them.
 Are there a lot of missing documents; records of the type that
you normally would expect? (Unfiled tax returns)
 Is there an ongoing refusal to produce relevant documents.
©2015

6. 6
 Is the discovery proceeding piecemeal.
 Is it being produced in what appears to be a purposeful
disorganized, confusing or redundant manner.
 Do the records reveal a high volume of cash
transactions, possibly aimed at avoiding a paper trail of
the money.
 Is the spouse loaning money to friends or family
members. (Timing of loans)
 Does the discovery process keep uncovering previously
unknown or undisclosed accounts, particularly if they
have current activity and/or substantial balances.
 Is there the possibility of collusion with their employer to
delay payment of bonuses, stock options or raises until
after the divorce.
©2015

7. To Proceed or Not to Proceed
(Is It Worth The Trouble?)
 Is there money out there to fund? (Known, unknown or
just speculation)
 Wasteful dissipation (or economic misconduct versus
actual fraud)
 How much is it going to cost your client to find out – both
in terms of actual cost and in terms of poisoning other
issues on future relationships with soon-to-be ex spouse
– Do you really want to call other spouse a loan?
 How much due diligence is enough?
– Subpoenas to every bank, money market 7
©2015

8. Spe cialpro ble m s with the se lf-e m plo ye d
spo use
• Is there a haphazard pattern of deposits of account receivables
and are there deposits in which the source is hidden or not
recorded.
• Is salary being paid to a nonexistent employee from the spouse’s
business.
• It’s possible that the checks will be voided after divorce.
• Is there a delay in signing long-term business contracts until
after the
• divorce. [Contrast with previous years]
8
©2015

9. 9
How to use the Discovery Process
 Under equitable distribution permitted discovery is very
broad
 Discovery is not, however, unlimited
 Non-party discovery
– Old Rule: “The Court held that "[a] motion to quash is, thus,
properly granted where the party issuing the subpoena has failed to
show that the disclosure sought cannot be obtained from sources
other than the nonparty“
– New Rule: “We conclude that the "material and necessary"
©2015

10. Discovery Devices
• Bank Accounts
• Tax Returns and K1s
• Special discovery for closely held
corporations and partnerships
10
©2015

11. 11
©2015
Motion to Compel
 The Supreme Court improperly denied the defendant's motion for a
protective order with respect to the plaintiff's demand for financial
disclosure.
– Fakiris v. Fakiris , 575 N.Y.S.2d 924, 926 (N.Y. App. Div. 2’d Dep’t,
1991)
 “The fact that respondent has proceeded on motion rather than by notice
is immaterial, in view of CPLR 3124 which permits a motion to compel
disclosure in the absence of notice pursuant to CPLR 3121.
– Martin v. Martin, 72 Misc. 2d 222, 224-5 (N.Y. Fam. Ct. New York, 1972)
 Recent amendments to CPLR 3122 have reversed the procedure for
objecting to discovery demands (as amended by L 1993, ch 98, § 9, eff
Jan. 1, 1994).
– In re T. /P. Childre n, 165 Misc. 2d 333, 334 (N.Y. Fam. Ct. Albany, 1995)

12. 12
What a Forensic Accountant Can
Do
 A Forensic Accountant can be a great asset during the pendency of the
case or at a hearing or trial by:
– Identifying discovery that is needed or items or documents incompletely
disclosed
– Investigating and analyzing financial evidence
– Communicating their findings in the form of reports, exhibits and collections
of documents; and
– Testifying in court as an expert witness and preparing visual aids to support
trial evidence
– Assist in settlement discussions
 Forensic accountants can also perform a lifestyleanalysis.
– This financial analysis is done to help determine, validate and present a
couples marital lifestyle to assist in the true calculation of income for
determining child support or alimony. A lifestyle analysis can also be used to
uncover hidden assets and income, since expenses in excess of reported
income could signal hidden sources of funds.
©2015

13. 13
Remedies for Fraudulent Conveyances
 Injunction- Restrain Marital assets
 Marital misconduct versus economic misconduct
 After Divorce
 What if assets transferred pursuant to equitable distribution
were fraudulently obtained
©2015

14. Remedies?
 Contino v. Cotino, 529 NYS2d 14 (AD 1988)
Hiding asse ts in o rde r to pre ve nt the trialco urt fro m m aking an
e q uitable distributio n suppo rts a finding o f e co no m ic fault.
Court awarded the wife an amount equal to that which her husband
withdrew from their bank in anticipation of divorce and later concealed.
 Maharam v. Maharam, 666 NYS2d 129 (AD 1997)
– Trial court awarded wife 55% (additional 5%) about equality for
monies spent on adulterous affairs
– Raised to 10% on appeal
Problem –
There may not be enough remaining assets
14
©2015

15.  Allow a party to recover assets conveyed adversely to its superior rights in the
property
 Transfers that are actually fraudulent—even if the transferor received
consideration—because the transfer or intended to defraud its present or future
creditors and those that are presumed fraudulent because they lack
consideration.
NY De bt & Cre dit Law §27 6
 While showing that a conveyance was made with intent to defraud creditors
concerns the subjective mindset of the transferor, it does not require actual proof
of fraudulent intent. Because direct proof of fraudulent intent is rare, courts can
infer intent from the circumstances surrounding the transfer—so called “badges
of fraud.”
NY De bt & Cre dit Law §27 3-27 5
 Conveyances without fair consideration are presumed to be fraudulent—that is,
they are constructively fraudulent—when they prevent a debtor from being able
to satisfy his financial obligations, regardless of the debtor’s actual intent. ID.
15
©2015
Use of Fraudulent Conveyance Law

16. Problem Fraudulent conveyance may only be utilized post-
divorce?
Exceptions:
Soldano v. Soldano, 411 NYS2d 395 (AD 1978)
– Pre-equitable distribution
– Husband reduced assets to avoid support before divorce
– Wife went after family members for property obtained before
divorce
Unique case of
Peter C. v Lisa F., 118 AD3d 631 (1st
Dept. 2014) 16
©2015

17. 17
Mario D. Cometti, Esq.
Tully Rinckey PLLC
441 New Karner Road
Albany, New York
518-218-7100
mcometti@1888law4life.com
©2015
Questions?