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Protecting Your High-Value Assets from Post-Divorce Claims of Fraud in Florida

As a business person going through divorce, you have many worries that relate to your business assets. Not the least of these is that you and your attorneys will work hard, engage the other side in good faith, and eventually reach a resolution that is approved by both parties and the court, only to have that outcome unraveled by subsequent litigation by your ex-spouse. Wherever you are in the divorce process, don’t leave your substantial business interests to chance; instead, be sure that you have the knowledgeable South Florida divorce counsel you need.

As many business owners will attest, a business may be only one lost contract from financial crisis and one new contract from being flush with cash. These changes can happen literally overnight. Not all massive upticks in your business that happen shortly after your divorce goes final are the result of malfeasance, but your ex-spouse will probably try to argue that it was.

Take, as an example, a famous TV producer known for his police-and-prosecutors prime-time dramas on network television, but who was in the headlines recently in relation to his divorce. The producer and his wife worked out an agreement to resolve their divorce in 2003. The wife agreed to take a cash payment of $17.5 million and alimony of $2 million per year for eight years. She also got a house and other assets. At the time, the producer’s crime drama shows were allegedly valued at $4 million. Shortly after the divorce went final, the Los Angeles Times reported that the producer had signed a new contract with the network. The newspaper described it as a “billion dollar deal.”

The wife attempted to sue on the basis of fraud, arguing that the producer and his financial advisors actually had hid assets. Ultimately, the courts in California ruled for the husband and denied the wife the chance to pursue her fraud case.

As a business owner in Florida, that conceivably could be you. Perhaps your business makes pharmaceutical manufacturing machines and you just inked, shortly after your divorce was finalized, a massive new contract with a major worldwide pharmaceutical firm. Maybe you’re an upstart fashion design house and, not long after reaching an agreement in your divorce, one of your designs is selected by a Best Actress nominee to wear on the red carpet at the Academy Awards. Possibly you’re a construction contractor who finally landed that big condo project on South Beach. In other words, there are lots of reasons why the value of your business might increase several-fold in a very abrupt way right after your get your divorce.

So, what happens if that is you and your ex-spouse does try to pursue a fraud lawsuit? It is important to recognize that, under Florida law, there are two kinds of fraud in these situations. There’s intrinsic fraud and extrinsic fraud. Intrinsic fraud means some sort of fraud that was carried out during the divorce proceeding. Extrinsic fraud means that the wrongdoer’s fraud effectively prevented the other spouse from being able to participate in the litigation in a meaningful way and obtain a legitimate outcome at trial.

This distinction is important because, if the court concludes that a type of fraud was extrinsic, then there is no statute of limitations. If the alleged fraud is intrinsic, then the allegedly victimized party has only one year to take action.

That, of course, leaves you will several methods for defeating your disgruntled ex-spouse’s lawsuit. First and foremost, you can provide persuasive proof to the court to indicate that there was no fraud at all. Alternately, if your spouse has waited more than one year to pursue legal relief, then you can seek to convince the court either that there was no fraud or, even if there was fraud, it was intrinsic fraud. Either way, the law would dictate a ruling in your favor.

As a business person going through divorce, one of the key goals you likely have is to protect your high-value assets. To do that, be sure you have the legal team you need to provide that protection. The skilled South Florida divorce litigation attorneys at Stok Kon + Braverman have helped family law clients with high-dollar assets for a number of years, and are here to discuss your case with you.

Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.