Family business fraud in marriage separation

Attempt to reduce family business profit backfires

Fraud may occur in any jurisdiction and unfortunately the area of Family Law is no exception.

The situation

A family company was controlled by one party in a marriage separation.

The company engaged in a complicated arrangement with a foreign company in Asia. The company bought services from this foreign company at inflated prices, with the aim of decreasing the profitability of the domestic company. This consequentially reduced the value for the purposes of the Family Law proceeding and removed ‘profits’ offshore.

The solution and result

Streeterlaw made an application for a freezing order (also called a Mareva Order) which prevented further transactions and obtained orders for an investigative accountant to audit the true value of the company.

Note

The Family Law Act provides stiff penalties to any person who discloses the names or identities of parties in family court proceedings or who publishes sufficient information to allow for the identification of these individuals. Accordingly many of the case studies and profiles are of a very general nature as a number of the distinguishing facts have been removed to preserve the anonymity of the parties.