It’s often necessary to uncover money during legal proceedings like divorce or bankruptcy, by conducting a financial investigation to expose hidden assets, fraud or embezzlement.
Unfortunately, the paper trail of hidden assets isn’t always clear and it takes a specialist to track it down. For example, a typical ploy is to pay personal bills using funds that don’t belong to the perpetrator — money from a company or an employer.
There is an initial approach for finding the trail, which is a technique called horizontal analysis. This approach can be done on an absolute dollar basis or a common size basis, where the dollar payments are converted to a percentage of some larger amount — say, total operating expenses or revenues.
Utility costs are a particularly abundant ground for uncovering hidden assets for two reasons:
Consistency: Utility expenses are relatively constant and variations occur for predictable reasons, such as altering plant size, adding energy-consuming machinery, changing unit costs and weather patterns from one period to another. For example, a local energy provider might note that a particular month was the very cold and that consumption jumped 17 percent from the previous year.
Unusual consumption: It’s easy to spot any surplus spending, given the general stability of energy costs. This evidence leads the investigator to identify where the energy was consumed. If it’s just at the perpetrator’s residence, nothing particularly exciting has been uncovered. However, tracing excess payments can lead to a bigger — and more exciting — discovery: unknown real estate assets.
To take this discovery a step further, these real estate assets may be held in a fictitious or corporate name that wasn’t readily associated with the individual and could point to even larger sums that have been misappropriated or hidden.
Be sure to turn to skilled and experienced financial investigators when your case involves hidden assets, fraud, defalcation, or embezzlement in a divorce, bankruptcy or other incident of financial wrongdoing. They know how and where to find the assets and show you the money.