Fraud Found After a Divorce Agreement in New York

Fraud Found After a Divorce Agreement in New York

stressed emotional couple arguing fighting when checking financial papers together finding unexpected debt lack of money on bank account

While New York requires that both parties fully disclose assets and liabilities during a divorce, people do not always provide the courts with accurate information. Some people may even go so far as to forge documents or signatures. This kind of fraud can lead to an unfair judgment.

If you have discovered evidence of fraud after a divorce agreement, it is not too late for you to take action. New York courts do not tolerate divorce fraud, and a judgment based on fraud can be vacated. Fass & Greenberg can help you find evidence and pursue a more favorable result.

Finding Fraud in a Divorce Agreement

Financial fraud is one of the most common forms of divorce fraud. There are many ways that a person can hide or misrepresent their finances, such as:

  • Giving away assets
  • Engaging in excessive spending
  • Concealing assets from the courts
  • Undervaluing assets
  • Misrepresenting their income

This type of fraud is not always easy to spot. During divorce proceedings, you should watch out for warning signs of financial fraud, such as:

  • Restricting your access to bank accounts or financial statements
  • Pressuring you to sign documents that you have not had the chance to read
  • Frequent cash transactions
  • Selling assets to friends or family members
  • Costly habits like gambling and substance abuse
  • Constantly moving around money
  • Missing assets

You will need statements for all of your former spouse’s accounts to establish fraud. If they do not provide these statements willingly, or if you believe that some accounts are being hidden from you, your lawyer can request these documents from the court. Once you have the documents, your attorney can look for evidence of financial fraud.

While most fraud involves finances, other types of fraud can occur during a divorce. For example, one party might forge another party’s signature on legal documents or obtain a signature on false premises. If you suspect your signature was forged, you can request copies of your divorce papers from the County Clerk’s Office where the divorce was entered. 

What Can I Do When I Believe My Divorce Agreement May Have Been Based on Fraud?

A claim for a cause of action sounding in fraud must include the following elements: 

  1. a material misrepresentation of an existing fact, (2) made with knowledge of the
  2. falsity, (3) an intent to induce reliance thereon, (4) justifiable reliance upon the misrepresentation, and (5) damages. Orchid Construction Corp. v. Gonzalez, 89 AD3d 705, 707 (2d Dept. 2011).

  In making such a claim, you must allege any justifiable reliance on alleged

 misrepresentations by Defendant. In short, if you contend that the basis of the fraud is

that you relied, to your detriment, on Defendant’s purported failure to disclose certain

 “marital property at the time of your Settlement Agreement you must be able to prove that you were not aware of such purported assets at the time you entered into the Settlement Agreement. Your own knowledge and awareness of the existence of those very assets you claim Defendant failed to disclose defeats any fraud claim. NM IQ, LLC v. OmniSky Corp., 31 AD3d 315, 316 (1st Dept. 2006) (where plaintiff received independent analyst report of defendant’s need for capital, reliance upon defendant’s representation that it had sufficient capital was unreasonable), app. denied, 2006 NY App. Div. Lexis 12559 (1st Dept. 2006), app. denied, 8 NY3d 804 (2007); AIX Partners I, LLC v. AIX Energy, Inc., 2013 NY Slip Op. 32003U, (Sup. Ct., New York Co. 2013) (plaintiff’s actual knowledge of facts defeated claim for fraud in the inducement as a matter of law). 

Bald assertions, without more, also are insufficient for a fraud cause of action. You must also be able to provide facts or submit documentary evidence to support any contentions that Defendant forged your signature on documents and authorized bank transactions that required your signature. 

The claims must sufficiently detail the allegedly fraudulent conduct to permit a reasonable inference of the alleged conduct, as required by CPLR § 3016(b). Sargiss v. Magarolli, 12 NY3d 527, 530 (2009), and to meet the statutory requirement that a cause of action in fraud be pleaded with particularity. Greschler v. Greschler, 51 NY2d 368, 375 (1980); Rubin v. Rubin, 33 AD3d 983, 985-86 (2d Dept. 2006). 

Most recently, in Wong v. Wong, 11/9/2022 NYLJ 1668764201 (Sup. Ct. Kings Cnty, Shlomo Hagler, J.), the Court denied Plaintiff’s motion to rescind provisions of the parties’ Stipulation of Settlement and her application for summary judgment based upon fraud, in the inducement and breach f fiduciary duty claims.  Plaintiff claimed that Defendant failed to disclose assets he owned in Taiwan in his Statement of Net Worth.  Defendant moved to dismiss claiming he disclosed many of the assets and claimed Plaintiff agreed that the property in Taiwan was his separate property.  In dismissing the Wife’s argument, the Court stated, “A husband’s failure or refusal to disclose his financial circumstances when the agreement is executed is not sufficient to void an agreement fair on its face.”, and it is not considered fraud (citing Dayton v. Dayton, 175 A.D.2d 427, 428 93rd Dept., 1991). Further, the settlement agreement stated that each party’s separate property shall remain so “notwithstanding the discovery of assets that either party failed to disclose.  

How a Divorce Lawyer Nassau County Can Help

Establishing and providing fraud is not always easy, so working with an experienced family law attorney in Nassau County is best. 

It is not always easy to detect fraud during divorce proceedings, and it can be even harder to establish fraud once a divorce has been finalized. Thankfully, you still have options if you have found evidence of fraud after a divorce. Your lawyer can gather evidence, file a motion to vacate the order, and represent you in court. 

At Fass & Greenberg, we have handled many divorce cases and are familiar with the warning signs of fraud. It is not too late for you to take action and prove fraud. Call us at (516) 742-8111 to know more.

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