What Are The Panama Papers?
In short, early this month, a group of journalists dropped a bombshell of a document leak, hailed by whistleblower-in-hiding Edward Snowden as the “biggest leak in the history of data journalism.” The Panama Papers, as they’ve been designated, involve a Panama-based law firm called Mossack Fonseca that has allegedly helped many of the world’s super-wealthy hide assets behind shell corporations in order to shield them from taxation in their home countries. It has never been a secret that this sort of tax-evasion scheme happens, but with proof, many world leaders and otherwise wealthy private citizens have been implicated.
Though it will take some time to pore through the 11.5 million documents contained within the Panama Papers, the world impact has been pronounced. At least one world leader has resigned his post, Prime Minister Sigmundur DavÃÃ° Gunnlaugsson of Iceland, due to public outcry regarding his connection to the Panama Papers. Other implicated parties, such as President Vladimir Putin of Russia and Prime Minister David Cameron of Britain, have issued vehement denials, while the entire country of China instituted a moratorium on media coverage of the Papers. Sounds shady.
But there is another lesson to be learned from the leak that we thought would be relevant for a blog: how the Panama Papers implicate wealthy men and women who attempt to hide assets from their spouses during divorce.
Hidden Assets in the Panama Papers
When a couple files for divorce, they are supposed to disclose all assets and marital property to ensure equitable division of assets between the parties. However, divorce ”“ especially high profile divorce ”“ can be very contentious, and faced with the idea of losing a massive chunk of wealth, especially to someone that a person might not really like anymore (some of these divorces are downright vicious), it makes sense that the holder of the wealth might look into options for hiding that wealth. One option ”“ create a series of shell corporations and trusts overseas to funnel the money into, making it very expensive, difficult and time-consuming to track down. This is how the Panama Papers have revealed hidden divorce assets: by providing a blueprint of how money was hidden, where it was hidden and when it was hidden.
Take, for example, Dmitry Rybolovlev, a Russian oligarch whose divorce with his wife Elena was once described as the most expensive divorce in history. According to a report by the International Consortium of Investigative Journalists (ICIJ), Elena fought Dmitry for seven years at the cost of millions of dollars to receive her due share of his wealth in their divorce. She claimed he was worth much more than he said he was. Her initial winnings amounted to $4.5 billion, which was then slashed to $609 million by a higher court. She eventually settled for an undisclosed sum. Now, the ICIJ report shows that Rybolovlev hired Mossack Fonseca in 2002 to move assets beyond Elena’s reach.
What Happens If Hidden Assets Are Discovered After Divorce?
If you become aware of assets that were hidden and the divorce has already been finalized, you have options to take your ex-spouse back to court. You can file a motion to have your divorce case reopened for the purposes of amending the divorce agreement, or you can even file a civil lawsuit for monetary damages.
Spouses found to have hidden assets could receive court sanctions and be forced to pay more to their ex-spouse than they would have if they had been honest at the outset.
Our Denver divorce attorneys are prepared to walk you through the electronic discovery process to ensure that you receive your equitable share of your marital property.