Fraudster unable to unwind own fraud

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People facing claims they want to avoid will sometimes be tempted to engage in fraud or lies to remove their assets from the reach of creditors. This temptation should be resisted, as such misconduct can lead to additional claims and even criminal charges.

Such misconduct can also result in you actually giving up assets that you only pretended to give up, as the fraudster in Este v. Esteghamat-Ardakani discovered. In divorce proceedings, the wife claimed that millions of dollars of real estate registered in her name was in fact held by her only as trustee, for her mother. She also claimed that she owed significant amounts of money to her mother. It seems that these claim were effective in reducing what her husband was entitled to, as the divorce proceedings ended with a consent order that required the wife to pay her husband only a small settlement amount.

Less than a year later, the wife started a new court action against her mother and others, claiming that the properties were in fact hers, that no debt was owing by her to her mother, and that her mother held other funds in trust for her. In this new action she claimed that much of what she had said in her divorce proceedings about her assets and finances was a fraud.

The judge held that this new court claim was an abuse of process and dismissed the action. An appeal from this dismissal was unsuccessful.

To add to the wife’s woes, the divorce settlement was unwound and her ex-husband is free to pursue her for a richer property settlement!

“Asset sheltering” can create more problems than solutions, and should not be entertained without careful consideration and advice from a lawyer experienced in the area.

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