Fraud Blocker

“Real Housewives” Star’s Divorce Alleged To Be A Fraud In Federal Class Action Suit

Divorce is often about much more than two people growing apart. A divorce can be the result of political disagreements, family pressure, or financial troubles. Separating from a spouse is a good solution to these problems, with one caveat: the divorce should be a legitimate separation, not a method of evading financial issues.

A recent class-action lawsuit alleges that the sudden divorce of attorney Thomas Girardi and his wife Erika Jayne Girardi, of The Real Housewives of Beverly Hills fame, is just that. Previous clients of the well-known attorney have come together to accuse him of embezzling funds from their settlements. The suit alleges that the divorce is fraudulent, and a method of hiding funds, as opposed to a genuine separation.

Girardi and his law firm, Girardi Keese, represented the surviving relatives of the victims of the Boeing Lion Air 610 plane crash in 2018. This lawsuit led to a significant settlement for the claimants. However, the new lawsuit alleges that the firm has not disbursed the payments due despite months of demands. Instead, the money allegedly went to funding the Girardis’ lifestyle, which includes two private jets.

Since the couple has no prenuptial agreement, according to California law, half of the marital assets belong to Erika. She is also requesting spousal support payments in the divorce. The plaintiffs aim to block Erika from using the divorce as a vehicle to maintain control over these assets, including those that were fraudulently obtained from the Lion Air settlement.

The litigation is likely to delay the Girardi divorce significantly. In cases where embezzlement or other forms of fraud are suspected, the division of assets must be performed carefully. Funds that rightfully belong to others are not eligible to be included in the assets divided in a divorce. Instead, those funds must be returned to their rightful owners. The Girardi divorce may be on hold until the financial investigation is complete.

This investigation will most likely include a significant audit of the Girardis’ finances, as well as the finances of the law firm Girardi Keese and the other defendants in the lawsuit. If embezzlement or fraud are discovered in the audit, some or all defendants are likely to face serious financial and potentially criminal consequences.

Not every divorce is as dramatic as the allegedly fraudulent Girardi separation. However, even more routine divorces can benefit from precise and honest property valuations during the division of assets. To be clear, no matter what your circumstances are, it is still illegal to hide assets during the divorce process.

The Importance of the Division of Assets

The division of assets is a crucial part of the divorce process, especially for couples who have been together for a long time. California considers marriages that last longer than ten years to be a marriage of “long duration,” which can significantly impact spousal support and asset division. The Girardis, for comparison, were married for 21 years. After that much time, the couple is considered to be genuinely interdependent, and their assets intermingled. In a long term marriage, the majority of a couple’s assets will be considered marital assets if there is no pre- or post-nuptial agreement stating otherwise.

California is a community property state, meaning that marital assets must be split equally in a divorce. While most other states focus on the division of assets being equitable but not necessarily equal, California law states that the division must be equal unless both partners agree otherwise.

In high net worth divorces, this can become a complicated process. Even without the additional complications of fraud, dividing significant and varied assets equally between the former partners takes time and thought. Taking the time to value assets correctly is not just important for fairness, though; it’s also an important legal step that can protect you from financial and criminal consequences later.

Honest Financial Disclosures Matter

There’s a reason for the stereotype of one spouse hiding assets from the other in a divorce. It can be hard to see hard-earned assets go to your former partner. However, honesty is crucial to protect yourself both financially and legally. Lying about assets can result in perjury charges, leading to fines or potentially even jail time. In some cases, any hidden assets may be awarded in total to the other partner. The potential consequences greatly outweigh any benefits from hiding assets.

With that in mind, getting a fair and trustworthy appraisal of your assets is a worthwhile step in your divorce. Because of California’s focus on an equal split between spouses, there is little room for estimations in the division of assets. Unless both partners agree on an estimated value, a lack of precision may lead to problems down the road if one partner decides to contest the estimate.

Instead, getting an outside appraisal for assets like real estate, art, intellectual property, and other valuable assets is a wise decision. Using an outside appraiser helps prevent accusations of fraud. As a result, it can help you wrap up the divorce process quickly and simply.

Meanwhile, if you suspect your spouse is hiding assets, you can also work with a forensic accountant. This is the same type of professional who will be investigating the Girardis for wrongdoing. They work to trace funds back to their source, discover accounts and assets that have been hidden, and bring to light any fraud or dishonesty that might have occurred. If your spouse has been lying to you, working with experienced attorneys and accountants can help you find the truth.

Keep Your Divorce Fraud-Free

It’s difficult for a divorce to become much more complex than that of the Girardis. However, from the inside, every divorce can be complicated. If you’re considering a divorce but dreading the division of assets, our experienced high net worth divorce attorneys can help. With years of experience in both finance and law, they have the knowledge to help you reach an equitable and honest agreement. Reach out today to discuss your options.