How to Deal With Financial Fraud During Divorce


Jessica: So is there financial fraud in your marriage? Or do you even know what the red flags are to look for that and how to find out? Because these are some of the things we’re going to be talking about today on the Divorce etc… podcast. We are the exEXPERTS, Jessica and T.H. We focus on helping you navigate your divorce and successfully moving on with your life. Please follow us on all social media at exEXPERTS, and check out for tons of free divorce-related resources. Let’s bring in today’s guest.

T.H.: Hey, everybody, today’s guest is Tracy Coenen. She is a forensic accountant, but she has created so many do-it-yourself programs so that you can find the money, or at least be directed in ways that you can look for money that might be hidden or other things, that Tracy will get into, during your marriage, and therefore become a really important part of your divorce settlement – her Divorce Money Guide, and she is also considered the fraud coach. Welcome, Tracy to our show.

Jessica: Thanks for being here.

Tracy: Thank you. Thanks for having me.

Jessica: This is such a hot topic. Because as you know, when people are getting divorced, money, who has it, and who’s going to get it is what everybody’s thinking about. But I feel when you hear the word “fraud”, it’s also really scary. Can you give us a few examples of what you define as fraud, money fraud when it comes to divorce?

Tracy: When we think about the marriage, I like to talk about financial infidelity, financial abuse, and fraud, and put them all together. Sure, there are distinctions between them, but I like to think of it as dishonesty with the money. That can look like spending money outside of the parameters that you and your spouse have agreed to. You might have an agreement about how much money one can spend without speaking to the other first, things like that. It might be secret spending. It might be squirreling money away that your spouse doesn’t know about. It can be controlling your spouse through money. That’s more on the financial abuse side, but when you are controlling your spouse excessively with the money, it can often be a sign of financial fraud. It can lead to financial fraud. All of that kind of goes into that bucket of fraud that I’m trying to help people navigate.

T.H.: So when I hear fraud, I feel like you’re going to jail.

Jessica: Right.

T.H.: You broke the law.

Tracy: You sound like an attorney now. Part of my work as a forensic accountant is testifying in court as an expert witness.

And so I end up testifying, and these attorneys hit me with the legal definition of fraud. And so you’re right, there is that legal definition of fraud as a crime, as a civil action, and so that is what people typically think of. But I could defraud you and not go to jail if nobody finds out about it, or if you find out about it, but the police don’t want to do anything about it.

T.H.: What are some examples? What do you hear most often?

Tracy: In marriages?

T.H.: Yeah.

Tracy: What I hear most often is people spending money on secret things.

Jessica: Like girlfriends and trips to Costa Rica?

Tracy: Girlfriends, trips, drugs, gambling, but even expensive hobbies. Maybe the wife knows that the husband has an expensive hobby related to jeeping or ATVs and likes to go do things with his friends regarding that. They have an agreed-upon budget for that because that makes sense. Budgeting is great. He secretly spends way more on it. That’s something that I see a lot of. And so when I get involved in cases, what we’re really trying to do is figure out where the money went. So I say, “I find money.” It might not even be about fraud necessarily. It might be all on the up and up, someone just needs to know what our money has been spent on.

Jessica: Well, wait, I think that my first inclination would be that it’s like you said, squirreling money away. Someone has a secret bank account and they’re siphoning off money off of their paycheck or off of whatever it is and not putting it into the joint marital funds, so that they can have something later that they think is not going to end up being found. What percentage of the work that you do falls into that category? Is that more common than like, expensive hobby spending?

Tracy: I think by the time that people get to me they know that there has been that fraud, that hiding of money. So yes, the cases I see much more often are the hiding money variety. But that’s also a function of when does it make sense to hire a forensic accountant? And if someone is spending 1000 bucks here or there on an expensive hobby, that probably isn’t going to need a forensic accountant. It probably isn’t going to justify the cost. But when you know that something has been going on where paychecks have gone missing, cash withdrawals have happened from your bank account and you don’t know where the money went and you can get a feel for what kind of money might be missing, that’s when you’re going to come to me. And so I don’t have a good sample for in marriages how often does this happen, things like that.

Jessica: It’s often enough that people are hiring you and you’re staying in business so…

Tracy: Well, that, and often enough that if you go on any of the divorce support groups on Facebook, you will see on a daily basis people talking about money issues, and someone in the comments will say, “You need a forensic accountant.”

Jessica: Right.

Tracy: Mm-hmm.

T.H.: So in what instance do you say I need a forensic accountant? I was in my divorce, there was a lot that was hidden from me, and he wasn’t–I mean, there was dissipation of assets, for sure. But the bigger money issue was that he changed jobs, like immediately, to a salary level that I know he could not live on because he’s super fancy. So forget about me and three kids, he’s not living on that salary, but a whole song and dance of why that had to happen. What our forensic accountant did was uncover an opportunity that was going to come in the future, in the hopes that divorce would end before that money would come to be. And so it wasn’t so much about the today, and we did dissipation of assets, but that money that was found has paid for three kids in college and potentially graduate school. I want people to know that, yes, something can be happening now, but if something doesn’t feel right, like, with the job change or whatever, there could be a hidden money opportunity there.

Tracy: I agree with you. Some of it is about what has gone on in the past. Some of it in the cases that I work on is understanding what the family has been spending. It’s something that we call “lifestyle analysis”. What I often use that “lifestyle analysis” for is to prove that there is income that someone is not disclosing. And so the cases where this gets really interesting, one I worked on where this guy was a developer, and he developed assisted living homes, and they were high-end fancy ones. When it came time for divorce, he said, “Oh, look at our tax returns, we show no income on the tax returns. And so, therefore, there will be no money for support. These assisted-living communities are all underwater, so I’ve got no assets to split with you. Thanks. Thanks for playing.” Well, what was really interesting was this guy was spending about $50,000 a month on his living expenses. The wife didn’t know what he was spending; she just knew that it was a lot. And so I came in and went through all of their spending and came up with what it cost to live his lifestyle over a month, and we went in front of the judge and said, “Judge, it’s fine for him to say there’s nothing on the tax return, there’s no value in the assisted living facilities, but this 50 grand a month has to come from somewhere.” And so that’s another way that my work can be used as well.  

Jessica: So what are some of the, I hate to say obvious red flags, because I think that it’s not always obvious to us, and sometimes we just don’t want to see things that are in front of us anyway, but what would you say are the top three things for people who are in marriages, who are getting divorced, should be looking for and aware of?

Tracy: So the first and biggest one that I see is a change in behavior. So some obvious changes either in where they’re going and what they’re doing, how they’re hiding or using their phones, a change in how they spend money or how often they go to the ATM, things like that. Those changes in behavior that are noticeable are the biggest sign that I see. The second one that’s the next biggest is becoming more secretive. That can be secretive about your whereabouts, about your phone, about what’s going on with the money. And as you can imagine, the reasons why they’re secretive can vary. You’ve got the husband with the phone that was always on the counter. He would come home from work and set his phone on the counter every day, and nobody thought twice about it. Now all of a sudden, that phone never leaves his body. Even when he’s taking a shower, that phone is within arm’s reach. And of course, I say him, but we all know the women can do it as well.

Jessica: Sure.

Tracy: And third, I guess the third most common sign I see is unexplained spending or secret spending.

Jessica: But what does that look like? Should we know already that that’s happening? What if you haven’t seen it?

Tracy: Well, that’s exactly it. A lot of this is a Catch-22, right? I’ll say to people, when they ask, “How do I know if I need a forensic accountant?” I’ll say, “Well, one of the things you want to think about is how much money is at stake? How much do you think might be hidden?” And they say, “Well, if I knew how much was hidden, I wouldn’t need a forensic accountant now, would I?” So there is a little bit of a Catch-22. I guess what I’m saying is that if some spending that was secret reveals itself to you, you can consider that a red flag. And so what I find with people, though, who are in this position, is it is really hard for them to know am I being paranoid? Or am I really seeing signs? You guys maybe even experienced it yourselves where you saw some signs, some things going south, and you said something to your spouse. You might not have even been confrontational. You might have just said, “Hey, I noticed some unusual spending. What was going on?” And you got the, “You’re paranoid. You’re looking for something to pick at. You don’t know what you’re talking about.”

T.H.: Or a bunch of nonsense lies that you chose to hear and ignore as red flags.

Jessica: The phone thing I definitely saw.

T.H.: I went through the credit card, and I’m like, “What are these hotel charges?” “Oh, well, for work, or for whatever.” I don’t even know why asked if I wasn’t going to listen to how ridiculous the answer was. I don’t even know what I was doing. But I definitely did. I’m like, “Oh, they screwed up. They charged me for all these nights. They screwed up. I’ve got to figure it out on the credit card.” Lies upon lies upon lies.

Tracy: Right? Or “My business credit card didn’t work, so I had to use the personal one, and business is going to reimburse me.” But I think what you went through is not uncommon. You want to believe your spouse, and so you’re going to probably err on the side of believing them. And so when I was putting together the Divorce Money Guide, I said I want to have a way for people to have an objective view of what their situation is, and whether it’s something to worry about or not. So in the Divorce Money Guide is a 25-question quiz about how do you manage your money with your spouse who has control of it, and things like that. Then most of the questions are surrounding, “Have you seen any of these things occurring in your marriage?” And someone checks them off, and when they get done, they get a result back that says how likely it is that there is financial fraud so that I’m telling them what’s a really bad red flag and what’s not. So then I was like, “Oh, this is fantastic.” Then one of my professional associates said to me, “Well, that’s really great, but someone doing that quiz is already in the Divorce Money Guide. Can you make a quiz like that and assessment for people who haven’t gotten into the Divorce Money Guide, who are like, I don’t even know if I should be worried at all or should be looking into anything?”

T.H.: So we’re going to get an answer to that question in a few minutes. We’re just going to pause for a quick moment here because we know it’s hard to get honest and reliable information about your divorce, so we’ve done the work for you. Be sure to subscribe to our newsletter to get exEXPERTS in your inbox, and join our virtual Open House events where you can ask questions to top experts like Tracy live, and sign up for private sessions with us so we can help you move forward and thrive. You can get all of this information at We’ve lived it, so we get it. Now back to our show.

Jessica: So Tracy, tell us about this. Someone asked you for a questionnaire that didn’t already exist inside the Divorce Money Guide? I agree because it’s like there are people who are like, we they don’t even know if they need to be there yet.

Tracy: Right, so I put together an assessment, the red flag assessment. 15 questions – you can answer them in three minutes or less. And same deal, you will get a result that tells you how likely it is that there might be fraud in your marriage. So again, it’s not an exact science, but I’ve seen enough of this to know, okay, if you tick this box on this red flag, that is a huge predictor of fraud. For example, one of them is, “Has your spouse ever been involved in infidelity either in your relationship or in a prior relationship?” because that is a very high indicator of the potential for financial fraud.

Jessica: Why? Because they’re already a liar?

Tracy: Correct. And also because affairs generally have to occur with money that your spouse won’t miss, so somebody’s got to be hiding money or using a secret credit card, or something like that.

T.H.: Or not, and you’re being ignorant and not looking at information in front of you. He didn’t. He really didn’t. It’s unbelievable. But I would honestly, having gone through it in so many different ways in so many different stages in my marriage and separation and divorce negotiation, if you feel in your gut that something really doesn’t feel right, you may as well ask your lawyer about it, and ask your financial advisor. If you’ve already retained a forensic accountant, that’s what your team is there for you for. And start writing down these questions. Also, people, if you’re just like, ugh, I’m feeling uneasy about my relationship, put voice memos on your phone, because your brain turns to mush as you get more and more emotional and this comes over you. So that way, you don’t forget really important things, like on this day this happened, on this day that happened. Now here we are 14 years later, and now I’m remembering the credit card stuff that I ignored. I mean, in the end, I got all that money back, because there were significant dissipation of assets for all of his trips with her, to visit her, the gifts, everything. Everything.

Jessica: Yeah, it’s crazy.

Tracy: I get asked a lot, “Can I get that money back that was spent like that?” When people are spending money, it’s not like there’s a pile there of it just waiting to be paid back to the spouse, right? My answer is always if you have equity in the house if you have cars, if you have retirement accounts or bank accounts, a judge can give you a larger share of those to make up for what was wasted. So when your spouse is saying, “You’ll never get a penny. You’re not going to get this money back, it’s gone,” don’t believe him.  

Jessica: Yeah, no, totally. I agree with that. It was exactly that, although we’re in New York–well, I’m in New York, which is a no-fault state. It doesn’t matter that he’d had an affair, but dissipation of assets is still dissipation of assets. I was entitled to half of what he had spent in that, which we had to guesstimate. But yeah, it’s definitely worth finding out. I mean, I just think the whole thing is scary that a) there are people that are, and I know it happens, opening separate credit cards, opening separate bank accounts, trying to keep all these things secret. But I also think it’s a little bit funny that a lot of people don’t know enough to know that when it does get discovered, it’s 50/50. I feel people keep trying to get away with things, and it’s like, why do you think that you’re going to be the person who’s going to get away with it? There are people like you who make sure that they don’t. It’s the stupidity or someone saying, “Well, I never put this money in our joint bank account, so therefore, it’s mine.” That’s just not how it works.

T.H.: So what are some things that you should not do? Because I know I had a lot of people chirping in my ear of things that I should do in light of what I was afraid was happening, like taking out money – you take out half the money and then you put it in your own account, you go buy gift cards, all of that kind of stuff. Is that a thing that you should not do if you’re on the other side of it? What are things we shouldn’t do if this is happening?

Tracy: So here’s the thing, I don’t want you also trying to hide money. Like the gift card thing, people say, “Well, go buy thousands of dollars of gift cards. It’s untraceable.” Or I’ve seen spouses who want to hide their spending. Every time they go to the grocery store and they get a big load of groceries for the family, they’ll throw $100 Visa gift card on top of it, and it just blends in and nobody notices. I don’t recommend any stuff like that.

Lawyers, shut your ears right now, but if there is a bank account with money in it, I say absolutely. If you have access to it, take that money and put it in an account with your own name on it. I don’t say take half, I say take what’s in the account. The worst that happens, you are going to have to account for it. You’re going to have to show what happened to it, and you’re probably going to owe half of that back to your spouse. But I watched too many spouses cut the other person off, and they have no money for groceries, no money for rent, and no money for an attorney. So you know what? There’s money in account? I say secure it for yourself. Again, attorneys shut your ears. I know some of you will say, “Oh, gosh, you might look bad in front of the judge.” You know what? I might look better in front of the judge, but I’ve at least been able to feed myself and put a roof over my head in the meantime. That’s more important to me. So here’s my advice on all that kind of stuff. As long as you’re not hiding money or doing illegal things like trying to hack into their phones or putting a tracker on their car, all that dumb stuff, I don’t even want anything to do with that, but securing money for yourself and being on the up and up with exactly how much it is, where it went, what you use it for, I’m on board with that.

Jessica: Yeah, no, that makes sense. Especially if you know that you are in a relationship, either with a narcissistic partner, or someone who’s going to create a really vindictive and acrimonious situation.

T.H.: Someone with an addiction.

Jessica: Right. If you’re in a relationship like that, it does make sense to protect yourself, even though that seems scary in and of itself.

Tracy: Right.

Jessica: What would the next steps be for someone? So they have these suspicions, they’ve taken the quiz, they see what the red flags are, they know that they need help, and so they bring you in, how do you find the money?

Tracy: What I do is very much based in looking at credit cards, bank statements, investment account statements, and tax returns. Those are the basic documents where I spend all my time because I am trying to trace that money through accounts, figure out what it was spent on, and figure out where money is sneaking out of the system. I’m looking for things like were the paychecks not deposited, or were they deposited only partially? Are there cash withdrawals that we don’t know what they were for? Is there weird spending? One of the funny-sounding things that I find in these cases is, on the credit card, there’ll be a normal-sounding company name, “Something, Something LLC.” I’m like, “What the heck is that company?” I will start researching and researching and find out that it’s the ATM at the strip club. Yes, yes, this happens.

Jessica: Oh, my god.

Tracy: So that’s the interesting stuff, right? So some of what I do is complicated in tracing the money, and some of it is not complicated.

It’s simply a matter of looking at these statements. When someone can’t afford to hire me and they want to do it themselves, one of the things I say is print out a copy of your statements. Make it a clean copy so that you always have one set that has no writing on it. Make a copy, take some highlighters, and start highlighting transactions. I like to use green to highlight the paychecks. If you highlight every paycheck, you can go and easily count up how many green highlights do I have and are all the paychecks accounted for? I like to highlight things that are obviously bad transactions in pink because that stands out. Plus, transactions that we have to ask questions about – highlight those in yellow. Then sit down with your attorney. That’s one of the simplest do-it-yourself things if you can’t hire a forensic accountant.

Jessica: I love that. T.H., you are muted.

T.H.: What about cash?

Tracy: Ugh, cash is so hard.

T.H.: Yeah.

Tracy: Because people use cash on purpose because there is no paper trail because they want to cover up what they’re spending. And so the way I approach that in cases is if you have withdrawn cash in amounts that are out of the ordinary. In the old days, you went to the ATM once every six weeks, and now you’re going two and three times a week. I’m going to add up all those ATM transactions, and I’m going to put them in the bad category unless you can prove differently. But judges don’t always want to hear that. I get that. Judges don’t always want to hear that. So cash is super tough.

T.H.: But what about if cash was never deposited, and you are in a business, and it’s a cash business? You hear it all the time in various industries that they just took cash. They could just keep the cash and then spend the cash. Then it’s like it was never there. And so that could be, I would imagine, very tricky if you’re saying that your ex makes all this money and she or he has cash, and they’re like, “I don’t have anything. Go look at my tax returns. Go look at my bank statements.” You have no transactions. How do you prove that?

Tracy: So part of it could be the “lifestyle analysis” if we can add up how much was being spent on the lifestyle. Now, if someone is grabbing cash out of their business, they’re probably using it to buy groceries, and to fill up the car with gas, to eat out dinner. And so if we never see those things on credit card statements or on bank statements with the debit card, I will make an estimate of what the family spent on that. I would ask you, “How often did you guys eat out? What was a typical type of bill at the restaurant?” and we do the best we can with things like that. If you are in a position where let’s say you have a restaurant, you and your spouse have a restaurant, and you know all sorts of cash isn’t getting deposited now, let’s say you said, “Oh, everything before we were getting divorced, we were on the up and up with it all. But as soon as we filed for divorce, the cash started disappearing.” I as a forensic accountant will use special little techniques to compare what was coming in and cash before versus what’s now, to try to prove those kinds of things. It’s any kind of business that someone owns. When the divorce is filed, it’s so common for that spouse who’s in control to say, “Oh, gosh, business is failing now. Business is worthless. I can’t pay you support.” And so I will find ways to prove that they are making the money. I’ll tell you one quick one, a great story. It was a manufacturer, and “Oh, business has tanked. We’re not selling anything. Here, look at our financial statements. See? Sales are way down. It’s so terrible.” And I like to look at expenses because they’ll never take expenses off the financial statements. So that’s one way to say, “Hey, there’s still stuff going on. There are expenses.” But the best part of this one was I was learning about this business from the spouse and found out that all of their parts that they manufactured would get shipped to their customers via FedEx. So the attorney sent a subpoena to FedEx for all of their shipping records, and we proved that there was no drop off in sales whatsoever.

Jessica: Oh my god, that’s so good–

T.H.: Fantastic.

Tracy: It’s so easy.

Jessica: That’s the forensic part.

Tracy: It’s so easy and obvious once I tell you, but yeah. Or when I worked on where it was a laundromat, they deal in cash a lot. “Oh, golly, gee, nobody’s washing clothes anymore. We had a lot of washers and dryers break down. We just have had problems.” Oh, okay, let’s subpoena the water bills and see what’s been happening.

T.H.: Oh, my god, listen, guys, you’re going to want Tracy.

Jessica: Yeah, right, seriously.

T.H.: And if you can’t hire her, she has some do-it-yourself programs coming out that you can use to do most of the work yourself and save some money. Why don’t you tell us a little bit about them?

Tracy: So the big program is the Divorce Money Guide. It is a little bit of do-it-yourself accounting that anyone can do. You don’t even have to be good with numbers. 10 simple steps, you don’t have to do them all, but I walk you through how you get those documents you need, what you’re going to look for in them, and what you’re going to do when you find that fraud if you find that fraud, right? I’ve also got the Post Divorce Money Guide, which is a shorter guide that helps you with all those little things that you have to do after your divorce is final, to make sure that you’re legally protected, and that your spouse can’t interfere in your finances anymore. Then I’ve got the Marriage Money Guide for Women, which is the front end of all of this – how to set things up so that you are protected so that you have access to financial information and know what’s going on with the money in your household.

Jessica: Which is so important. We always talk about the importance of financial literacy and just the fact that so many women, traditionally that’s the stereotype, will step back and let the man deal with the finances. But listen, anyone who’s getting divorced, now you know. If you’re going to start again, you’re going to be in another relationship again, you have to do things in a way that’s open and transparent. You have to be part of the money-making decision. Having that money guide would be obviously–

Tracy: Also, being on your own now, especially if you were a stay-at-home mom and now money is like a holy crap moment for you, that now I’ve got to deal with all this and I have to figure out the money. We’ve spoken to so many people, you guys, who have explained that anybody can learn this. I hated accounting, I hate numbers, and if I can do it, you guys can do it.

Jessica: You’ve got to know your money. You’ve got to know your money.

T.H.: It’s logical. And don’t be intimidated by it. There’s a lot of empowerment in controlling your money and being able to support yourself in a responsible way. So thank you.

Tracy: That’s exactly it. I created the Divorce Money Guide because of my experience with fraud. I was doing it from a place of let’s find the fraud. But the more I got into it, and the more I talked to people, and the more people started using it, I was like wait a second, anyone going through divorce really needs this, because if you haven’t been involved with the money, you might not know where to start. And so this can give you that great place to start for, again, what documents to get, what to look at once you’ve got them.

Jessica: Awesome. Well, we definitely want to further the conversation. But for today, thank you so much for your time. This was so much really great information. I particularly loved giving the tip for the colors of the highlighters for people at home who–

Tracy: I mean you can’t spell forensic accountant without…

T.H.: You should sell a highlighter kit with your guide.

Jessica: Seriously. But the information I’m sure is going to be helpful to everybody as much as it was for us. And for everybody listening, if you’ve enjoyed this episode of the Divorce etc… podcast with us, the exEXPERTS, today, then can you help a girl out? Or two girls really. Because when you subscribe, rate, and review, it actually helps us get the word out on the podcast platform so that we can support more people like you going through divorce and beyond. Check the show notes for more info on Tracy Coenen and the red flag assessment and her guides. And of course, share this with anyone you know who can benefit from listening. Have a great day.

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