A friend is going through a messy divorce, aren’t they all?
Before learning of the divorce, she learned that he had dissolved her 401K. She took no action on it an a year later he decided to leave her, so it’s been about 2 years since he did this. Since the divorce has started, she did the footwork to research the details and now has the copies of the disbursement papers from the 401K and the signed checks that clearly are not her signature. In addition, she has emails from him acknowledging that he requested the 401K funds and signed the checks himself. She is in debt up to her ears with her lawyer and the case is likely going to the judge. Her lawyer is evasive on commenting about his liability for this money as he claims it was all spent on “family debt”. The lawyer also insinuates that since she knew about this prior to the divorce and did nothing, she may not have any recourse. Given her limited ability to pay, my friend feels like she is being pressured in to just settling so that there isnt more debt with her lawyer.
For the lawyers who have exposure to these kind of problems, would you please comment in general on the following questions?
How likely is it that he could be held criminally liable? How would she even pursue this (assuming it would be in her best interest, which is questionable)? The jurisdiction would be WI, though they both now live in MN.
Could the company that managed the 401K and disbursed the checks be considered liable for the money? If this is even possible, how would she pursue it? More money down for lawyers?
In her current understanding of the circumstances , she feels like she’s getting more and more of the shaft. It just seems strange that he could run this particular racket and not be held liable because of his relationship with her.
Any comments or impressions from someone who has knowledge of how these things work would be really appreciated.
I would think the lawyer would know this and provide advice, but as I said, she is very evasive with comments like she “may not have any recourse”. Her lawyer basically replied with telling her she would have to hire a lawyer to investigate anything outside the divorce proceedings.
Two years ago he forged her name and took all the money out of her 401K. At some point between then and when he decided a year later to leave her, she found out. But she did nothing until the divorce proceedings started. She has very little chance of recourse at this point, but it’s not entirely because of his relationship with her - it’s also because of how she handled it. She didn’t make any complaint to the company managing the 401K or to the police until at least a year after it happened. Had she reported it immediately upon receiving the statement that showed the transaction, she would have been in a different position. The relationship just makes it more difficult - if a stranger had done the very same thing and she waited this long , it would still be an uphill battle. But now she will have to convince people (cops, prosecutors,a judge and/or a jury) that her husband forged her name and emptied her account and she stayed married to him and didn’t report the theft even he though didn’t have her permission to conduct the transaction* and that she didn’t benefit in any way from the money *and *that she didn’t forgive him for it at the time that it happened and she isn’t only taking action now because of the divorce. Gonna be difficult - there’s definitely more to it than you’ve told us or that she’s told you.
I don’t actually think the lawyer is being evasive. I think he’s giving the best answer he’s got. Even if he 100 percent absolutely stole the money from her, that doesn’t mean she’ll be able to get him arrested or convicted or found guilty in a civil suit. And it wouldn’t be part of the divorce action.
Sometimes married couples do this sort of thing for convenience
It’s difficult to make heads or tails of this story given your convoluted description.
If I’m reading correctly - Husband closes out her 401K pre divorce 2 years ago. She knows this at the time. He spends the money not on hookers and cocaine but on mutually accrued family debt. Her (I think) lawyer warns her that chasing signature forging hubby for closing out her account without her permission may yield minimal benefits because (1) she effectively knew about it for 2 years and did nothing and (2) it was all spent on family debt.
She thinks her lawyer is telling her this so she won’t keep piling up debt with him on what he thinks is likely to be a financial wild goose chase.
I can see the lawyer’s point. If she is likely to get little to nothing financially doing this why spend more money with him piling up debt she can’t pay pursuing this criminally unless it’s just to punish forging hubby.
Unless the husband is wealthy (and it doesn’t sound like it given the forced 401 sale to cover family debts) what is it she expects to get out of this?
Like any profession, some people are better than others. It may pay to talk to another divorce lawyer (quite possibly a free consult); if she gets the same answer, that’s probably that. If she gets a different answer, it may pay to consider changing lawyers. I know people who fired they lawyer who tried to talk them into a 50/50 split, which was not what the customer wanted because of financial shenanigans by the soon-to-be-ex.
I don’t know how a civil divorce could negate criminal fraud, but that’s one question she should ask the district attorney, not a divorce lawyer. But how much money are we talking about? If the 401k had a few hundred thousand in it, it would be worth pursuing. If it had five thousand, it’s probably not.
Whether she knew about it after-the-fact or not may not matter as it would still be within the statue of limitations which is typically 4 years. She should be able to file an action at any point during that time.
However, it may not be a divorce matter but rather a civil litigation matter.
The 401k money is gone. It was spent on mutual debts of the husband and wife. Doesn’t sound like the hubby has got any money to go after.
This sounds like what she is really seeking:
The company’s defense is that she was notified probably multiple ways, email, her 401k account statement, tax form 1099, etc. that her account was being disbursed. Yet she did nothing. Besides, she personally benefitted from the proceeds as well, they were used to pay-off her and her husband’s debts.
She’s barking up the wrong tree, and should quit acting like the victim. Sounds more like she is as responsible for the mess she’s in as anyone.
Assuming they are not 59.5 or older, even if he dissolved her 401k without her knowledge, they should have had to pay a penalty and taxes on their next return. If he didn’t declare it, that’s evidence that he was attempting to hide it from her. (P.S. And the IRS will eventually come calling to get it, so she needs to look at her tax returns and make sure it was included in that year’s tax return.) If he did declare it, and she signed it without looking it over, well then that’s her fault.
Besides, if he used the money to pay off joint debts, it’s rather a moot point anyway. They are both responsible for that debt.
The weirdest thing about this scenario is that the OP’s divorcing buddy is in dire financial straits and yet is super pissed and suspicious at *her own attorney *for cautioning her not to run up more debt with him chasing this action which will likely be expensive, problematic and have little to no financial yield.
But that assumes the funds in the 401k are joint assets. If the funds came from a job she had before the marriage, then he has no right to the money. There is not enough information in the OP to make an assumption either way, but she should be pissed off that he fraudulently cashed out her 401k. He shouldn’t get a pass on that, regardless of how the funds were used.
I’m not even sure it was her 401k. In a divorce, its possible that she has rights to his 401k - and if he takes money out of his own 401k, she needs to sign.