Someone in Texas City needs to clean up the municipal court, but it’s trash of a different kind. The city has been demolishing properties all over town, but are the …
Silicon Valley judges have become disgruntled with their $200,000 annual pay. So family lawyers decided to do something about it in order to get in judges’ favor. Fueled with client money pouring in from Facebook, Paypal , Google and Twitter executives, divorce lawyers are using Bitcoin or crypto currencies as well as equity in family homes and investment properties to bribe judges and rig divorce cases. The blueprint is being repeated all over the state as these well funded lawyers and corrupt judges operate what has become California’s most dangerous criminal organizations.
Police officers willing to write bogus reports of domestic violence while ignoring serious white collar crimes play a critical role in the operation. Crooked cops are getting special loans and below market houses in exchange for the role they play in the scam. Children whose parents are involved in divorce or custody disputes are being used by the enterprise to incite conflict and generate fees that justify the selling off of the family home or rental properties that generate family wealth.
Judges rotated through family, civil and criminal courts are the most likely to be dragged into the network. These judges issue orders that are critical for the organization. It has worked like a well oiled machine for 20 years, as property values in Silicon Valley skyrocket.
The pandemic however, disrupted the corruption and leaked information to outsiders. Meetings through local bar associations have been disrupted due to the pandemic . No longer can the lawyers rub shoulders with judges or others in the enterprise in hallways such they they are able to overhear other cases in a manner that invites illegal, or exparte, communications.
During the COVID crisis, attorneys in the San Francisco Bay Area used the pandemic to record public court hearings, meetings with private judges and attorneys court appointed to represent children. Some of the recordings were made illegally to help lawyers and judges make more money on ghost real estate transactions and inflated legal bills that are always ordered in favor of lawyers assuring a steady stream of bribes.
The existence of these illegally recordings only is revealed when I judge is involved, as was the case in a Santa Clara County Superior Court earlier this month:
“Judge Roberta Hayashi needs another apartment complex in Santa Cruz and someone has to chip in for more remodels on her Los Gatos house ” , attorney Mark Erickson is heard telling attorney Jim Hoover in an illegally recorded call made on special software Erickson keeps on his office computer. Erickson, like most other lawyers, reportedly does poor legal work, charges unconscionable fees, spies on his own clients and makes backroom deals with opposing lawyers to stay in the good graces of the local judges. This is especially true in cases where he opposes attorneys associated with Hector Moreno, David Patton, James McManis or Jim Hoover from Hoover Krepelka, all of whom assure outright bribes to judges, cops and court appointed experts to get desired legal outcomes that keep the flow of clients coming into their legal practices.
The pandemic has caused trouble for divorce lawyers who find it difficult to conceal their criminality when other lawyers, and unknown members of the public, or a jury, may be listening. After moving her troubled career as a family court judge to civil court, Judge Hayashi was more than humiliated during a hot mic moment on a Zoom where the jury was present and an attorney in a auto accident case was heard calling Judge Hayashi a
“Fucking Idiot”. A sentiment divorce lawyers Mark Erickson, Hector Moreno, Nicole Ford, Liz Goodley and Elise Mitchell expressed when they were recorded outside the family courthouse back in 2020.
The LA Times and the San Jose Mercury recently reported on the hot mic incident and social media is mocking attorney Vincent Sal Filipo for calling Judge Hayashi a ” fucking idiot” in ear shot of a jury and recorded Zoom hearing. Judge Hayashi is said to be fuming and planning to make sure Sal Filipo never wins a case in Santa Clara County again.
Illegal recordings have also revealed how Los Gatos based attorney Carlos Martinez, Capitola based attorney John Hannon and lawyers from San Jose; James McManis, Rhonda Edgar, Walter Hammon, Richard Roggia, James Cox, Tracey Duell Cazes and Bill Dresser are connected to real estate scams designed to take family homes and convert the equity to attorney fees during a divorce, custody or domestic violence case in family court.
Converted fees are laundered through attorney trust accounts , title companies and escrow accounts where the funds are used to bribe judges up and down the state, where the bribes assure civil cases are buried and claims are returned to family court. Houses sold below market value through private judges, referees or ” Special Masters” are funding the criminal enterprise that incites conflict, harms children and seizes family homes in order to continue to operate.
Family courts do not have jurors. Cases are heard by a single court judge. Torts such as fraud, domestic violence, concealment, and conversion can not be litigated in family court as the claims must be in heard in civil court where a jury is entitled to hear the claims. Judges who have been earning money on side hustles from rigged divorce cases do not want these cases heard by jurors who go home and tell about what is really happening in family courts. Looking through civil court filings against attorneys can reveal the players in involved in the corruption.
The pattern of the most corrupt lawyers show that they work closely with the police departments in Morgan Hill, Gilroy, San Jose, Los Gatos and Santa Clara to assure reports are written in a manner that will allow lawyers to raise false domestic violence claims in and around the time a divorce case is filed. Further, individual police officers and police chiefs are accepting bribes that prevent clients willing to pay the criminal organization from being charged for tax evasion, fraud and other crimes that could be exposed during a divorce case.
Police chiefs who have been paid bribes through local police associations include police chiefs from Gilroy, Los Gatos, and San Jose , all but Los Gatos Chief DeCena have resigned as they knew police records laws and new snitches could expose their corrupt deeds. Scott Smithee , the chief in Gilroy, was known for his long corrupt history with drugs and sex trafficked, and more recently for bribes he took that included special loans and real estate deals assured by Intero Real Estate agents who agreed to who assured home remodels and tax accounting favors through the CPA firms of Greco, Filice and Thompson and MHTB, where Angelo Pezzoni, Mike Schumway, James Butera and Marcy Nunez have worked for powerful members of Silicon Valley’s legal community in exchange for court appointments that offer them immunity.
According to information provided to family law attorneys Valerie Houghton, Elise Mitchell, Liz Goodley, and Heather Allan, by now deceased Santa Clara County Sheriff Deputy Jack Solario , the most corrupt judges, lawyers and cops, get off the books accounting advice and should they ever face a DUI, false DV claim or personal divorce, free legal advice from attorney James McManis , and his former associates including, Carolyn Helwick, who uses her former relationships at the local DA’s office and as an associate in the McManis Faulkner law firm where Helwick was known as the go between when it comes to bribing local judges or getting clients to agree to use private judges. Helwick’s name appears in the Mitchell papers as having assured over $5 million in bribes to Judges Patricia Lucas, James Towery. Roberta Hayashi , Mary Arand, Julie Emede, Beth McGowan, Stuart Scott and Carol Overton ( the judge in the county protecting big landlords in unlawful detainer and civil harassment cases) . Overtime’s ties to real estate has made her one of the most corrupt judges in the county.
San Jose police Chief Ed Garcia, moved to Texas , where he reportedly continues to cover up human trafficking crimes. Scott Smithee, the former Gilroy Chief is reportedly getting into private security for Silicon Valley’s tech and social media companies where he is reportedly consulting on how to conceal the most serious white collar crimes connected to SEC violations and real estate fraud.
Rigging Divorce Cases
Judges have a legal obligation to disclose their social, personal and professional relationships with lawyers or others they appoint in a case, they rarely do. Judges also have a duty to report attorney misconduct, they rarely do . Judges know everyone lies in family court, yet they look the other way when it comes to the criminality of clients paying the criminal enterprise and assuring bribes to local judges. Those clients and their lawyers will never be sanctioned or disciplined by the state bar. In fact the corruption at the bar, revealed by the Thomas Garardi case works to protect the most corrupt lawyers in Silicon Valley These corrupt lawyers are never prosecuted by a local district attorney whose political campaigns are funded by the monies these lawyers and judges pay to keep them in office.
Divorce cases that are ” fixed” or ” rigged” involve the same lawyers and the same pattern and practice when it comes to public corruption. These cases, regularly assigned to a specific judge, often find a judge working for the criminal operation, come into their case at a hearing where no legitimate reason for the judge switch has occurred. Judge James Towery’s cases show the most corruption, where Towery has injected himself in other cases where the corruption could be revealed.
The lawyers in Silicon Valley are no different than those in LA and Organge County, where it was recently revealed how corrupt attorney Thomas Giaradi had become, right under the nose of the State Bar. Giarardi was known for screwing his clients. Now in his final years of life, he is facing disbarment, bankruptcy and his own divorce from celebrity Erika Jane of Real Housewives of Beverly Hills. Turns out their plush lifestyle was supported on the backs of women and orphans Girardi represented in class action lawsuits, never got paid. Girardi’s corruption and influence include bribes and kickbacks to Governor Gavin Newsom, who appointed Girardi to approve judges Newsom would appoint over his political career. Bribes to Shelia Sonenshine, Judge Moss, Judge Lucas, Judge Yew. and countless attorneys acting as private judges independently, David Weinberg, or through the private business known as JAMS are also documented in the Mitchell Papers.
Judges Stealing Family Homes
One secret recording made by attorney Marilyn Moreno reveals that Santa Clara County Judge Carol Overton has been assigned by court managers to ” kill” civil cases with related family law matters. Judge Overton has reportedly been assigned to work on any case involving SEC or real estate fraud to keep it out of ear shot of a jury. The recent hot mic incident involving Judge Hayashi solidifies the resolve of the judges to continue to protect the corruption and handle the cases that cold leak information to the public that family court judges don’t want heard.
One recording, believed to have been made by Bill Dresser shows Marilyn Moreno, Bill Dresser and attorneys from Hoover Krepelka’s law firm , discussing how to get Judge Overton to pressure a mother to drop her civil real estate fraud case and get the case back to family court where they can use pressure on custody issues related to her young children to get her to forget about the real estate fraud. Judge Overton’s assignment on the unlawful detainer calendar in the county made her very popular in the local judge bribing pool.
On the civil calendar Judge Overton’s courtroom deals with civil harassment and unlawful detainer cases. In recent months Overton has been assigned as a ” settlement judge” to real estate cases that arise from claims of fraud in a divorce case. Overton has been reportedly working to favor clients in the case who are represented by Hoover Krepelka’s firm. A secret recording believed to be made by Marilyn Moreno reveals a public court judge , believed to be Judge Carol Overton, captures Overton telling attorneys Dresser and Moreno to assure their client accepted a settlement and dropped a civil case, to ” get the case back to family court”. Arguably where no media or jury is watching. ” If your client does not agree to drop her civil case , the judges in family court will make her life a living hell. Overton is reportedly not beyond making threats to get her way to protect slumlords and the criminal organization that is using divorce and custody cases to generate huge sums of cash that are used to pay off judges, lawyers, experts and cops.
The Los Gatos Police Officer Association is noted in the Mitchell Papers as assuring Overton large sums of money so the Los Gatos slumlords are assured of Overton’s favorable orders in court cases involving Los Gatos real estate.
How to Detect Fraud Divorce Case and Real Estate
The corruption is spreading to other counties in California, it is being ignored by presiding judges, the Commission on Judicial Performance and the State Bar.
Civil court files reveal the lawyers involved in the corruption. Look for judges assigned to unlawful detainer cases. These judges typically protect real property owners and landlords over tenant’s rights. Malpractice claims also reveal the patterns and practices, but knowledge of the players is critical too and malpractice lawsuits are a huge leak when public corruption taints a community’s family courts.
Judge Overton became connected to the corruption through the law firm Hoover Krepelka , and its relationship to Dean Rossi and the law firm Rossi, Hamerslough, Reischl & Chuck which has historically worked to for Intero Real Estate Services, a real estate company known for fraudulent transactions connected to the county’s family courts. And a company where agents and brokers have a long history of bribing judges, cops and lawyers. This agency is getting court appointments through private and public court judges and then selling family homes below market value. Police officers, lawyers and judges are benefiting and much of money laundered for these transactions is bring moved through crypto currencies and attorney trust accounts, where they are not disclosed, nor detected in family law cases.
Self- proclaimed malpractice attorney John Hannon is a source of leaks too, Hannon has been known to dragnet clients into malpractice cases, only to drop them by staging fake fights with clients, or intentionally blowing service and discovery deadlines.
Hannon is particularly known for escalating duress in his clients, while colluding with the very attorneys he is hired to sue for malpractice. Hannon’s reach is in Santa Cruz, Monterey and Santa Clara Counties, where he takes nominal retainer agreements and gets his real money kicked back from the lawyers who never get exposed in family court due to his incompetence and connection to the family court corruption. Hannon is known in particular for preying on victims of domestic violence, and for verbally insulting any client who dare to question his competence. This leaked email shows how Hannon pretends to not be able to serve lawyers he is secretly protecting. Mr. Hannon was meeting daily with Mr. Dresser as the two were trying to determine how to get a restraining order filed against Bill Dresser in Sacramento County back before Santa Clara County Superior Court Judge Carol Overton who is the highest grossing bribed judge in the county.
Want to see the joke of the day? The Texas Constitution requires state lawmakers who have a personal or private interest in a proposed law to disclose it to the House… and not vote. Now you will understand why fathers rights groups are furious and are demanding a vote on a bill for equal parenting after divorce. We agree.
Originally published by Robert Epstein.
A parent’s behavior may affect their rights to access and possession of their child in a Texas custody case. In a recent case, the trial court’s order provided that the schedule would change if the child had a certain number of unexcused absences or instances of tardiness while in the mother’s care.
According to the appeals court’s opinion, the trial court entered a custom possession order (CPO) as part of a modification order at the end of January 2020. Pursuant to the CPO, the father had the right to possession of the child from Wednesday morning to Friday morning each week and from Friday morning to Monday morning every other weekend, and the parents alternated holidays and school breaks. The CPO also provided that the mother’s possession schedule would change to the Standard Possession Schedule if the child had a total of any combination of five unexcused absences and “tardies” from school, as determined by the school, while in the mother’s possession.
Father Moves to Impose Standard Possession Order
The father moved to confirm and clarify the order and requested an injunction in April 2020. He alleged the child had been tardy five days and absent two days during the fall semester of 2019. He asked the court to confirm and clarify that the standard possession schedule was in effect and to grant an injunction.
He testified the child’s official school record showed the five tardy days and two unexcused absences and that the mother was responsible for getting the child to school on those days. He presented a business records affidavit of the school’s records custodian dated January 30 and the child’s attendance records. The records showed the child had four unexcused absences and five tardy days, including the specific days identified by the father. He also testified that his attorney had attempted to resolve the issue without going to court.
The mother presented a business records affidavit dated June 16. The attached records did not show the child was tardy on three of the dates on which he was shown tardy in the records introduced by the father.
The child’s kindergarten teacher testified she would rely on the records dated June 16. She testified children are sometimes sent to the office when they arrive late, and that she and the office personnel can both input tardies. She also testified that the system she uses and the system used by the office are different and that the two sets of records were from two different systems.
The mother testified she did not know if she was responsible for getting the child to school on three of the dates, which were on the days the parents alternated possession.
The trial court ordered the parties to use the standard possession and access schedule and awarded the father attorney fees.
Mother Appeals Trial Court’s Confirmation of Standard Possession Order
The mother appealed, arguing the trial court abused its discretion because it did not have sufficient evidence to support the order. She argued the kindergarten teacher was an expert, and the trial court should have relied on the June records because the teacher testified she would rely on them and because they were more recent.
The appeals court noted the trial court had recognized the teacher as an expert in teaching, but not in education administration. She had testified she was unfamiliar with generation and interpretation of school attendance records. Although she acknowledged the discrepancy in the records, she could not explain it. The appeals court further noted the trial court could have found she would rely on the June records because she was familiar with that report and not the one the father submitted. The trial court had the discretion to discount her testimony.
Appellate Court Finds that Trial Court Properly Considered Conflicting Evidence
The appeals court noted that the trial court could also have found the January attendance records were more reliable than the June attendance records. The June records contained a summary of absences and tardiness on a single page, which the appeals court noted was blurry and hard to read. The January records included a “detailed accounting of the daily reports of attendance, absences, and tardies. . .”
Additionally, the court could have believed the father’s testimony that the mother was responsible for getting the child to school on the identified tardy and absent days. The mother had admitted she was responsible on some of the days and did not remember who was responsible on the other days.
The appeals court found the trial court did not abuse its discretion in deciding to apply the standard schedule because there was substantial and probative evidence supporting it.
The appeals court found there was insufficient evidence supporting the award of attorney fees and remanded the case to the trial court on that issue, but otherwise affirmed the trial court’s order.
Walk into Court Prepared: Call McClure Law Group Today
A significant issue in this case is the conflicting evidence presented by the parties. Although the mother presented a witness to testify about the records, that witness was unable to explain the discrepancy. If you are experiencing a custody dispute, a skilled Texas custody attorney can work with you to identify the evidence to best support your case. Please contact McClure Law Group at 214.692.8200 to set up a consultation.
Lawsuit Uses A.I. To Catch Divorce Attorneys Stealing From Women, the Elderly and Independent Tech Guys
If you have to ask if your attorney fee bills look right, it’s probably too late. Divorce attorneys Hector and Marilyn Moreno along with a number of judges, cops and dirty divorce lawyers were sued in federal court during the 2020 pandemic related to COVID-19. The Plaintiff in the case used artificial intellegence, “AI”. to show the relationship between domestic violence and divorce cases and how attorneys in Santa Clara County are using those cases to fund a criminal organization that opoerates in California by selling the family homes and getting cops to write false police reports about domestic violence. The suit names the legal legacy Moreno siblings and Hector Moreno’s son, Micheal Moreno, who left the Santa Clara County DA’s office to set up shop with his aunt Marilyn with cases being funneled to them through Campbell’s Home Church, non- profits and police officers working for the Gilroy , Los Gatos and Los Altos police.
Former Santa Clara County prosecutor, Cindy Hendrickson, who conspired with DA Jeff Rosen and Stanford University law professor Michele Dauber to rig the Santa Clara County 2018 election such that she replaced Judge Aaron Persky on the local bench, is related to the Morenos through marriage and since she was elected, Hendrickson has been sitting in the county’s domestic violence court where she appears to be part of a criminal organization trafficking children and rigging divorce cases based on Hendrickson’s connections to the DA’s office and the founder of a charity, Ruth Pattrick Darlene, who runs a scam charity that serves only ” affluent ” vicitms , and that really operates to dragnet divorce cases for attorneys working for what appears to be a criminal organization operating in plain sight with impunity.
Brent Ostler’s federal case reveals a pattern and practice cops, divorce lawyers and judges engage in to rig divorce cases and fund bribes, fines, fees and sanctions for the benefit of the operation. These illegal payments and public corruption is funded with equity from the family home, where court ” Settlement Conference Officer” Sharon Roper uses her power to appoint Intero Real Estate agents and lock in home equity that is express delivered to the IOLTA trust accounts of lawyers working for the enterprise, while engaging in antitrust activity that is prohibited by state and federal law.
Ostler’s federal lawsuits name the Santa Clara County District Attorney Jeff Rosen, the Gilroy Police Department and private judge Sharon Roper who works as an attorney for the courts, in addition to the divorce lawyers and Intero agents Roper reguallry appoints to assure a flow of illegal commissions to Intero Real Estate and Berkshire Hathaway. Roper also feeds the enterprise referrals as the court’s ” Settlment Conference Officer” , where James Cox is appointed to the most corrupt cases, including the divore case of Intero founder John Thompson and retired judge Mary Ann Grilli, who appointed more cusotdy evaluatiors, referees, special masters, private jduges and minor’s counsel for the enterprise than any other judge in California’s history, where Judge Hendrickson, Judge Towery and Judge Scott are closing in fasted based on being enternched in the court and public corruption based on connections to the DA’s office. Following the death of her husband, Roper has reportedly carved out a new lookout postion inside the court where she funnels referrals, but also made up the title of temporary judge for ” Real Estate” , which is ourely made up.
Discovery in Osteler’s federal case has reportedly found government attorneys working overtime to shred documents , complaints and emails in order avoid discovery in the case. These governmetn attorneys and elected officials ( Susan Ellenberg, Mike Wasserman and Cindy Chavez) have been telling insiders Ostler’s case was brought in pro se, and will not survive in a manner that will ever be dicovered. Ward Penfold, Kim Hara, Micheal Rossi and risk managerment employee for the county, Matt Fisk, were captured on a recordings reportedly held in the offices of tax attorney Ronda Edgar, scheming to destroy evidence and deflect criminal investigations that include investigating money laundering and tax evasion scehemes connected to real estate transactions and divorce cases.
Intero Attorney Heather Wang Linked to Weed , Sex & Corruption- LA & OC
In a related case, Ostler filed against Intero Real Estate agents, a company affliated with Berkshire Hathaway. The suit names Intero attorney Heather Wang, who is reportedly running blackmarket real estate scams connected to the LA and Organge County’s drug and sex trafficking rings operating through private judge cases before Keith Dolnick, Shelia Sonenshine, Tom Tuttle and David Weinberg.
Dolnick links the enterprise to out-of-state crimes discovered in Arizona, Texas and Florida, where the Santa Clara County DA employee Kasey Halcon is known to traffic vicitms so they can not be found and brought to testify against police officers, lawyers , judges and other ” justice partners” operating the enterprise with the knowledge and assistance of court insiders.
Dirty cops, divorce lawyers, CPS workers, private businesses and even non- profit or charity organiations , along with court clerks, judges, private paraleagals and top ranking employees at the state bar are the gatekeepers allowing this criminal conduct to persist over the past 20 years, leaving families bankrupted and homeless, and divorce attorneys , dirty cops and judges wealthy with secret assets and ghost properties that never make to to their form 700 disclosures to the public.
Acting under the color of law, dirty divorce attorneys funded their criminality with home equity found in family homes, charity donations to Women SV and state and federal grants paid under the Violence Against Women Act. San Jose and Los Gatos police officer associations reportedly use paralegals, attorneys and bookkeepers to “manage” the day to day operation and money laundering scheme , according to recordings found on attorneys Elise Mitchell, Mark Erickson, Carlos Martinez, Michelle Hales, Christina Adames, Jason Pintar, Richard Roggia, Laura Perry, Annie Fortino, David Patton, Walter Hammon, Hector Moreno, Natalie Depril, Rebekha Frye, Lynne Yates Carter, Tracey Duell Cazes, Heather Allan, Sean Onderick, Ronda Edgar, John Hannon, and Bill Dresser as secreted by attorney Sydney Hall. These recordings are the blueprint for the criminal organization operating in plain sight in the state’s family court cases and filings.
Over the past 10 years, as trained by attorney and MFT, Valerie Houghton, attorneys are known for secretly and illegally recording in their offices, and in court, in order to line out bribes owed to judges, cops, court staff, court reporters and court appointed experts that result in court orders and fees that fuel the operation in Santa Clara . As it has since 20002, when Judge William Danser got caught for doing it with Los Gatos Police in traffic court cases.
MOVING CORRUPTION TO ORANGE COUNTY MONEY AND HOME EQUITY SCAMS
The operation expanded to Organge County in 2012, after attorney Keith Dolnick and court CEO David Yamasaki formally joined forces. The enterprise became unstoppable its players got Judge Persky Recalled, and Judge Hendrickson appointed to replace him as she also maintained her position on the Santa Clara County Domestic Violence Council. These public positions provided for the rigging of legal outcomes and kept the flow of state and federal money pouring in to county coeffers as the pandemic dried up tax income that supports the count courts and DAs office.
Also on the council are attorney Nicole Ford and Victim Witness ” Director” Kasey Halcon, who have assured bribes for local cops and judges that keep them in a quasi political office and their boss, and head of the mob, DA Jeff Rosen, in office. Ford , and Halcon have personally acted to protect bad cops with the Gilroy, Los Gatos and San Jose police department who are known to be beating spouses, selling child porn and covering their criminality up in the county’s divorce courts, as is a common practice for dirty cops, judges, and lawyers.
Dirty Lawyers – What they Look Like To Families, Children and Orphans: Attorney Rebekah Frye Killed Her Client , Collects Fees, And Told Her Cleints:
“We Own the Los Gatos Police” .
Frye was the attorney known for causing her client to jump off an overpass, then collecting $800,000 in fees from her estate with imposter Vietnam Veteran and now retired attorney Brad Baugh, who continues to be paid from the operation.
When attorney Frye handled the divorce case of powerful tech executive Don Henja in the early 2000s , she slipped the case directly into the enterprise. She got her own client on paid supervised visitation, and racked up nearly $800,000 in legal fees in no time at all, eyeing the Los Altos home equity that throwing the case in Don’s favor would seek to assure. But in March of 2003, Gloria suprised the criminal attorneys she had gotten mixed up with when she climbed onto a Silicon Valley overpass and took her own life by jumping on to Highway 101. Shortly before she jumped, she was heard telling a friend she had been fired to from her tech job at Oracle. Without it , she would not be able to afford to keep her attorney, or pay the supervised visation and court appointed custody evalautors to see her own children, as the enterprise demanded.
Even in death Gloria had no peace. Frye had her heirs rummage through the house the night Gloria died, and Frye came along for the break in, taking all evidence that could expose the enterprise before Gloria’s husband Don could return to the family home. Frye then hired attorney Brad Baugh to drag the case out in divorce and probate court another 5 years. When it was finally moved into private judging before Neville Spadafore, Baugh and Frye got ever dime of the $800,000 in fees from the estate Gloria had anticipated would go to her children.
State Bar Ignores Attorney Crime
Court files in the federal case brought by Ostler claims to have been prepared using Artificial Intellegence and scapping court dockets to reveal the uselessness of the state bar and the willingness of state bar officials to allow attorney crime to harm families and children.with impunity. State Bar executives Suzanne Grant and Vanessa Holton have reportedly been shredding complaints and diverting attention from the criminal organziation operating in Santa Clara county with the help of Judge James Towery, former chief trial counsel at the state bar. According to recordings, and papers leaked by attorney Elise Mitchell through local process servers and preists operating pedo rings in local San Jose private Catholic schools, the enterprise expanded to Organe County where Judge Dolnick works behind the scenes with appeallate attorney Garrett Daily and Keith Dolnick, his brother, to assure deposits in attorney IOLTA trust accounts that pay off the state bar insiders to bury their complaints and misdeeds as was done for Thomas Giardi over the past 10 years.
Ostler however could never detect all the cases that would evidence the pattern he alleges, as the courts have secreted the dockets and information from the public domain that Ostler would need to have access to. The most secreted cases appear to come from the enterprise, as plotted and planned by attorney Elise Mithcell, WomenSV Founder Ruth Patrick Darlene, and Judge Hendrickson , who has accepted bribes through her Moreno family connections, as arranged by attorney Sean Onderick and an network of paralegals, bookkeepers and legal secretaries working legtimately in the family law community to conceal their criminality from being discovered by the press, or public.
How they Get Away With It: The Lawyers & Paralegals
Divorce attorney Carlos Martinez stole from clients, botched their cases, and violated court orders. But Martinez, much like other divorce lawyers across the state, acted as an informant for the DA, and supported Jeff Rosen’s political career, so he was able to engage in criminality with immpunity. When the bar had evidence of Martinez’s unethcial and criminal conduct, they offered him a permanent vacation, or rather confidential discipline designed to conceal his criminality through a bogus probation period where he continued his criminality cases up and down the state.
As a civil, family law and appeal attorney, Carlos Martinez has represented some of the county’s biggest criminals. He is connected to cases through attorney, Brad Baugh, whose perjury was ignored by the Santa Clara, Contra Costa and Alameda County District Attorneys. Papers found during the investitaiton of DA Mark Peterson, revealed the criminal organization, but protestors at the time were just happy to see Mark Peterson indicted, disbarred and stripped of his pension,
Walnut Creek based forensic CPA Charles Burak, operates through the local bar in Contra Costa and Santa Clara County where he has joined the organzation with forensic CPAs Mike Thompson, James Butera and Sally White. These CPAs make up false reports for the benefit of the enterprise, where and court appointments give them qualified immunity and protection from California’s toothless consumer protection agencies such as the state bar, the Department of Real Estate, the Board of Psycology and the Board of Accountancy. The work of the CPAs and the criminality of the lawyers is concealed from the taxing authorities by attorneys including Sean Onderick and tax attorney Ronda Edgar, who handles money laundering for lawyers working in Santa Clara , Santa Cruz and Monterey counties. Sean Onderick , who works in Edgar’s offices, but does not hang out his shingle, connects the tax issues with the real estate and malpractice civil cases brought by attorneys Bill Dresser, John Hannon and Sydney Hall , where Onderick appears to have immunity from being sued for malpracitice. Nonetheless , he has demanded clients pay him in cash, money orders and even sex that is secreted from his second wife, a former client who allegedly broke up his first marriage.
While operating out of the building that houses private judge and mediation busienss JAMs , the offices of private judge Richard Roggia and the law firm Hoge Fenton, Martinez reportedly provides paralegals and investigators to the organization when he is comfortable these professionals are willing to launder money to attorneys, court reporters and private security firms with funds coming from cash, gift cards, Bitcoin deposits or liens on equity familes have in their homes such that they are untraceable.
San Martin resident, Margie Russo, worked as a paralegal in the law offices of Richard Roggia, a Gilroy based attorney who moved to the San Jose JAMS building to funnel business for the organization to B-level attorneys in the form of private judge appointments JAMS attorneys did not want. Russo, used her position to get ” secondary employment as a ” bookkeeper ” for the clients connected to Roggia’s firm. Margie’s job was to deflect media attention by monitoring mainstream and social media accounts for potential leaks and new business for the organization, while secretly recording court hearings and hacking the phones of their client’s former spouse in a manner that assured a steady stream of income flowed off the books in the form of ghost income benefiting the organization and its players. Margie also reportedly did the books for Intero Real Estate’s black market transactions, and for Tanimura and Antle’s farming operatings where seed counterfiting and human trafficking rings operated through farmers located up and down the Salinas Valley and in Yuma , AZ. where divorce cases were rigged by Hoge Fenton’s sister firm. Fenton Keller.
Mitchell Papers and secret recordings leaked by attorney Elise Mitchell through local process servers and clients doing ” free consults” reveal Margie helped develop a string of B-list attorneys, real estate investors and other professionals willing to look the other way, as she arranged bribes that would come in the form of equity in the family home, cash payments or ” special loans” arranged through lending expert Shelia Pott, in Saratoga, or John and Tim Filice down in Gilroy, all protected in their criminality by Jeff Rosen, the state’s most corrupt DA, who is always on the take. By 2018, judges on the take got special home equity lines that were paid off by attorneys appointed by public judges to act as private judges or attorneys appointed to represent children, where they incited conflict and assured payments to the enterprise would continue.
Margie (Burbank) Russo assured payments to labor contractors, real estate agents and contractors working in a blackmarket for Intero , private security companies capable of spying on vicitms seeking help from adovocates, and local charities claiming to assist alleged domestic violence vicitms, while operating a criminal organization and moving millions out of the home equity belonging to California families, and to attorney fees or payments benefitting the organization.
According to sources close to Margie Russo’s former husband “special bookkeeping services” Margie offered, include arraging sex favors for high paying clients, and other invaluable services to the organization. Russo’s help and that offered from secretary Michelle Harper, wife of vocational examiner Tim Harper, as well as paralegals in Walter Hammon’s office , reportedly paid for the operation of Gilroy’s blackmarket real estate scams, human trafficking and pedo rings that operated out of rental properties managed by Filice and that was funded with hard money loans assured by prominent real estate dedvelopers Tim and John Filice , as well as Tim Fortinio who reportedly used “Edward Jones Investments” in Gilroy to launder large sums of undisclosed investments for the enterprise. Powerful real estate developer John Sobrato took lead on funding pedo operations through Santa Clara University as connected to family courts. where SCU ” Innocence Project ” attorney Karyn Sininu Towery serves as lookout to protect the organzation from any possible threats.
Settlment offers related to another federal claim against the enterprise appears to indicate imposter Intero real estate broker associate Patty Filice and John Filice’s neice , Courtnee Westendorf, used Gilroy’s Glen Loma real estate project to secret ghost real estate transactions and launder money through labor contractors connected to Gilroy wineries and Salinas Valley’s agricultural market. In 2020 the organization took in PPP loans made by the federal government during the pandemic as the organization was stealing family homes, bankrupting spouses and profiting from the abuse of children living in Silicon Valley and surrounding farming towns.
Russo is reportedly continuing in her criminality based out of the San Jose firm of Richard E. Glaze.
Prior to the filing of Ostler’s federal case, . Pinnacle Bank openly assisted in laundering loans, fees and home equity through the community bank as funds were brought to the organization through the bank’s board member and top ranking blackmarket sales agent, Patty Filice, who joined the operation with the help of John Thompson’s connections to the LDS church back in 2015. Thompson, founder of the Cupertino Intero franchise, has been protected by insiders in the federal government who act as special invesgtigators and prosecutors for the DOJ, When these insiders are involved in their own divorce cases, the organization quickly moves them into private judging before B-list attorneys James Cox, Ed Mills, Richard Rogga, Micheal Smith and court attorney Sharon Roper, who effectively act for the sole purpose of concealing asssets from an innocent spouse and converting the home and business equity of community estates to the profits of what has become a criminal operation acting in the state’s wealthiestcommunities during divorce, probate and custody proceedings.
James Cox worked for the courts back in the early 2000s and while he was there he pretended to operate as the court’s Settlement Conference Officer. In actuality Cox was setting up Silicon Valley’s blackmarket divorce lists. This means middle -class divorce cases went to B list attorneys, and the wealthier families were ushered through the A list of attorneys which includes retired superior court judges. such as Catherine Gallager, Barbara Spector and Mark Pierce, all contracted with JAMS.
Cox was appointed in the divorce case of Intero Founder John Thompson, where Thompson racked up millions in unreported fees from commissions, and PPP loans fradulently taken during the global pandemic. And while he charged excessive fees to the organziation’s “clients”, the organization’s participants, including court attorney Lisa Herrick, former city attorney in San Jose, where she protected bad San Jose cops, got special deals and protections for their children that were secreted by the court in secret dockets.
Court Attorney Lisa Herrick Benefits From Criminal Organization Leader James Cox in Divorce From William Rice
More Cop Connections:
Spector, Wasserman, Los Gatos PD, &
Judge Towery Took Over for Danser After Sinunu and Rosen Got Him Stripped Of His Pension
Santa Clara County Family Court Presiding Judge Julie Emede has been protecting absuive cops since she worked in the local Sheriff’s Department for the county’s “family violence” programs. She protected cops who wrote bad police reports, cops who abused their spouses and cops who molested their own children when those cops landed in the county’s family courts. Since that time , Emede has been protecting the judicary and the Los Gatos police, while working to keep anyone who questions a judge, dismissed as being either “crazy” or “disgrunted”. Emede also is known to refer the ex wives of cops to the non- profit WomenSV, an organization decribed by a number of DV “clients” as operating more like a training program for divorce attorneys getting more in fee awards just as they were taught by Judge Towery and now Justice Mary Greenwood back on April 28, 2017.
” When we got reffered to Women SV , we found ” therapy” sessions run by this super creepy looking woman who was always passing out a wooden donation box and getting referrals for a private judges and DV case scams that landed in court assignments before Judge Emede, Judge Towery, Judge Arand, Judge Grilli, Judge Stewart, Judge Chiarello, Judge Hyashi, Judge Pierce and Judge Drew Takaichi in public court.
Years before she became the first openly gay judge in Santa Clara County, Julie Emede was protecting dirty cops, celebrity sports figures, real estate agents and Silicon Valley tech executives willing to pay for justice. One Santa Clara County Sherifff Deputy, and former San Jose Police Officer got caught with child porn on his computer, and Emede helped cover it up as the cop entered into his own personal divorce case.
As former president of the local bar, Emede pronounced early on she would protect judges , no matter how dirty, from ” disgruntled ” litigants and lawyers who questioned the competency of any judge. Emede was involved in the second divorce case of Judge James Towery, and she knew his secrets, which elevated her power as the county’s family court presiding judge.
Judge Emede reportedly told divorcing couples to use Intero agent Terry Houghton to sell the family home. She thwarted the media when Judge Chiarello appointed corrupt and incompetent minor’s counsel that sent a young girl to live with the father who raped, drugged and killed her ,afterwhich Judge Emede told reporters from the San Jose Mercury it was fine, “we just missed the signs”.
Attorney Kathryn Schlepphorst , Emede’s former law partner, continues to act as the biggest asset for the criminal enterprise operating in the county’s local courts. She whispers in the ears of judges, keeps watch over referrals of cases, and looks for leaks that could expose the outright racketering that has harmed countless California families with the full knowledge of the state’s most powerful lawyers and judges.
Originally published by Bryce Hopson.
Summer season is fast approaching, and that would typically mean co-parents across the metroplex are gearing up for some significant changes to their daily schedules with kids staying home. In the current environment created by Covid-19 and social distancing, the summer of 2020 might look very different than those of the recent past. Nevertheless, with most counties slowly phasing back to a normal—or maybe “new normal” is more accurate—pace of life and business, the summer schedule remains.
There are numerous ways in which the possession schedule for summer months has been crafted into custody orders across the state. Some are standard and adopt the one-size-fits-all approach, while others are intricately unique and carefully tailored to fit the specific needs of a particular family.
What does the standard, one-size schedule look like?
The Standard Possession Order, crafted by our legislature and incorporated into the Texas Family Code, is a defined schedule delineating which parent is legally entitled to possession of a child, and it is presumed to be in the best interest of the child. Under the Standard Possession Order, one parent is designated with specific periods of possession, and the other parent is entitled to possession “at all other times not specifically designated” to the first parent.
The parent with designated periods during the school year is entitled to 30 days of possession time in the summer, which can be exercised consecutively or broken up into no more than two smaller periods of at least 7 days each if notice is provided to the other parent by April 15th (if not, the 30 days runs from July 1-31). The parent with designated periods will still get the regular 1st, 3rd, and 5th weekend periods that they normally have during the school year, but the Thursday periods go away in the summer.
If a 30-day block of time in the middle of the summer is impractical because of a parent’s work schedule, or a child’s summer activities, what options are available for a more customized approach to the summer schedule? Here are a few options that some parents have utilized when the circumstances called for more of a customized fit:
Week-on / Week-off: Alternating seven-day periods of possession has some advantages over the standard block schedule. It shares the load of additional childcare needs that comes when both parents are working and school lets out, and limits the span of time that the child goes without seeing the other parent. 30 days without seeing a 16 year old might not sound that bad (and in some cases, might serve as a needed relief), but it is typically more difficult to say goodbye to a 5 or 6 year old for such an extended period of time.
The “Quadrant” Schedule: This approach takes June and July and breaks them up into four quadrants. One parent gets the first half of each month, the other parent gets the second half of each month, and they rotate every-other year. Although the summer vacation schedule will generally run into the first couple weeks of August, this schedule has some clear advantages to a standard structure. It provides each parent with two opportunities to take extended trips and travel with the child—if you have the privilege of lasting memories of road trips to the Grand Canyon, summer nights on the beach, or sleeping under the stars next to a campfire, those are typically trips that take more than 7 days, and this schedule can make creating those memories much more available. It also has the benefit of avoiding the need for designating—and potentially arguing—over which weeks one parent wants to exercise. This schedule is set as soon as the order is signed, meaning you can start planning your summer vacation three years in advance if you feel like it!
Alternating Weeks with Extended Election: This schedule has the same general structure as the week-on / week-off, but it includes a carve out for each parent to extend one of their seven-day periods into a ten-day period. This gives added flexibility for those longer trips to visit Aunt Betty up in Brunswick or hop across the pond for a European Vacation.
At the end of the day, the schedule that has the best chance of working is the one that both parents agree upon and work together to come up with. And most importantly, crafting your summer schedule to be conducive with the child’s activities is crucial to ensuring a smooth, successful summer vacation.
The post How Co-Parenting Might Look This Summer Given Current Circumstances appeared first on Hance Law Group | Dallas Divorce & Family Lawyers.
Originally published by On behalf of Laura Dale.
The battle for equal rights for same-sex couples didn’t end when the Supreme Court quashed the Defense of Marriage Act in 2015. New sorts of battles — many of them related to the way that same-sex couples were treated in the past — were just beginning.
One of those battles is determining what exactly makes a marriage when your marriage isn’t recognized under the laws of your state. Same-sex couples who were in long-term, committed relationships that fall technically short of the definition of marriage only because the parties were of the same gender find themselves facing this question often when such a marriage comes to an end.
Why does the date of a same-sex marriage matter if the couple is splitting? It’s simply because the start and end of a marriage is both a social and a financial contract. The date of a marriage often informs issues like how much spousal support a dependent spouse is due or what assets are really marital assets and subject to division in a divorce.
Now, the Texas Fifth District Court of Appeals is being asked to grant a new divorce trial to a man who split from his partner of 15 years just prior to the Obergefell v. Hodges decision that made same-sex marriage legal throughout the country. A lower court said that no marriage existed because there was no legal same-sex marriage in Texas.
The plaintiff and his attorneys argue that the couple did everything short of legally marry. They say that since they were prevented from doing so by a law that is now considered unconstitutional, that shouldn’t prevent the court from treating their relationship as a marriage.
Cases like this will, unfortunately, continue to come up for a long time into the future. That’s why same-sex couples seeking a divorce are wise to look for attorneys who understand their unique concerns.
What is the procedure when traveling across state lines during COVID-19 quarantine, when you share custody?
As I am barred only in Texas, I cannot provide specific legal tips with regard to your state in particular. However, I can provide some general guidance that may help you navigate your child custody issues during the COVID-19 pandemic.
No nationwide domestic travel prohibitions have been issued, and air and ground travel continues. However, many states have issued orders restricting both interstate and intrastate travel. Some have restricted all non-essential travel and further clarified their orders by defining what travel is considered essential.
Before traveling to exchange your children with your former spouse, consult your state’s executive orders, those in your former spouse’s state, and — if traveling by car — those in the states you will travel through for the exchange. If none of these states restrict travel, you likely are free to proceed with the exchange.
Keep in mind that a state’s stay-at-home order may define travel for these purposes as essential further into the document. Additionally, the order explicitly may not make mention of custody or children, but still may provide that travel for purposes of compliance with a court order is essential.
For example, the order may read similarly to the following: “Individuals may leave their residences for the purposes of traveling required by a court order.” This will apply to any order of the court, including any orders entered pursuant to your divorce or custody matter, so be sure to read the orders carefully and completely.
Additionally, be aware that some states specifically have issued orders regulating travel from certain states or localities. For example, Texas has ordered mandatory 14-day self-quarantines for people traveling by air from certain states, and previously implemented ground checkpoints to identify travelers from Louisiana. Keep in mind that you may be affected by travel restrictions like this.
If you plan to travel by air, be aware that the TSA has implemented social distancing procedures and modified their operations. Recent policies include an allowance for wearing a facemask during screening. However, the agency states that “a TSA officer may ask you to adjust the mask to visually confirm your identity.”
If you find that such travel is not restricted by your state, your ex-spouse’s state, or those states you will travel through by car, and your former spouse refuses to comply with your court-ordered custody or possession agreement, consider consulting a Cordell & Cordell attorney to seek enforcement of your parental rights. Bearing in mind the laws in your state, keep records of your former spouse’s refusal to comply and their stated reasons for doing so.
Regardless of whether you are able to facilitate exchange prior to the end of travel restrictions, these may be helpful to your attorney in the future.
If, however, any of the state orders restrict travel and do not provide clarification on whether travel for the exchange of children under a court order, or for purposes of complying with a court order in general, you should seek legal assistance from an attorney barred in your state.
The post How Does Shared Custody Work Between Separate States During COVID-19 Quarantine? appeared first on Dads Divorce.
Originally published by Winstead.
There has been considerable speculation that one consequence of the Coronavirus will be an increase in the divorce rate resulting from togetherness imposed by the quarantine that push marriages already on shaky ground over the brink. Whether divorces will increase in the future due to Covid-19 remains an open question, but what is certain is that a sizable number of future divorces will involve the transfer of a business ownership interest between spouses as part of the divorce. To address this situation, this post focuses on key business issues that arise when one spouse (the “Divesting Spouse”) transfers an ownership interest in a business to the other spouse (the “Recipient Spouse”) as part of a divorce settlement. Addressing these issues will help the Recipient Spouse continue to run the business successfully and also avoid future conflicts with the Divesting Spouse, as well as with future investors and potential buyers of the business.
1. Don’t Rely on Divorce Decree or Settlement Agreement to Document the Transfer of a Business Ownership Interest Between Spouses
A divorce decree and settlement agreement will document the terms of the divorce and the division of property between spouses, but it is not a good idea to rely on the decree or the divorce settlement to memorialize the transfer of a business interest between spouses. There are a number of reasons for the Recipient Spouse to insist on securing a stock transfer agreement (or its equivalent), including the fact that the Recipient Spouse will likely be required to show the transfer document to third parties in the future, including banks or other lenders, new investors, company officers or managers, and potential future buyers. The Recipient Spouse will not want to show the decree or settlement agreement to these third parties, however, because they include private matters unrelated to the business. This will therefore require the Recipient Spouse to prepare a heavily redacted document for review by third parties. It is more efficient to simply require a transfer document to be signed that is limited solely to issues related to the business.
Another reason for the use of a transfer document is that it will include many provisions that are not normally part of a settlement agreement. The decree or settlement agreement will become a very lengthy document if it includes all of the provision that are traditionally set forth in a separate document that covers the transfer of a business interest.
2. Secure a Separate Release of the Divesting Spouse’s Claims Against the Business
After the business is transferred and the divorce becomes final, the Recipient Spouse will not want to defend claims that are brought by the Divesting Spouse against the business. This requires the Recipient Spouse to secure a broad release of claims against the business from the Divesting Spouse. This release of the business is separate from and in addition to the release that the Divesting Spouse provides to the Recipient Spouse, individually.
For example, if the Divesting Spouse was an officer, employee, director or manager of the company, the Divesting Spouse’s release needs to include a release of all employment claims, such as claims for unpaid wages/back pay, vacation time, unpaid expenses, and commissions. The release will also include the Divesting Spouse’s release all claims for wrongful termination, claims related to the distribution of any profits generated by the company and all other business related claims. The release will also confirm that the Divesting Spouse has resigned from all positions with the company and has no further right or authority to take any action for or make any statements on behalf of the company.
3. Confirm Broad Transfer of All Rights by Divesting Spouse
The provisions that confirm the transfer of ownership in the business by the Divesting Spouse need to be broadly described in the transfer agreement to include all rights, title and interest of every kind related in any way to the business. This includes all rights of the Divesting Spouse in any and all intellectual property of the company, such as company names, trademarks, trade secrets and patent rights. This is particularly important if the Divesting Spouse worked in the business, because the Recipient Spouse does not want to be faced with a situation in the future where the Divesting Spouse later claims that he or she developed some software, designs or other intellectual property rights that are not owned by the business, and which are now being used by the Divesting Spouse in direct competition with the company.
4. Consider Requesting Divesting Spouse to Accept Restrictive Covenants
In a normal M&A transaction, a company buyer secures a set of restrictive covenants from the seller as part of the purchase agreement to prevent the seller from competing in any way with the company after the sale takes place. The buyer will require the seller to provide all of the following restrictive covenants that will last for two to five years: (i) a covenant not to compete, restricting any involvement by the Divesting Spouse — whether as an owner, employee, consultant, etc., — in a business that is competitive with the subject business for a reasonable period of time within a reasonable geographic area, (ii) an agreement not to interfere with the business’s relationship with its customers and vendors or to solicit customers, or attempt to persuade the business’s customers and vendors to cease doing business with the company, and (iii) an agreement not to hire or solicit the hiring of any of the employees of the business, or otherwise attempt to persuade any of the employees of the business to cease their employment relationship with the company.
If the Recipient Spouse is concerned that the Divesting Spouse may compete in business against the company after the divorce, the Recipient Spouse may want to request the Divesting Spouse to agree to accept some or all of these restrictions. The Divesting Spouse will not agree to accept these post-divorce restrictions, however, without a corresponding commitment from the Recipient Spouse to provide some amount of additional consideration in the divorce settlement.
5. Request Confidentiality Agreement from Divesting Spouse
Confidentiality agreements are similar to restrictive covenants in that they prevent the person who is subject to the agreement from taking actions that are harmful to the business. The confidentiality agreement is specific, however, in prohibiting the individual officer or employee from using or transferring any of the company’s confidential information or trade secrets. All of the company’s officers and employees are subject to a common law duty not to use or misuse any of the company’s confidential information, but a written confidentiality agreement makes this prohibition clearer on the use of confidential information and trade secrets.
If the Divesting Spouse has not already entered into a confidentiality agreement with the company, the Recipient Spouse will want to request the Divesting Spouse to accept and sign a confidentiality agreement to protect the company’s valuable confidential information and trade secrets. The Recipient Spouse wants to make sure that the company’s confidential information, technology and trade secrets are maintained in strict confidence.
6. Secure “Tail Coverage” of Divesting Spouse From D&O Carrier
If the company has a directors and officers liability insurance policy (a “D&O Policy”) that provides protection for officers and directors from third party claims, these polices will generally remain for one or two years after the company’s officers and directors are no longer affiliated with the company. The Recipient Spouse will therefore want to secure “tail coverage” to provide continuing insurance coverage for claims made against the Divesting Spouse. In this regard, the Recipient Spouse may want to secure a tail policy will extend the D&O coverage over former officers and directors for a total period of five years.
The Recipient Spouse may feel like securing a tail policy that extends coverage for third party claims against the Divesting Spouse is unnecessary because it provides a benefit solely for the Divesting Spouse. In fact, a tail policy provides insurance protection that protects both the Recipient Spouse and the Divesting Spouse, and it is also a benefit to the company. If third party claim is made against the Divesting Spouse after the divorce related to the business, the Divesting Spouse will likely demand that the company indemnify him or her. If the D&O policy is still in place, however, the tail policy will enable the company tender a defense of the claim against the Divesting Spouse, because the D&O carrier will cover all of these legal defense costs. Fortunately, a tail policy that extends D&O coverage is often not too expensive to secure.
7. Specify Treatment of Future Tax Filings
Dealing with all of the tax issues involved in the transfer of the business is an extensive subject that goes beyond the scope of this post, and spouses engaging in the transfer of a business interest are strongly advised to consult with a tax advisor during their divorce. But there is one tax issue that the Recipient Spouse should consider addressing up front. Many businesses held in marriages are structured as pass through entities (i.e., LLC’s partnerships, Sub S corporations), which means that the owners pay the taxes on all profits that are generated by the company. As a result, in the year following the divorce, Recipient Spouse may be required to issue a K-1 to the Divesting Spouse based on the ownership interest held in the business by the Divesting Spouse during the year in which the divorce took place.
If the K-1 issued in the year after the divorce reflects any income that is apportioned to the Divesting Spouse, he or she may expect to receive a cash distribution from the company that is sufficient to cover the Divesting Spouse’s federal tax liability based on this income. If the company does not issue any distribution to the Divesting Spouse, that would create what is known as “phantom income” because the Divesting Spouse has to pay taxes on this income even though no distribution was issued by the Company. The issuance of phantom income to the Divesting Spouse is likely to provoke a heated dispute at that point.
The Recipient Spouse will therefore want to address in the divorce settlement how the future K-1 that will be issued to the Divesting Spouse will address any income generated by the business in the year of the divorce. If the Recipient Spouse is prepared to issue a distribution to the Divesting Spouse, that will take care of the issue. If the Recipient Spouse has no intention of authorizing the company to issue any distributions in the future to the Divesting Spouse, however, this issue will need to be dealt with by the Recipient Spouse a manner that will not lead to a future legal dispute with the Divesting Spouse.
The transfer of ownership interests in business is common in divorce settlements. But if business issues related to the transfer of this type of interest are not considered at the time of the divorce, the parties may find themselves engaging in continuing disputes they did not anticipate. The Recipient Spouse, in particular, needs to take steps to ensure that the transfer takes place in a manner that allows the business to continue to run successfully, and to head off potential future conflicts with the Divesting Spouse and others after the divorce.
Originally published by On behalf of Laura Dale.
Could your business debt become a big problem in your divorce?
Most of the time, people think that the biggest bone of contention in a high-asset divorce is likely to be the family assets. However, business debt belonging to one party can also cause major headaches.
You may find yourself scrambling to convince a judge that a loan you took against business property to pay for family expenses should be repaid out of the marital assets. You may find that the judge won’t allow you to base your support payments off the reduced income you’ve been taking — even though the rest of the money was being put toward your business debts. Either way, you could walk away from your marriage saddled with a lot more business debt than you can manage.
How can you avoid this kind of problem? The experts say that there are a few basic rules you need to follow:
- Keep your business money separate from your family money. They’re two different resources, meant for two different purposes.
- If you do borrow against the business or the business property for personal reasons, clearly document where all of the money went. Also, keep track of any repayments that were made to the business out of family funds.
- Never pay your family expenses out of the business funds during your divorce. That’s a quick way to have the court impute more income to your name than you might otherwise believe is fair.
When you’re a business owner, there’s no such thing as a “simple” divorce. It may take the help of a forensic accountant and a financial advisor as well as your attorney to get you through.
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