Jail for Hiding Assets
March 12, 2014
My friend, Steve Hayes, forwarded to me a link to a story about a man who was sentenced to 17 years in jail for hiding assets in his divorce. According to the story, Steven K. Zinnel, was accused of putting much of his property in other people’s names before and after filing for bankruptcy. He then allegedly laundered funds back to himself through a company owned by an attorney, the attorney’s trust account and personal bank account.
Zinnel was convicted of 15 counts of bankruptcy fraud and money laundering last year. (The attorney was also convicted, but has not been sentenced yet). In addition to the jail sentence, Zinnel was also ordered to pay a $500,000 fine and forfeit assets worth more than $2.8 million
A few comments:
First, hats off to the judge for imposing a substantial jail sentence. Too often, white collar criminals get off with probation and restitution under the theory that if they go to jail, the victims will not be recompensed. In addition to questioning how much restitution ever gets paid anyway, if the potential downside to fraud is to pay back what was stolen, the cost/benefit analysis seems to weigh in favor of trying it.
Second, it is amazing how infrequently you hear about such cases. Is this due to so many people being honest or so few getting caught? I’d argue for the latter. Notwithstanding the popular view that everyone going through a divorce wants to cheat their partner, that is not my experience. While it is true that divorce brings out the worst in everyone (including, sometimes, the lawyers) most people are not trying to hide assets or commit fraud.
For those who are, however, very few get caught. A number of years ago at a lunch for AAML members, we took an informal survey: How many years had each member been practicing family law and how many times have you caught someone hiding assets? With a total of around 200 years of practice around that table, the total was maybe 3 or 4 cases.
Unscientific survey? For sure. But if someone is trying to bury a few bucks in the back yard, it is easy to do so and not get caught.
Of course, most cases do not involve $2.8 million in assets. In fact, most don’t even involve $280 in assets! So this story is an example of “man bites dog.” It happens, but fortunately, very rarely.
