Recent Blog Posts in June 2011

It's been years in the making and, quiet frankly, something divorce attorneys in Pasadena thought might never happen - but actor Mel Gibson and his longtime wife have reached a deal in their two-year-old divorce case, attorneys told a Los Angeles judge on Tuesday.

Gibson, star of the recent flop The Beaver, and ex-wife Robyn have been inching their way closer to divorce since 2006 after Gibson's notorious drunk driving arrest in Malibu. Robyn filed for divorce in 2009, citing irreconcilable differences. But recent reports suggest that Robyn was dragging her heels in finalizing the divorce as she offered support to Gibson as he went through another public meltdown: the alleged battery charges against girlfriend Oksana Grigorieva. In March, he plead no-contest to the charges and was sentenced to three years probation as well as domestic violence and mental health counseling. Now the divorce is back on.

Neither Mel nor Robyn released details of what the divorce deal included, but spokespeople said it did include division of the couple's shared properties. Gibson at one time was estimated to be worth $900 million. Lest we forget before becoming a tabloid tragedy, Mel Gibson was once one of Hollywood's most bankable stars and even won two Academy Awards for the 1995 film, Braveheart. The anti-Semitic remarks made after his DUI arrest coupled with the threatening voicemails he left Grigorieva have made Gibson something of a Hollywood persona non grata over the last few years. A Los Angeles Superior Court judge is expected to finalize the couple's divorce in August.

Gibson has seven children with Robyn as well a 20-month-old daughter from his former relationship with Oksana.

Any good family lawyer in Pasadena would tell you to hang on to a big divorce settlement and make sure you protect your investments. But clearly nobody told once-billionaire-now-broke-socialite Patricia Kluge to save her pennies for a rainy day. According to recent reports, Kluge is in the middle of a financial tsunami.

When Patricia Kluge divorced billionaire television mogul John Kluge in 1990, she was awarded an estimated $1 billion dollars. The massive settlement is widely considered one of the largest in U.S. history, but proportionate when you consider John Kluge was worth around $6 billion at the time. Patricia Kluge, a British-born former adult movie star, got used to the high life during her years with John. She was the queen of the Manhattan social circle during her marriage and was known for hosting lavish parties like the $1 million fiesta she threw for her 40^th birthday at the Waldorf-Astoria.

So when she remarried Bill Moses, a lawyer, she continued spending like she was still a billionaire bride. Then last year, the couple sold off over-the-top furnishings like a Chippendale commode and a George III crystal chandelier and priceless works of art during an estate sale. Moses told the Daily Telegraph, "We spent too much too fast." The estate sale brought in an estimated $10 million but Moses and Kluge were also forced to sell of their 300-acre lavish home in Virginia. The mansion was once listed for $62 million but sold for $9 million a few months ago.

Still, Kluge has reason to smile, thanks to friends with big paychecks like Donald Trump, who recently bought her winery for $3.7 million.

"All we're focused on is getting this done and then rebuilding the company with Donald and his team, bottling the wine and re-opening our distribution channels," said Kluge.

She tells the British newspaper that financial disasters like hers are not uncommon. And despite her loses, she'll survive.

"It's life," Kluge said. "We're not the first to go through it. Through all this tragedy we see a lot of positive things. I'm a Brit - you cut one arm off and I'll grow another."

Want to save your daughter from visiting a divorce attorney in Pasadena later in life? A new study says preaching abstinence from sex might just keep teenage girls from getting divorced later in life. According to the report conducted by the University of Iowa, women who lost their virginity in their young teen years are more likely to divorce.

Of the 3,793 women surveyed by researchers, 31 percent who lost their virginity as teens divorced with 10 years of getting married. Women who waited to have sex, on the other hand, had a divorce rate of only 15 percent at five years and 27 percent after a decade of being married. Mainly, the study found that a first sexual experience before the age of 16 was strongly associated with divorce. Early sexual experiences are known to impact the future of sexual and romantic relationships, especially when those sexual encounters are unwanted. Unsurprisingly, 42 percent of the subjects claimed their first sexual experience before the age of 18 wasn't completely wanted and they admitted these experiences have affected their adult life.

Anthony Paik, the author of the study, which was published in theJournal of Marriage and Family, believes unpleasant and unwanted first sexual experiences can seriously damage the way women conduct their future relationships if the problem was never addressed.

"If the sex was not completely wanted or occurred in a traumatic context, it's easy to imagine how that could have a negative impact on how women might feel about relationships, or on relationship skills. The experience could point people on a path toward less stable relationships," Paik said in a press release.

While men who lost their virginity in their teens were not interviewed about their divorce rate for the study, Paik believes the subject could make for a fascinating follow-up.

If you're an unemployed man seeking divorce advice in Pasadena, being jobless may have to do with your newly-single status. A recent study on divorce and unemployment finds that men with no job are more likely to get divorced than their employed counterparts.

The study, conducted by researchers at Ohio State University, found that even though women are a force to be reckoned with in the workplace, men are largely expected to still be the breadwinners. Unemployed men were also more likely to initiate a divorce - even if they were happy in their marriage - than guys with jobs. Unemployed women, on the other hand, were less likely to seek a divorce than employed wives.

"These effects probably emanate from the greater change in women's than men's roles," the researchers write in a forthcoming issue of the American Journal of Sociology. "Women's employment has increased and is accepted, men's nonemployment is unacceptable to many, and there is a cultural ambivalence and lack of institutional support for men taking on 'feminized' roles such as household work and emotional support."

Researchers found that employment still provides women with financial security and enables them to leave a marriage when they are dissatisfied with their relationships. Men, on the other hand, are unlikely to leave their wives based on employment status. This is a telling finding which suggests women still have greater societal acceptance when it comes to whether they need to enter the workforce.

Liana Sayer, Ph.D., of Ohio State University and her staff analyzed data on more than 3,600 couples from 1987 to 2002.

Playboy founder Hugh Hefner has been called a lot of things over his 85-year lifespan - entrepreneur, gigolo, misogynist, reality TV star. Now Mr. Hefner can add "dumped days before the wedding" to his dubious distinctions. Yes, good ol' Hef tweeted last Tuesday that his marriage to Crystal Harris has been officially cancelled.

"The wedding is off," Hefner, 85, tweeted Tuesday. "Crystal has had a change of heart."

The pair was engaged last Christmas Eve, but according to reports things had recently gone sour between the two. Hefner and Harris allegedly had a massive argument last week. TMZ is reporting Crystal moved out of the infamous Playboy mansion over the weekend and called off the wedding, which was to take place on Saturday, June 18.

Crystal has remained silent over the decision not to go through with the marriage, but her tweets are giving fans of the Playboy model some insight into why she called off the nuptials.

"There are two mistakes one can make along the road to truth... not going all the way, and not starting," she said on Twitter on Tuesday.

The pair was all set to walk down the aisle in front of 300 friends and family. Guests were instructed to donate to charities in lieu of gifts for the couple and all of the ceremony details had been arranged. Back in April, Hefner toldUs Weekly that Harris had planned every aspect of the big day.

"Everything is in place," he said at the time of the wedding. "She's wonderful and she's done a really terrific job so far with all the planning. She is the one for me!"

This would have been Hefner's third marriage. He and Harris started dating in 2009 after she was named Playmate of the Year.

Poor Hugh Hefner. Being left at the altar can't be a great feeling. But look on the bright side, Hef; at least you won't have to visit a divorce lawyer in Pasadena.

As folks speculate about whether Maria Shriver will officially divorce Arnold Schwarzenegger, there's one big thing on everyone's minds: The money. The former governator and action star Schwarzenegger once was quoted as saying "I've made many millions as a businessman many times over." And if the reports are true, he could lose many of those millions to his ex. Reports claim that Shriver stands to walk away with an estimated $200 million in a divorce settlement - while other sources claim it could be even more. While these numbers are nothing to sniff at, the final payday isn't close to some of the most expensive divorces of all time.

Thanks to Wikipedia.com and Askmen.com, we've found a list of the ten most expensive divorces of all time. Keep in mind, the numbers here are all estimates since no actual financial totals are ever officially released (and remember this list is subject to change given the sheer number of high-profile divorces happening regularly). Also, some high-priced divorces didn't crack the top ten lists. Madonna's divorce from Guy Richie, for example, is estimated at a paltry $90 million while Kevin Costner's divorce to Cindy Silva didn't make the list, despite it costing him a whopping $80 million. So if you're seeking divorce advice in Pasadena and worried about how expensive your divorce might be, remember it could always be worse.

#10 Tiger Woods and Elin Nordegren= $100 million

#9 Steven Spielberg and Amy Irving = $100 million

#8 Greg Norman and Laura Andrassy = $103 million

#7 Harrison Ford and Melissa Mathison = $118 million

#6 Neil Diamond and Marcia Murphey = $150 million

#5 Michael Jordan and Juanita Jordan = $ 168 million

#4 Roman Abramovich and Irina Abramovich = $300 million

#3 Craig McCaw and Wendy McCaw = $460 million

#2 Adnan Khashoggi and Soraya Khashoggi = $874 million

#1 Rupert Murdoch and Anna Murdoch = $1.7 billion

I'm writing this letter to tell you that I'm leaving you forever. I've been a good man to you for seven years, and I have nothing to show for it. These last two weeks have been hell. Your boss called to tell me that you quit your job today, and that was the last straw. Last week, you came home and didn't even notice that I had a new haircut, had cooked your favorite meal, and even wore a brand new pair of silk boxers. You ate in two minutes, and went straight to sleep after watching all of your soaps. You don't tell me you love me anymore; you don't want sex or anything that connects us as husband and wife. Either you're cheating on me, or you don't love me anymore; whatever the case, I'm gone.

Your Ex-Husband

P.S. Don't try to find me. Your sister Carla and I are moving away to West Virginia together. Have a great life!

***************

Dear Ex-Husband,

Nothing has made my day more than receiving your letter. It's true that you and I have been married for seven years, although a good man is a far cry from what you've been. I watch my soaps so much to try to drown out your constant whining and griping. Too bad that doesn't work. I did notice when you got a hair cut last week, but the first thing that came to mind was "You look just like a girl!" Since my mother raised me not to say anything if you can't say something nice, I didn't comment. And when you cooked my favorite meal, you must have gotten me confused with Carla, because I stopped eating pork seven years ago. About those new silk boxers: I turned away from you because the $49.99 price tag was still on them, and I prayed that it was a coincidence that she had just borrowed fifty dollars from me that morning. After all of this, I still loved you and felt that we could work it out. So when I hit the lotto for ten million dollars, I quit my job and bought us two tickets to Jamaica. But when I got home you were gone. Everything happens for a reason, I guess. I hope you have the fulfilling life you always wanted. My lawyer said that the letter you wrote ensures you won't get a dime from me. So take care.

Signed, Your Ex-Wife, Rich as Hell and Free

P.S. I don't know if I ever told you this, but Carla was born Carl. I hope that's not a problem.

The final, and perhaps lifelong, stage of recovery involves forgiving your unfaithful partner. Those who have been traumatized are normally filled with rage at their offender. When you consider the harm she has caused you and your family, you may wonder if you ever want to, or ever can, forgive her. You might think to yourself, "I do not owe her forgiveness." That's true. Your forgiveness is a free gift. There is no obligation to show mercy. You may also wonder if you can ever get over the hurt and anger enough to say with sincerity that you forgive the wrong she has done. "It takes a saint to turn the other cheek," you reason. It certainly takes courage and humility to let go of anger and the desire for revenge and to replace it with kindness. But it is possible, with time, effort, and prayer.

Just as those who are dying protest in anger that death is being imposed on them against their will, those who have been betrayed are outraged at what is taken from them. It is only natural to feel anger, to protest the injustice suffered. It is normal to close yourself off behind a wall of anger for protection. However, if that wall of anger becomes a permanent structure in your life, it will imprison you. Your world will shrink, and you will suffocate. At some point, for your recovery to proceed, you need to let go of your anger. It is for your own sake. If you refuse to forgive either yourself or your partner, you will remain in the grip of your anger and hurt. The anger will eventually consume you, seep out in ways beyond your control, and result in continued unhappiness. The desire to punish your partner will rebound as a loss of inner peace. The anger will also color your view of the world, making it difficult to trust others, because you will be ever alert to being betrayed again.

Paradoxically, entering the fiery furnace of your anger provides an opportunity to purify your love. Let me explain. The opposite of love is not hatred, but indifference, the avoidance of intimacy. Both anger and love are passions directed toward those we care about. Intimacy is always a risk, approached with fear and trepidation, because when we care about another we open ourselves to the inevitability of being hurt. We allow ourselves to become vulnerable to another. Because we are unique individuals, misunderstandings, disappointments, and separations happen often in every intimate relationship. Infidelity provides a near ultimate test of love. At that moment of betrayal, our vulnerability is exposed. Our lover has become our enemy, and we naturally react with anger to nurse the wound. By embracing the rage we feel at the betrayal, any superficial consolations we received from the relationship are destroyed. The ensuing struggle to forgive and love again produces a different quality of love, a more mature and wiser love. As Jesus repeatedly taught his disciples and demonstrated by his life and death, the highest form of love is the love of our enemy, of those who have harmed us. The price of such a love is a dying to ourselves, a generous giving of ourselves for the good of another, without expectation of return.

For most people, divorce isn't exactly a reason to throw a party. Yet divorce attorneys in Pasadena have seen an increase in the "divorce party" trend over the last several months. The divorce party is quickly becoming a way for couples who part ways in a friendly manner to celebrate their relationship with family and friends. Super hip rock star Jack White of the White Stripes and his ex-wife, model and singer Karen Elson, are the latest high-profile couple to say goodbye to married life with celebration.

When White met Elson on set of a music video for his band's song "Blue Orchid," it was reportedly love at first sight. The couple married in Brazil in 2005 and later had two children together - a daughter, Scarlet, age 5, and a son, Henry, age 6. After several high-profile relationships, including an affair with actress Renee Zellweger, it appeared that White had finally found his happy ending with Elson.

So music fans were shocked when the couple announced in typical nontraditional fashion that they were getting divorced. The pair sent out invitations asking guests to celebrate their 6^th anniversary and upcoming divorce with a positive swing bang hum dinger at a party in Nashville. White and Elson want guests to re-affirm their friendship and celebrate the past and future with close friends and family. The invite stated the party promises to include "dancing, photos, memories and drinks with alcohol in them." To keep unwanted guests out, however, it also warns "this is only for close personal friends and family. So please no plus ones or dead beats."

In addition to the invitation, White and Elson released an official statement regarding their divorce.

"We remain dear and trusted friends and co-parents to our wonderful children Scarlett and Henry Lee," the announcement said. "We feel so fortunate for the time we have shared and the time we will continue to spend both separately and together watching our children grow."

Here are some points to think about:

1. The key is to get a business valuation expert who is experienced with these types of cases, doesn't mind rolling up his/her sleeves, and has experience in forensic accounting. Also keep in mind that the cost of this type of assignment is usually much greater than just a straight-forward business valuation.This means you need to budget for this additional cost, and you need to do a realistic assessment of the cost versus the anticipated benefit.This can sometimes be difficult, as you may not know the extent of the unreported income (if any) until your forensic analysis is well under way. My advice is to plan the investigative process in phases so that you, your attorney and forensic / valuation expert can meet to review the preliminary findings and discuss the direction and extent of future work.  
2. Being involved in your case is very important, especially if you have previously been involved with the business and are familiar with its operations and procedures. Even if you have not been involved in the business operations, it is important for your valuation expert to gain an understanding of how you lived and socialized during the marriage, as this information can be used to determine if the reported income is reasonable. For example, if your spouse alleges that he or she only receives $100,000 per year from the business, but your life style requires $350,000 per year to support, this would raise the possibility of unreported cash income, absent any other sources of funds.  
3. The site visit of the business, and management interview, is a very important part of the process. During the site visit, the business appraiser tries to get a feel for the operations of the business and understand the various internal controls that exist, or don't exist. He or she will also get a feel for who the key individuals are, setting the stage for one-on-one interviews or possibly having the lawyer subpoena these individuals for depositions. For these reasons, it is not uncommon for the propertied spouse's attorney to allow the opposing expert to perform a site visit, but not allow him to talk to their client or anyone at the business. Controlling what is said is important and many attorneys take the position that if the opposing counsel wants to talk to their client or other personnel, they can subpoena them for depositions or provide written interrogatories. This approach limits the opportunity for informal conversations that may lead the forensic accountant to discover potential problem areas. The financial expert should attend the deposition to assist you attorney in preparing the right questions to ask and to follow-up the responses to the initial questions with further inquiries.

If the business appraiser is allowed to talk to various personnel during the site visit, he will obtain from them information about how revenue is collected, the extent of cash sales and how are they handled and recorded. It takes a careful eye to observe the types of transactions that are most likely to be omitted from the books. For example, in a manufacturing plant, is the cash received from the sale of scrap materials being recorded on the books? Does the company engage in any bartering transactions? Who prepares the deposits for the company, and is the daily cash received reconciled to the deposits? Do the deposit slips reflect any cash being deposited?

The type of company being valued will dictate the types of issues that need to be considered. For example, consider a coin operated laundry business. To determine if the sales reported on the tax returns are different than what is actually received, you can try to tie sales to other direct operating activities, such as the amount of water being used. If you know the type of washing machines used in the laundry business, there are specifications as to the amount of water used per load by each machine. The next step would be to subpoena the water bills for the business. Dividing the monthly water usage (in gallons) by the amount of water used per load will provide a good approximation of the number of loads of wash that were done for the month. Multiplying the calculated number of loads by the average price charged per load would result in a good approximation of what is the monthly income generated from washing machines. Naturally, you would also consider other sources of income, such as the use of dryers, sales of laundry supplies, vending machines, etc.

Another well known type of cash business is a restaurant. This is another situation where the "actual income" may be greater than the amount reported on the tax returns. If the restaurant owner makes the mistake of not reporting all the income, but continues to report all of the direct operating expenses related to the income, this could lead to a red flag. There are many sources that provide statistical data on the normal operating expenses for various types of restaurants. By reviewing these studies you can notice if the subject restaurant's expenses, as a percentage of sales, are out of line with the rest of the industry. In estimating what the actual sales should be, you can divide the direct expenses, such as the cost of food and beverages, by the average cost of sales percentage from the restaurant industry studies. The resulting answer represents an estimate what the actual level of sales should be.

Another way to estimate the actual sales, in conjunction with the above analysis, is to review the daily cash register tapes or customer checks and total them for the year. This total can be compared to the amount of sales calculated through the use of the statistical data. On newer cash registers, the daily receipts are closed out in a manner that summarizes the revenues by breakfast, lunch and dinner. The receipts are then further broken down by the type of sales, such as food and beverage. It is possible to find that two sets of books are maintained by the business owner, with one set tying directly to the cash register tapes.

Additional procedures for verifying the reasonableness of reported sales include comparing the usage of product to the sales reported. For example, in analyzing a sub shop, if you are able to obtain records from the bakery as to the amount of bread purchased for the year, you can estimate the number of sub sandwiches sold for the year. Multiplying the number of sandwiches sold by the average price per sandwich produces an estimate of the sales that should have been reported. All of these methods individually, or in combination, can provide further evidence that the restaurant is under-reporting sales.

A common analytical technique used in valuing a business involves the preparation of "common size" financial statements. This is done by simply expressing the dollar amount of each expense item as a percentage of sales. By reviewing these percentages over a number of years the financial expert may be able to spot trends that will raise flags for further investigation. For example, large swings in the cost of sales percentage or gross profit percentage are signs that there may be some type of accounting problem. The common size financial statements can also be compared to industry statistics in order to determine if other companies are experiencing the same types of trends as the company being valued.

Another way to look for under reported income when valuing a cash business may be to look at the underlying documentation. This can be a very exhausting and extensive process, requiring a significant number of hours and resulting in a high cost. For example, in a distributorship, purchase orders can be sorted and compared with deposits on a monthly basis. If purchase orders exist for which no deposits have been made, further investigation should be done.

In a medical practice, the day sheets can be compared with deposit slips and the entries in the appointment books. If discrepancies are found, they can be further traced into the patient's receivable records.

In a home remodeling business, each customer's contract can be reviewed to compare the contract price with the amount actually received or deposited. Taking this a step further, a confirmation letter might be sent to customers verifying the amounts they paid for a particular job. If the job was financed through a finance company, the job cost can be compared to the amount financed. Examining the underlying documentation can sometimes turn up skeletons, as owners many times do not take the time, or have the ability, to alter the transaction all the way through the paper trail. The problem with this type of analysis is that it may prove to be cost prohibitive. The time and expense involved in obtaining and comparing the data may exceed your budget, and may also exceed the benefits received. For this reason, determining the true earnings of the business, may be cost prohibitive.

While determining the true economic income of a cash business may be a tedious and time consuming process, it can be done and should be considered when the benefits are thought to significantly outweigh the costs involved. The only way to make this decision is to review the known facts of each case have a frank and specific conversation with an experienced financial expert, at an early stage of your divorce.