In Texas and across the country, there are parents who cannot afford to pay alimony or child support. The reasons are varied: Some are unemployed, while others are incarcerated, disabled or underemployed. And some are millionaires.
One of those is the chief executive officer of a Dallas-based debt-investing firm. He says the 2008 financial crisis sunk his company into a state of insolvency, costing hundreds of millions of dollars and embroiling it in lawsuits with investors and banks. He said his income is down to "a million, two." His wife's attorney, however, told the court that the CEO's 2010 tax return revealed an adjusted gross income of more than $36 million.
The husband argues that his own income estimate takes into account pending lawsuits against him, and that family court doesn't follow the same accounting principles as businesses do.
The CEO filed for divorce in September. He and his wife have two daughters, ages 3 and 6. She's seeking enforcement of a prenuptial agreement that guarantees her half of their community property, with a cap of $5 million. She says she hasn't been paid $104,000 he owes her in alimony and attorney fees. A former portfolio manager called to testify on her behalf said the CEO told him of a plan "to get his net worth down and pay her as little as possible."
If that's true, the plan may have worked too well. His attorney and a financial advisor hired to evaluate the CEO's net worth estimate it at a negative $50 million. At least eight investors have sued his firm accusing it of deceiving them, but many of the suits have been settled or dismissed and the firm has yet to lose a case. So how much does the CEO really have? We may find out as the case continues.
Most divorcing couples in Texas aren't battling over millions of dollars, but plenty of them are mired in disputes about alimony, child support and prenuptial agreements. Having an experienced family law attorney is key to making sure these agreements are upheld and fair to the spouse entitled to gain from them.
Source: Bloomberg, "Highland Capital Chief Tells Divorce Judge He's Insolvent," Tom Korosec, March 28, 2012