California law imposes a “fiduciary duty” on spouses to generally act in each other’s best interests in financial transactions throughout the course of the marriage. That includes the time period after a couple separates and before they divorce. As the Second District Court of Appeals recently explained, a spouse who commits fraud during that time is likely to be required to pay back the other spouse for the value of any community property lost as a result.
Husband and Wife separated in September 2009, following more than five years of marriage in which the couple had two children. Wife filed for divorce shortly thereafter. In the proceedings that followed, a judge found that Husband actively tried to conceal the fact that he owned a cosmetics business based in Nigeria. Husband later admitted that he owned the company, but he said it had no assets and was created solely to transact business for a separate entity where he worked as an employee.