My friend wants to hide money in my bank account

Question

my friend of 10 years might be going through a divorce he wants to sell every thing he owns and cash out his pay checks and put that money in a new bank account that he wants me to open in my name for him is this legal can you explane why it is or is not

Answer 1

That would make you a party to illegal action and fraud. He is trying to hide his income from creditors, the IRS,  or his wife. You could be prosecuted and fined or even sent to prison. Obviously you know that this is wrong. Do not agree to it.

Answer 2

It's illegal.  

He could lose half in the divorce if he doesn't do this, but if he does he's sure to lose EVERYTHING.  He will get caught, and judges don't like it when people try to hide assets, no matter what reason.  Not to mention the trouble you'll be in.

Be a good friend.  Tell him no way.

Answer 3

hello - it will be connected to you through your SSN and as a result any interest earned will be on your taxes.  also, the IRS will come knocking if its a lot of money and will ask you where ir came from (usually 10K or more gets their attention).  i feel for your friend, but what hes trying to do is unethical, and frankly could be a big problem for you down the line with the IRS, and they may question your ethics when you try to explain it, which could lead them to really make your life difficult.  good luck whatever you decide to do.

Answer 4

Prob not legal but he's your friend so you should do it. I would want my friend to do that for me if I asked. Otherwise hes going to lose it all in the divorce. He's smart!

Answer 5

Your 'friend' is asking you to be an accessory to FRAUD.  He is attempting to DEFRAUD the divorce court by claiming he has no assets.  WHEN the court finds the money, YOU could face CRIMINAL charges.

Answer 6

The operative phrase is "might be going through a divorce". The opposing lawyer will be doing a discovery on all of his assets, so I'm not sure how he's going to explain where all of his pay check went. Believe me, no stone will be unturned during the divorce process. Another poster mentioned the issue of tax consequences, which could be avoided if he opened the account in a non-interest bearing vehicle (like a checking account).

What he's asking you to do is legal, but I think unethical. You're basically helping him rip off his wife and any children they may have. Are you really sure you're comfortable with that?

Answer 7

You would be part of a fraud, holding money in your name that is really that of another person.

Your purpose would be to enable him to commit fraud in the divorce court, by his understating his income and his assets.  You become part of that fraud.  That is a criminal offense.  This is very easily traced.

You would also be subject to IRS review, for helping the friend hide and/or launder money.  There i even the possibility that IRS would declare this as income to you, and you would have to pay taxes on it. You would be audited.

I am former Recorder of Deeds at the Court House. Do not do that, unless you are ready to get locked up.

Answer 8

It's not legal.

Plus once he does that, you could easily tell him to get lost and keep all of it.

Answer 9

That's fraud--or will be as soon as he files a statement of assets.  And, since you are aware of what he plans to do, you'll be an accessory.  

Answer 10

I would worry about tax consequences.  If you open the account in your name and suddenly there is a lot of money dumped into it and the IRS finds out they may ask where the money came from and have you paid your taxes on it.  You tell then that it belongs to your friend, they say prove it, then begins a long road of legal problems.

Answer 11

I believe "legal" is mostly a matter for the courts to decide.  The bottom line being that if he is not the subject of a court order right now, it is most likely legal if he gives the money to you outright.  But the gift will be subject to gift/estate tax rules.  (If more than $12,000, estate tax forms may be legally required.  If he doesn't file them, he is breaking the law and you are helping him)

The courts will likely review (with the lawyers) the transactions of both parties over a set period of time (if a lot of money is involved).  Tell him he is kidding himself if he thinks he can do this in August and divorce in September...

On the other hand, if he is going to divorce next year, it just might work.  (Again, depending upon how much money he is going to give you)