A lawyer accused of hiding assets was released from prison last week — after serving 14 years in jail. H. Beatty Chadwick was sent to prison in 1995 for allegedly hiding $2.5 milion in assets in connection with his divorce. By the time he was released last week from a county prison in suburban Philadelphia, Chadwick had been in prison for 14 years.
The Chadwick case is an important reminder that judges throughout the United States have broad civil contempt powers. Judges can jail debtors who appear to be unlawfully hiding assets. You can read more about Chadwick’s case in a number of recent articles including The Philadelphia Inquirer and the July 12, 2009 New York Times.
While the Chadwick case seems to have set a record, many other courts have imposed what asset protection attorneys call “Anderson relief”. That term comes from Michael and Denyse Anderson, who were jailed in the 1990s for refusing to return funds from their Cook Islands trust (after they had been caught by the Federal Trade Commission in an apparent telemarketing scheme). A federal judge in Nevada imprisoned the Andersons for 6 months for contempt of court when they refused to take steps to return funds from their offshore trust. The United States Court of Appeals for the Ninth Circuit affirmed the finding of contempt and affirmed the jailing of the couple as an appropriate way to coerce certain debtors to turn over assets from offshore trusts. This has become known as “Anderson relief.”
The Anderson case and the recent Chadwich case are important reminders that certain asset protection strategies can land you in jail. There are many reasonable, lawful asset protection alternatives; but crossing certain lines can have disastrous effects.