Pleading Innocent: When Your Husband is a Financial Criminal

Pleading Innocent: When Your Husband is a Financial Criminal

With wedding season upon us, you know we have to bring up those love and money topics:  whether you should you sign a prenup and how marriage affects your finances.

And here's another one: how your husband can keep financial secrets in a marriage and leave you with $3 million in debt when he passes away.

It sounds like a financial urban legend, but it happened to Carol Ross Joynt. In 1997, Joynt was 47 years old and living in Maryland, a successful producer for Larry King Live, mother of a healthy little boy, and happily married to her husband Howard, who owned the legendary Georgetown restaurant and bar Nathans. They lived a lavish lifestyle complete with vacation homes and designer clothes, and she was very much in love.

Then Howard died from pneumonia. Joynt's grief was multiplied by the shocking revelation that he had hidden a financial mess from her for years—most notably, he was under investigation for tax fraud, and the IRS was turning to her for the $3 million owed.

In her new book Innocent Spouse, Joynt reveals in painful yet honest detail how she coped with becoming a widow, a tax delinquent, a single mom, and the owner of a struggling business in one blow, and how she beat the rap with the help of the IRS's "Innocent Spouse" clause.

We interviewed Joynt to find out what she learned from her harrowing experience.

Did you ever suspect that Howard was in this much financial trouble?

No. When it came to our finances, he always said, “Don’t worry about it, I’ll figure it out.” It never even occurred to me—because marriage is trust--that I might have been able to prompt him to explain.

I was always selling things. I was like Scarlett O’Hara, taking down the curtains to use.

Ironically, knowing all the numbers now, we could have been okay--we just would have had to cut back. But since he didn’t discuss it with me, I wasn’t able to make that recommendation. I would have said, “We’re not living like this. We have to downsize.” I can’t bear debt.

(If you have your own personal debt, try LearnVest's Get Out of Debt Bootcamp.)

What happened after Howard’s death?

About two weeks after he died I was asked to come see his tax lawyers. They told me he had been under investigation for tax fraud, and that since I was his heir, I was now responsible for the debts. The actual debt was $800,000, but with the penalties and interest over five years, it came to $3 million. I told them I didn’t have that money.

What else did you discover?

He had been lying about many aspects of our financial situation. He told me that he was getting $20,000 a month from his trust, and I found out it was $15,000 every three months. I also found out that the restaurant, Nathans, was hemorrhaging money. I didn't know that his father used to bail him out periodically, to the tune of around one to two million over his lifetime.

Before this happened, you visited the best restaurants, vacationed often, and had a live-in babysitter. What happened to your lifestyle after Howard died?

Whatever income level you’re at, if the bottom falls out, it’s chaos. When he died we had a lifestyle we couldn’t afford, and I had to quickly regroup. I had to sell the house and ratchet down. I was swimming in quicksand. I would take a painting and sell it, or take a piece of furniture and sell it. I was always selling things. I was like Scarlett O’Hara, taking down the curtains to use.

Before he died, the lawyers figured we had a cost of living of over $500,000 a year. It went down to about $75,000 after I paid taxes on the restaurant. And whatever money I had in savings ultimately went back to Nathans, because I kept trying to save the restaurant.

Was there anything you didn't give up when you downsized?

It was always my highest priority to pay for my son's schooling. At the time, the DC school system was not robust so I kept him in private school. Now a friend is helping pay for his education at Georgetown, and he qualified for some loans.

How did you deal with the IRS?

The lawyers I inherited from Howard didn't believe me when I said I had no idea what had been going on. Luckily, I found new attorneys who believed me, and after a year, I won on the Innocent Spouse relief. The Innocent Spouse relief absolved me of any guilt in the tax fraud case, and it meant they couldn't come after my assets. The IRS still got Howard's estate, but at least I got to keep whatever was in my name.

If I hadn’t been granted Innocent Spouse, I would have lost my house , I would have lost my income, I would have lost my savings.

How would you advise other women who face your situation after a husband's passing?

I think anybody at any economic level can relate. The message in my story is that I got a lawyer who believed me. Don’t try to take the IRS on yourself. It may cost you, but it will save you in the long run. A good lawyer will protect you. In every town in America, there is a lawyer who can deal with the IRS.

In your book, you say, “Widows seem to be hung with a neon sign that shouts EASY TARGET.” Why is that?

You’re shark bait, because you’re perceived as vulnerable, and I had to become hip to that. A plumber would come, he would tinker around, I would give him a check, he would leave, and it wasn’t even fixed! People just feel they can dump on you. For whatever reason, women aren’t given the same credibility as men. You have to be a little stronger, talk a little louder, be a little more assertive.

I would say, “I’m a widow, can you please make sure you get this right?” I was basically saying, “Take advantage of me.” I don’t do that anymore.


You thought Nathans would be an asset and generate income. Instead it ended up costing you.

It was one of the great bars of Washington, but it couldn’t afford itself. Its rent was ridiculously high, the insurance and taxes were ridiculously high.

At first I thought I could turn the business around and get income from it. After the first year, I signed a personal guaranty on the lease because I thought I could sell the restaurant. That was my biggest mistake. No one who owns a small business should use their own money. The smart small business owners always use someone else's money and they don't sign personal guaranties.

Without the guaranty I could have filed for bankruptcy the moment I learned Nathans was bankrupt. Instead, I became personally responsible for the restaurant's debts.

How did you finally shut down the restaurant?

My only asset at this point was my home, which I owned free and clear. So I had to take out a half a million dollar mortgage on my home to fund my getting free of Nathans: paying off the landlords, paying the tax and other debts I was legally bound to as an LLC.

Where do you stand now financially, now that the IRS case is closed and Nathans is shut?

Well, I had to leave my job as a producer to focus on the restaurant. I have a just a little bit left.  I make about $25,000 a year, and I have a half million dollar mortgage to make payments on.

Do you miss your old lifestyle?

I tell my friends, I’m a post-Jimmy-Choo woman. I gave up all that stuff. In the end I didn’t really need it. It became symbols of what wasn’t real. I can still appreciate things, but I don’t covet them. If I miss anything, I miss the freedom of travel, and being able to go where I want, when I want. I miss the luxury of time, and things that are taken care of.

What would you tell women, having been through this, about marriage and finances?

Don’t not fall in love. Falling in love is the best thing in the world. I wish that everyone falls in love with the man of their dreams.

But if you are on a joint tax return, don’t just take it for granted. An accountant did our taxes, and I didn’t even read them; I just signed them. That was just stupid. Also, if you end up being the heir to your spouse's business, it would behoove you to learn something about it.

I’m always telling my son, like Reagan said: “Trust but verify.”

Don't Learn the Hard Way

alt Carol had a fairytale life, until the lies at its foundation caused it to crumble and come crashing down. She admits that she was just too trusting (actually, she bluntly calls it being stupid) by putting her financial life into her husband's hands and always taking him at his word.

So talk to your partner or spouse. Keep a separate checking account (learn how to open one here) and credit card (find the right card for you). Ask to be a part in all the financial decisions. And always read the fine print before signing anything.

Other Resources

Prenups may not sound romantic, but they are a smart move for women. Find out more.

If you just got married, it's high time you had a financial conversation with your honey. Go through LearnVest's checklist.

If you are afraid you might be audited yourself, click here.


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