Divorcing Attorney Formed a Second LLC With Nearly the Same Name and Moved Her Husband’s $38,795 Escrow Into It Without Telling Him

Photo credit: AI-generated image created using ChatGPT. Illustrative only

A divorce case in Indiana turned into something much uglier than arguments over schedules and custody exchanges: a fight over a chunk of real money that was supposed to be locked down until everyone agreed what to do with it. And in the middle of it was an attorney who, the courts found, created a new company with a nearly identical name and quietly redirected escrow funds into it.

The details come from the appellate opinion in Stanley Klos, III v. Kristen L. Gentry Klos, decided July 30, 2026, by the Indiana Court of Appeals. The ruling largely upheld the trial court’s decisions on custody and parenting time, but it also left a clear record of what the trial judge called fraud tied to an LLC and $38,795.50 in proceeds.

The money was in escrow for a reason

During the marriage and separation, the couple and the wife’s brother were members of a company called 849 N. Rural, LLC. The husband, identified as Father in the opinion, held a 50% interest, while Mother and her brother split the other half.

That LLC sold property in December 2022, and the sale proceeds went into escrow with Security Title Services. The escrow agreement wasn’t casual paperwork: it specifically blocked distribution unless all LLC members agreed. By January 8, 2023, Father’s share was pegged at $38,795.50.

In other words, it was the kind of setup meant to prevent exactly the kind of end-run that later got the court’s attention. When money is sitting with a title company under an agreement requiring unanimous consent, one party isn’t supposed to be able to unilaterally pull it out—especially not while a dissolution case is barreling toward settlement.

A second LLC appeared with a “virtually indistinguishable” name

On January 19, 2023—days before the parties executed their final divorce decree—Mother formed a new business entity: “849 Rural, LLC.” Unlike the original company, this one did not include Father. The members were Mother and her brother.

Mother then opened a bank account for the new LLC and transferred the escrowed funds from the original LLC into that newly opened account. The appellate decision describes the names as “virtually indistinguishable,” and the trial court found Mother knew the escrow agreement required all members’ consent before any transfer could happen.

What mattered just as much as the paperwork was the silence. The courts found Mother did not disclose the transfer to Father. The divorce was finalized in February 2023, and the money issue didn’t explode immediately because Father still believed the escrow existed where it was supposed to.

He didn’t learn the escrow was empty until months later

It wasn’t until May 2023 that Father contacted Security Title Services about the funds. That’s when he discovered the escrow wasn’t holding the money anymore.

By that point, the divorce had been granted and a mediated settlement agreement had already been approved by the court. The custody structure was set: Mother had sole legal and primary physical custody; Father had parenting time under the Indiana Parenting Time Guidelines, with expanded weekends into Monday mornings and Tuesday overnights.

On paper, those are separate issues—money on one side, parenting on the other. But the opinion makes clear this was a “high conflict” case, and the escrow move became one more piece of a larger pattern of distrust and litigation.

Custody stayed put, even in a case the GAL called “one of the most high conflict” she’d seen

Father later sought changes to custody and parenting time. The background included serious allegations on both sides: Father had made accusations of sexual abuse that the Department of Child Services found unsubstantiated, while Mother alleged Father abused alcohol. There was also a Soberlink testing requirement during Father’s parenting time, which a trial court order removed in February 2024.

Even after that removal, the trial court found Mother refused to allow Father’s parenting time unless he still submitted to Soberlink tests—and Father complied anyway. Father also raised concerns that Child had not received therapy recommended by a professional after some evidence of hypersexual behavior was noted in June 2023.

When the case came back for evidentiary hearings in February 2025, the guardian ad litem did not recommend changing custody. She testified that “neither of these parties can act like reasonable adults at times,” that they intentionally provoke one another, and that Child gets caught “in the crossfire.” She didn’t think there had been a substantial change in circumstances and described choosing a sole legal custodian as “like choosing the lesser of two evils.”

The trial court denied Father’s request to modify custody and parenting time, and the Court of Appeals deferred to that call. The appellate judges stressed the usual point: trial courts see the parties face-to-face, gauge credibility, and have more context than an appellate panel reading transcripts.

The judge said “fraud,” reopened the marital estate, but refused treble damages

Where Father did gain ground was the money. He filed a petition to modify the property disposition and asked for treble damages and attorney fees, arguing Mother’s transfer amounted to constructive fraud, intentional fraud, criminal conversion, and theft. He cited the Indiana Crime Victim’s Relief Act and the state’s attorney deceit statute.

The trial court granted Father’s request to reopen the marital estate and made blunt findings. It concluded there was “sufficient evidence to set aside a settlement agreement because of constructive fraud,” that Mother owed Father a fiduciary duty as an LLC member, and that she failed to disclose moving escrow funds into a new LLC that excluded him.

The court found Mother “intended to deceive” Father and prevent him from getting his share of proceeds. It also found Father “lost his $38,795.50 share” and that Mother “received a benefit” by taking control of it. The trial judge went further, writing that Mother “defrauded Father by converting funds held in the jointly owned LLC in days prior to executing the Final Decree,” and that she tried to hide behind a waiver-and-release clause “in a clumsy attempt to justify the theft” of Father’s portion.

But the same order declined to award treble damages under the Crime Victim’s Relief Act and directed each party to pay their own attorney fees. On appeal, Father challenged those denials along with the custody and parenting-time rulings. The Court of Appeals ultimately affirmed in part and remanded in part, meaning some pieces stood as decided while at least one aspect needed further work back in the trial court.

Why this kind of move hits so hard in a divorce

In a typical divorce, people expect fights over who keeps what. What they don’t expect is a spouse—especially a licensed attorney—creating a near-copy LLC name, moving escrowed funds into it, and not telling the other owner until he discovers the account is empty months later.

Escrow exists to slow everyone down and force agreement. The trial court’s findings suggest the opposite happened here: the structure that was supposed to protect all parties became something Mother allegedly maneuvered around, leaving Father to chase his share after the marriage was already dissolved.

Meanwhile, the custody side stayed locked in place, with the court essentially saying the parenting war was so entrenched that switching custody wouldn’t fix it. That leaves a harsh reality reflected in the opinion: the parenting conflict continued, the financial damage was already done, and the court had to separate what it could correct (the property distribution) from what it wouldn’t (a full custody reset).

The end result is a case where the family law drama isn’t just emotional—it’s documented down to the dollar amount, the LLC filings, and a transfer that the trial court explicitly labeled deceptive. And for everyone involved, especially the child, the courts were left trying to contain the fallout without rewarding the chaos.