Madoff Victim’s Lawsuit Against Ex-Wife Reinstated

Jan 6 2011 | 2:59am ET

To say there has been a lot of litigation surrounding the Bernard Madoff Ponzi scheme would be laughably mild. Today, there’s a little bit more, with one of the more interesting lawsuits having been reinstated.

Lawyer Steven Simkin and his wife, Laura Blank, divorced in 2006 after more than 30 years of marriage. She got the Manhattan apartment and $6.6 million—and waived alimony payments. He got the house in Scarsdale, N.Y. —and the couple’s account with Bernard L. Madoff Investment Securities.

At the time of their divorce agreement, that account was valued at $5.4 million. But, as became clear little more than two years later, it was worth nothing at all.

Simkin sued his ex-wife in 2009, arguing that $2.7 million of the loss in the Madoff fraud was rightfully hers. She, unsurprisingly, disagreed, and a New York state court tossed the suit last year.

But a state appellate court proved a good deal more sympathetic, reinstating the lawsuit, allowing Simkin to plead “unjust enrichment” based on his theory of the “mutual mistake” the former couple made in placing any value on the Madoff investment, listed in 2006 as their biggest asset.

Simkin “never had an account” because “on Madoff’s own admission, there were no accounts within which trades were made,” a divided court ruled.

But two of the five judges dissented, calling the majority opinion “truly ‘divorced’ from reality” and noting that their divorce agreement “does not mention the Madoff account.” Simkin redeemed part of his Madoff investment to pay off his wife and continued to invest with Madoff after the divorce.

Blank’s lawyer has vowed to appeal the “completely erroneous” decision.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


Hedge Funds Swarm Into Palm Beach

Oct 27 2016 | 2:32pm ET

As the first flakes of snow fall on New York's northern suburbs, Dan Weil of South...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...