Thursday, 31 July 2014
Last updated 17 hours ago
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.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…