A story published by Law.com on Christmas Eve really got my attention.
So, when is it fair to revisit the terms of your divorce? That may depend on who you are.
Yes, a final judgment or decree is supposed to be “final.” But, in family law cases, there are occasions where it is completely appropriate and sometimes even necessary to change the terms of the final judgment or decree.
What justifies modifying a final judgment? You obviously don’t want people going back to court every time they realize they left something out of their agreement or want something new. At the same time, courts have to respect that circumstances do change. This is especially true with continuing obligations such as child support, alimony, and visitation.
The law is pretty clear that you can revisit alimony, custody, time-sharing, and parental responsibility when there is a substantial change in circumstances. Most states also require that the change is involuntary and unanticipated.
But, when is it appropriate to reconsider the equitable distribution of assets? A high-ranking New York real estate attorney at the prestigious Paul Weiss law firm recently learned that he would receive no sympathy from the court when his circumstances changed for the worse.
Steven Simkin had been married to his wife, Laura Blank, for more than 30 years. They spent the better part of two years fighting over the value of certain real estate investments and Mr. Simkin’s law practice. One item that was not subject to dispute was their account at Bernard L. Madoff Investment Securities LLC, which reflected a value of $5.4 million. In the divorce, Laura Blank took $2.7 million in cash for her share of the Madoff investments. Presumably for tax and other reasons, Mr. Simkin left most of the money in the Madoff investment fund.
As virtually everyone now knows, Bernie Madoff’s investment fund was one of the largest ponzi schemes in the history of the world. And, it turns out that Steve Simkin’s Madoff investments were completely worthless. After learning that he paid his wife $2.7 million for her half of a worthless investment, Mr. Simkin asked a New York court to set aside the agreement.
On December 24, 2009, the New York Law Journal reported that the court denied any relief to Mr. Simkin. According to the report, Acting Supreme Court Justice Saralee Evans held that the Court simply would not revisit the parties’ settlement. The Court reasoned that the account could have been converted to cash, so neither party was mistaken in their marital settlement agreement.
But, what the Court apparently failed to consider was that, even if the money had been withdrawn, it still would have been subject to a “clawback suit” by the Trustee for the Madoff Estate. The Trustee can recover withdrawals going back six years. Nevertheless, Mr. Simkin is simply out of luck. First, he lost $5.4 million in the Bernie Madoff fraud. Then, to add insult to injury, he unwittingly gave his wife $2.7 million for her share of the worthless Madoff investments. Of course, there are many stories about people who were screwed by Bernie Madoff. But, in this case, the family law judge decided that Mr. Simkin should bear 100% of the loss and his wife should keep the $2.7 million she took for her share of the sham investment.
The Court simply had no sympathy for a man who had represented many of the world’s most sophisticated investors in their most important real estate deals. I question whether the Court would have reached the same conclusion had the wife been left with the worthless investments.
The only good news is that Bernie Madoff will be spending the rest of his life in prison as part of a 150-year sentence. Unfortunately for Mr. Madoff, there are several inmates who apparently have a sense of rough justice that is even stronger than the Judge that slammed Steve Simkin.
