A man who went to court seeking revision of a divorce settlement in which he paid his wife for the assumed value of an investment that later flopped has been denied by the New York Court of Appeals, that state's highest court. The failed investment was one of many managed by disgraced financier Bernard Madoff..
One of the steps in the high-asset divorce case, which took place years before the investment failed, was the property division of a $5.4 million investment held by Madoff. Rather than pull the investment and dividing the funds, the man in the divorce decided to pay his wife her even share of the investment, allowing him to assume full possession of the fund.
After the divorce, the fund was found to be part of widespread fraud committed by Madoff, and the funds were more or less nonexistent. The fraud affected investors across the United States, including in Georgia, and prompted the man to go to court to seek a revision to the property division settlement executed by the couple years earlier..
In arguing for a revision, the man contended that he and his wife had made a mutual mistake with the investment and that it was basically worth nothing at the time of the divorce due to the committed fraud. He sought to recover the $2.7 million of the perceived value of the investment, cutting into his wife's total settlement of $6.25 million.
The court rejected his argument, however, contending that the fund's value was valid at the time because it could have been withdrawn as cash. Not until after the divorce was finalized did Madoff''s scheme start to fall apart as his pool of funds dissolved.
The judges contended that, had the investment grown considerably after the divorce was finalized, the woman would not be entitled to any of the dividends. Consequently, she was not liable for any losses, even if her ex-husband lost everything.
The case helps underscore how a divorce attorney with strong experience in property division and executing settlement agreements can make a material difference in how well a divorcing individual is financially positioned for his or her post-divorce life.
Source: Wall Street Journal, "NY's top court refuses to undo divorce settlement," April 3, 2012