One of the victims of Bernard Madoff’s Ponzi scheme wants to get some of his money back – from his ex-wife. Steven Simkin is suing his former spouse, Laura Blank, seeking the return of some of the money she got in their 2006 divorce settlement. Simkin says that $2.7 million of the $6.25 million divorce settlement was based on the belief that an account with Bernard Madoff was worth $5.4 million. In fact, there was no value there at all.
Florida divorce attorneys noted news reports on the case which said that Simkin and Blank married in 1973 and have two children. They separated in 2001 and made a property division as part of a divorce in 2006. By 2009, when Simkin and the rest of Madoff’s investors discovered Madoff’s fraud, Simkin sued to get some money back from Blank.
Simkin got the couple’s house. He agreed to pay $6.25 million to Blank, and she waived spousal support. She also got a Manhattan apartment with a $370,000 mortgage.
A trial court dismissed Simkin’s suit, but an appellate court has reinstated it, under the legal doctrines of “mutual mistake” and “unjust enrichment.”
The appellate court decided, by a vote of 3-2, that if Simkin had simply been incorrect about his determination of the value of the Madoff investments, that would not be enough to allow a court to alter the settlement. But the court decided that what had actually happened was that Simkin and Blank had made a “mutual mistake” in believing a Madoff account existed, when in fact there never really was an account with Madoff. After multiple car accident settlements in Michigan, the judge had decided.
Because of the mutual mistake, Simkin can sue Blank for unjust enrichment.
Not surprisingly, Blank’s lawyer disagreed with the majority of the court. Would it be fair, Blank’s lawyer asked, to revise all divorce agreements based on how investment values fared in the future? Does everyone Simkin did business with while he had “investments” with Madoff have to return money to Simkin because it turns out he didn’t have as much money as he thought?
The dissenting judges on the appellate court disagreed with the decision, too. They said it went against precendent that favors finality in divorce cases.