The New York Court of Appeals ruled today that a Bernie Madoff victim can’t redefine the terms of his divorce on account of his losses to Madoff’s fraud. Steven Simkin and Laura Blank, when married, invested $5.4 million in Madoff’s business together. The terms of their 2006 divorce settlement totalling $13.5 million split all assets evenly. However, while Mr. Simkin elected to retain his stake in Madoff’s business in the divorce, Blank took her half in cash. Madoff turned himself in to police for perpetrating the largest Ponzi scheme in history just two years later. Meaning that Simkin lost his millions, while Blank was none the worse.
Simkin sued Blank to essentially redo the divorce settlement, which eventually reached New York’s highest court. His argument was that, since Madoff’s investment was fraudulent, he and Blank should split the losses evenly. Today, the court decided against it, citing the finality of divorce and warning that allowing the resettlement would set a dangerous precedent for divorce settlements and other contracts. While Simkin tried to argue that the Madoff account didn’t exist and so he shouldn’t be held accountable for his investment in it, the Court disagreed, saying that the account did exist, it was just illegal, and that Simkin could have taken out his money at any time, like his ex-wife did. In other words, they called him a sore loser.
Mets fans are used to errors on the field, but not in the bank. Fred Wilpon and Saul Katz, the owners of the New York Mets, have settled a lawsuit concerning their profits from the much-publicized Bernie Madoff Ponzi scheme, the biggest investment fraud ever conducted. Irving Picard, the trustee hoping to recoup the investments lost in the Madoff case, had sued the Mets owners accusing them of “willful blindness”, or that they were aware of Madoff’s fraud, but ignored it because they were making money. Early adopters of Ponzi schemes often make money in the time it takes to collapse. The settlement today makes sure that those claims of willful blindness never go to court, claims which Picard thinks a jury would have found true. Jury selection for this trial was set to occur this morning. Luckily for the Mets, the owners settled for $162 million, nearly half of the $386 million they could have had to pay out. This is in addition to the $83.3 million in profits the judge in this case had already ordered to be paid back.
It will be interesting to watch how the rest of the Madoff damages litigation pans out. Despite the 74-year-old head honcho already convicted and in jail for a 150-year term, the recovery effort is still going strong, with Picard getting about $11 billion of the lost $17.3 billion returned. It is a little late in the game now, but who knows. Maybe all those rich people who trusted their money with a flimsy criminal will get their money back. Also, maybe pigs will fly. Here’s hoping!