A multi-millionaire millionaire lawyer is getting a chance to make his ex-wife taste his Bernie Madoff pain.
In a 3-2 decision, a state appeals court today reinstated attorney Steven Simkin’s lawsuit against Laura Blank, which seeks to recoup some of the $2.7 million in Madoff money he paid her as part of their $6.2 million 2006 divorce settlement.
Simkin had thought the “account” had $5.4 million in it, and since he and his wife had therefore made a “mutual mistake” when they were divvying up their assets, his lawsuit against her should be given the green light, the three judges said.
“Steven never had an account in his name Madoff; on Madoff’s own admission, there were no accounts within which trades were made on behalf of investors,” the majority ruling says.
“In Madoff’s Ponzi scheme what appeared to Steven and Laura to be a partial liquidation of an account was simply a payment to Steven that came from funds deposited by a more recent ‘investor’ in that the ‘investor’ believed was his own account,” the ruling says.
“There was no account which could be liquidated, as became apparent when Madoff received $7 billion worth of ‘liquidation’ calls from investors in 2008,” and the $2.7 million paid to Laura was therefore based on the couple’s “mutual mistake.”
In a strongly worded dissent, Justice Karla Moskowitz said her colleagues’ ruling is “divorced from reality,” and that the previously dismissed lawsuit should have remained on the legal trash heap.
“Today the majority unravels a carefully negotiated divorce settlement in which the husband received the benefit of his bargain,” Moskowitz wrote.
Simkin, a highly successful real estate lawyer at Paul, Weiss, Rifkind, Wharton and Garrison, and CUNY staffer Blank separated in 2001 after 28 years of marriage. Their 2006 divorce divorce carefully divvied up their assets, with Blank getting $6.25 million, and giving up her share of their Scarsdale home, three of their four cars and her right to alimony in return.
“To require Laura to give back any of the $6.25 million would result in a serious windfall to Steven, who received valuable consideration in exchange for this payment and, notably, does not suggest that he give back half the house or commence spousal support payments,” Moskowitz wrote.
The judge also noted that “had the Madoff account substantially increased in value” after their divorce, “Laura would not be able to share those benefits.” Therefore, she wrote, “she should not have to bear the burden of its loss.”
“Laura cannot be held responsible for Steven’s independent decision to continue to hold his investment with Madoff” for over two years after their divorce, Moskowitz wrote.
Blank’s lawyer, Richard Emery, said he plans on taking her case to the state highest court, the Court of Appeals.
“It’s kind of a troubling decision. It leaves everyone in doubt as to whether a deal is a deal,” Emery said. “We are very confident this will be reversed.”
