A New York real estate lawyer who paid his ex-wife $2.7 million of the supposed value of his account with Bernard Madoff can’t revise the agreement because he lost money in the Ponzi scheme, a state appeals court ruled.
The New York Court of Appeals, the state’s highest court, today dismissed a suit brought by Steven Simkin against his former wife, Laura Blank, reversing the decision of a Manhattan appellate court, which had said the case could proceed.
Simkin, chairman of Paul, Weiss, Rifkind, Wharton & Garrison LLP’s real estate department, sued Blank in February 2009, saying she was unjustly enriched by their 2006 divorce settlement. A trial-level judge in Manhattan dismissed the complaint in December 2009, and the intermediate appellate court later reinstated the suit.
Judge Victoria A. Graffeo of the Albany-based Court of Appeals wrote in today’s ruling that Simkin could have redeemed all or part of the investment until Madoff’s Ponzi scheme began to unravel in late 2008, more than two years after the division of property was completed.
“This situation, however sympathetic, is more akin to a martial asset that unexpectedly loses value after dissolution of a marriage,” Graffeo wrote. “The asset had value at the time of the settlement but the purported value did not remain consistent.”
Simkin and Blank separated in 2002 after almost 30 years of marriage and divorced in August 2006. Simkin agreed to pay Blank $6.25 million in the settlement, including $2.7 million from an account with Madoff that was valued at $5.4 million as of September 2004, according to the ruling.
Madoff pleaded guilty in 2009 to running what prosecutors say is the biggest Ponzi scheme in history. He is serving a 150- year sentence in federal prison in North Carolina. A trustee is liquidating Madoff’s firm in federal court in New York.
The case is Simkin v. Blank, 101501/2009, New York State Supreme Court, New York County (Manhattan).
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