Update, March 24, 2009: Michelle Schrenker and Marcus Schrenker million dollar indianapolis mansion in receivership.
Well, to begin with, Marcus Schrenker is adamant that his pretty wife Michelle Schrenker had nothing to do with his ponzi scheme. He has asked the court to unfreeze her assets, including the home on Geist Resevoir in Indianapolis where the couple lived with their young kids before Marcus purported to fling himself out of a fast moving airplane and “fake his death” to avoid creditors and court judgements.
In response, the court has pretty much said, “yea right” and have kept the home in receivership. Marcus has been ordered to make restitution to his clients and investors which he has promised to do. But he is still locked up in federal prison in Florida for calling in a fake distress signal and will likely face some jail time even though he is not denying “faking his death.”
Okay. Whatever. But what about this receivership business? What does it mean that the court has place the Schrenkers’ marital residence in “receivership”? I consulted Blacks Law Dictionary on this one so that I can give you a proper definition. Here is the formal definition of “receivership”:
Legal or equitable proceeding in which a receiver is appointed for an insolvent corporation, partnership, or individual to preserve its assets for benefit of affected parties. The State or condition of a corporation, partnership, financial institution, or individual over whom a receiver has been appointed for protection of its assets and for ultimate sale and distribution to creditors.
So what does that mean in English and in the context of Marcus and Michelle Schrenker? Well, let me see if I can conjugate it. As I said before, the court has frozen all their assets and will likely order the assets liquidated for the benefit of creditors who were defrauded by Mr. Schrenker. With respect to the marital residence which purportedly is valued at about $1.5 million dollars, it means that a third party is court ordered to take charge of this asset and to do with it what the court directs. Thus, neither Schrenker can sell or encumber the house by taking out mortgages, for example, or even market it for sale. To my way of thinking, a receivership in the context of a divorce action is a form of “guardianship” over property. Remember that post I did about guardianship? http://www.divorcesaloon.com/index.php?s=guardianship Well, it’s sort of similar except this time the reason the court appoints a receiver is usually because there has been some “bad acts” as opposed to a guardianship situation where there are no “bad acts” but somebody is unable to handle their personal and property interests for themselves.
The Schrenkers are perfectly capable of handling their property interests for themselves–and they want to handle it themselves (Michelle asked for the house in the divorce petition, I believe–but because of their alleged “bad acts” the court does not trust them, and the court wants to protect the interest of third parties.
That is what it means when a marital residence is in receivership. Sometimes, the receivership is for the benefit of the non-titled spouse, btw. One spouse can get a receivership over marital property, for example, see the caseYoung Choi v. Young Choi 167 AD 2d 217 where the wife was appointed receiver and ordered to sell the property and distribute the proceeds in accordance with the settlement agreement because the husband had a drinking problem and could not be trusted to do the right thing.
But in the Schrenker’s case, Michelle is just as suspect as Marcus. Their house will likely be liquidated for the benefit of their creditors after the judgment of divorce is signed, not before. So even though it is in receivership, Michelle still resides in the marital home and will likely do so till the actual divorce is finalized. At that point, if the court orders the house sold, Michelle will have to move out and find another place to live with the kids and the proceeds will go to creditors.