**Madoff investor Steven Simkin wins on appeal: wife Laura must share her divorce settlement with him due to mutual mistake and unjust enrichment
The New York Court of Appeals Appellate Division has made a big mistake in the Steven Simkin case, IMHO. They have overturned a lower court ruling that says that attorney Steven Simkin is NOT entitled to a portion of his ex-wife’s divorce settlement – to wit:$2.7 million that he paid her based on what he perceived the value of his account with Bernie Madoff was at the time. The court basically found that because Bernie was running a ponzi scheme, that Steven Simkin and his wife made a mutual mistake in reaching that divorce agreement and thus, she must pay back him, I presume, half of what he paid her. The First Department basically used unjust enrichment and mutual mistake as the reason to overturn the lower court.
I disagree with the court’s ruling. Vehemently. I’ve been following the case for a couple of years and I’ve always thought Steven’s case was a throw out, and I said it here:http://www.divorcesaloon.com/2009/02/05/madoff-investor-steven-simkin-sues-ex-wife-for-post-judgment-equitable-distribution/ I mean, come on, these two sophisticated people entered into an agreement whereby both of them had the option to take their money out of Madoff’s securities if they wished and do whatever they wanted to with it. Laura Blank, the wife, took her money and ran. Her husband, Steven Simkin chose to leave his money in the fund. Prior to the revelation that Bernie Madoff was running a fraudulent ponzi scheme, Simkin could have earned interest on this money, he could have withdrawn it in whole or in part. He had free will and free reign to do with that money as he wished. And Laura Blank could not have done a damn thing about it.
But then, fast forward to December 2008. Turns out, the killer investment that Steven thought he had with Bernie, was a scam. He lost his entire investment. Had he redeemed his investment just a month earlier, there is no telling how much he would have netted (and none of that would have gone to Laura Blank) but he left it with Bernie and at the end of the day, he lost it all. That is not Laura Blank’s problem. That is not a mutual mistake of Laura’s and Steven’s to leave that money in Bernie Madoff’s account. That was a unilateral mistake, probably predicated on greed, of Steven Simkins. http://www.divorcesaloon.com/2009/03/18/renegotiating-your-divorce-settlement-what-uks-brian-myerson-and-madoffs-steven-simkin-teaches-us/
Laura was not “unjustly enriched.” She was just smart to have taken her money out when she did. That is what it means to be an investor. It’s about the timing of the buy and the sell. You assume the risk. Admittedly, had the discovery of Madoff’s scam been made at or around the same time as the divorce agreement was executed, it may have changed my analysis some. But years had passed between these two events.
I am appalled by this ruling by the First Department in New York. I see the Court of Appeals overturning this. At least, they should. Steven Simkin and Laura Blank’s divorce agreement is, was and should be, res judicata. And the fact that he placed, or left, his portion of the settlement in fraudulent investments is his problem, not his ex wife’s. The Court in New York has set a very troubling precedent with this decision.
**oh, wait. He simply won the right to sue her. The court merely re-instated the lawsuit and I guess the lower court will have to now hear the case and decide if in fact he gets a portion. I hope the lower court sends him packing as I said. He is not entitled to diddly squat.