Big Law Partner Bears the Brunt of Madoff Fraud During Divorce

10950859361151CDPIn 2011 I wrote a story about Steve Simkin, a prominent real estate lawyer at New York mega-firm Paul, Weiss. An unwitting victim of Bernie Madoff’s ponzi scheme, Mr. Simkin signed an agreement with his wife, lawyer Laura Blank in 2006, before Madoff’s massive fraud unravelled, dividing their family assets between the two of them. Part of the deal saw Ms. Blank receive compensation for her one-half interest in Mr. Simkin’s investment portfolio valued at $5.4 million dollars and held by Bernie Madoff.

In 2008 Mr. Simkin realized he was a victim of Madoff’s criminal scheme. The truth was there was no account with Madoff’s company and the monthly statements were forgeries. Simkin filed a lawsuit against his ex-wife seeking to recover the funds he paid her for her share of the portfolio. Simkin’s lawyer argued that Ms. Blank had received a “windfall” on the basis of a “mutual mistake”. He sought a variation of the agreement and reimbursement from his ex-wife.

A Manhattan trial judge didn’t see it that way and tossed out Simkin’s lawsuit. She ruled there had been no mistake, because at the date of the separation agreement the account held funds. The fact the account was later worth nothing was not a “mutual mistake”.

Mr. Simkin immediately appealed and in a 3-2 decision in his favour, the Appeal Court ruled that Simkin’s claim was legitimate and ought to proceed in the lower court.

In a stinging dissent Justice Karla Moskowitz held that the majority decision trampled on years of well-settled law that “a deal is a deal”. She opined that when the agreement was signed the account had value and to adjust the division of assets because one asset had declined in value was “divorced from reality”.

The legal concepts set out in the dissenting opinion, mirror the laws in British Columbia with respect to a Court’s hesitancy to overrule or set aside a separation agreement negotiated by the parties in good faith and with independent legal advice.

The reason why separation agreements should not be easily varied is exemplified by the Simkin case. Another example? If a couple divorced, with the wife retaining the family home and the husband retaining other assets of equal value, it would be ridiculous for the wife to come back two years later and say, “The real estate market has dropped and my home is now only worth half the value it was at the date of the separation agreement, please pay me more money to account for this change in value.”

Of course, Ms. Blank appealed the Court of Appeal decision and in 2011 I made the following prediction:

“I believe at the end of the day, which could be years away, the pain caused by Madoff’s swindle will be suffered only by Mr. Simkin. Do I believe that is fair? Not really, but the law set out in the fourteen page dissent is compelling.”

Sure enough, with all appeals now completed, Mr. Simkin alone bears the burden of Madoff’s fraud, while Ms. Blank is permitted to retain the “overpayment” of $2.7 million.

It is likely that Steve Simkin’s plight will attract little sympathy, given the enormous salaries earned by “biglaw” partners in New York City. Website abovethelaw.com suggests a salary range of $600,000 to $900,000 per annum. Nice work if you can get it!

Divorce Drama a Shakespearean Tragedy

DSC00280I first wrote about the mega-divorce of British couple Scot and Michelle Young in August 2013 after Mr. Young was sentenced to six months in jail for failing to pay $1 million in support. I predicted that by the time the matter went to trial he would “lawyer-up” with the best attorney money could buy! But I was wrong… Scot Young acted for himself in his divorce trial in October 2013, a move that fit his litigation strategy of “I’m broke”.

The outcome? Here’s the Young divorce, “By the numbers”:

$6.5 million Legal costs expended by Michelle Young

$5 million Legal costs ordered to by paid by Scot Young to his wife

65 Total number of court hearings

20 Days of trial

13 Sets of lawyers hired/fired/discharged by Michelle Young

6.5 Years it took to resolve the case

4 Sets of accountants hired by Michelle Young

$300 million Amount of money sought by Michelle Young

$32 million What Michelle got from the judge

10,000 Pages of court documents

6 months in jail for Mr. Young for failing to produce financial documents, but he only served three months

British newspapers reported that Michelle Young was angry that the court refused to find that her husband was hiding a billion dollar in assets and called the decision a “disgrace”. She also said her next herculean task was to collect the money she is owed.

As for the trial judge, Mr. Justice Moor remarked that the Young case was a prime example of how not to conduct divorce litigation.

While Young plead poverty throughout the divorce proceedings it was reported he purchased a six-carat diamond engagement ring for his girlfriend, British reality star, Noelle Reno.

But no one could have guessed the last chapter of this British drama. In 2014 Scot Young tragically flung himself out of a window of his $4.5 million dollar London apartment and impaled himself on the railing below. Rumours abound that his apparent suicide was in fact retaliation from the Russian mafia who he allegedly owed millions of dollars.

Mr. Young left two beautiful daughters. Even Shakespeare couldn’t have penned this modern tragedy.

Lawdiva aka Georgialee Lang

Meddling Friends No Help in Divorce

If you are going through a divorce you need all the support you can muster, particularly if you find yourself in the midst of the “affidavit” wars, a stage of divorce litigation where nasty allegations fly fast and furious, and usually turn out to be highly exaggerated and embellished.

It is not unusual for clients, particularly female clients, to visit their lawyer’s office with a sympathetic friend in tow, a practice that I do not discourage subscribing to the theory that friends make the burden lighter.

However, with the recent explosion of “grey” divorce, family law lawyers have noticed that the adult children of their clients are “interfering” in the process, making their jobs more difficult.

Sometimes the interference is the intentional undermining of the legal advice provided by the lawyer to their elderly parent, other times it is directed at the adult offspring’s concern about the loss of their future inheritance, or their desire to force the reconciliation of their parents, a goal that while laudable, may not be in their parent’s best interests, particularly where the marriage is marked by chronic family violence.

Whether the adult child is cajoling their parent to rewrite their will, or sending abusive missives to the parent they deem to be the “guilty” party, most of these tactics only serve to escalate the conflict between their parents.

Well-known British divorce lawyer and media commentator, Marilyn Stowe, remarks:

“A client should be able to rely upon their legal team 100 per cent. Friends (and family) play a completely different role, which is socially centred. It is free of the professional ethics, scruples, obligations, privilege and confidentiality that are the lawyer’s domain.”

Certainly, if you are paying a lawyer hundreds of dollars an hour, it is most unwise to discard their professional expertise in favour of a friend or family member, who “only wants to help”, but may have little real insight or knowledge of the process or the law.

Frankly, if you have so little confidence in your lawyer’s advice that you defer to your girlfriend, who has been through two divorces, or your son, who sees his “meal ticket” slipping away, you need to seriously consider hiring a lawyer that commands your respect.

Lawdiva aka Georgialee Lang

Hidden John Lennon Divorce Document Hits Auction Block

IMG_0277Almost fifty years after Cynthia Lennon divorced John Lennon, family nanny and housekeeper, Dorothy Jarlett’s estate reveals a draft affidavit that sheds light on the troubled Lennon household.

John Lennon settled his divorce action with Cynthia out-of-court, paying her $100,000 and giving her custody of their son Julian, but common to many divorce cases, documents were prepared by Cynthia Lennon’s lawyer ostensibly to “encourage” a settlement, rather than drawn-out, public proceedings.

Dorothy Jarlett wrote that she was employed by the Lennon’s at their 22-bedroom Weybridge, Surrey mansion for four years as housekeeper and nanny to Julian, although she did not live with them. While initially she only observed minor differences of opinion, with John’s frequent absences to tour, record, and make films, tension in the household grew. She said:

“I do not think that Mr Lennon showed the usual interest the father showed in the household. He was certainly not bad with Julian, but he appeared to be preoccupied with other matters.”

Later she noticed that Mrs. Lennon’s expressed wishes to accompany her husband to functions and studio recordings were rebuffed by John, usually based on flimsy excuses.

Many of the Lennon’s arguments centred on how to raise Julian, but John’s admission to various affairs during the marriage sounded the death knell for their union.

Mrs. Jarlett describes Yoko Ono’s entry into the Lennon household as a friend of John’s, a status that changes when she finds John and Yoko in bed together.

The final straw for Mrs. Lennon was Yoko Ono’s pregnancy.

The Lennons met at the Liverpool College of Art and married upon learning she was pregnant with Julian. Their five-year marriage came to an end at the time the Beatles exploded on the international music scene in 1967.

The divorce document contains passages that have been stricken by Mrs. Jarlett, including references to pot smoking and physical discipline of Julian.

The document is expected to fetch $5,000 or perhaps more if members of John’s family seek to obtain the document to ensure it remains buried.

Lawdiva aka Georgialee Lang

Family Law Firm Tells It Like It Is

DSC00258_1I don’t know about you, but I like people, companies, organizations etc. that tell you what they are really all about and where they are at.

For most of the public, law firms are not particularly transparent entities. They deal in complicated subject matters and use complex language to describe what they do, if they ever explain it at all.

Not so, however, with respect to the Columbia, South Carolina law firm of Pincus Family Law. Their firm website tells you exactly what they will do and what they won’t. Their critics say their to-the-point abruptness can’t be good for business. Consider the following excerpts from their website.

Under the heading “Client Expectations” the following paraphrased rules are set out:

1. They do not work weekends and they will not provide clients with a weekend emergency number;

2. They will not routinely respond to email from clients on a weekend, however, if they do on occasion respond, this is the exception and not the rule;

3. They are good at what they do but they are not perfect. They are human beings with the same frailties as their clients. If a mistake is made, they will fix it quickly, but they do not expect to be harangued or insulted by their clients for human error;

4. They will return client phone calls in the order they are received by the firm, subject to their assessment as to client priority. Calling their office three or four times a day will not change the priority assigned to a call;

5. Legal Assistants and Paralegals are available to answer clients’ questions and provide status updates and their hourly billing rates are substantially less than the firm’s lawyers;

6. Being “nice” to your spouse during the divorce process is a laudable goal, but do not expect to get any concessions or consideration from your spouse as a result of your civility;

7. In the litigation process, your spouse’s lawyer will file documents called “pleadings”. These pleadings will contain allegations that may be upsetting to you. Don’t waste your emotional energy fretting over these documents. The allegations are “standard-operating procedure” and may or may not be true;

8. Courtrooms are overbooked and often there are an insufficient number of judges to handle all the scheduled cases. Don’t blame us if we cannot obtain hearing dates as early as you or we would wish. We have no control over court scheduling;

9. Your spouse may retain counsel who are “nasty” or who procrastinate. Once again, that is not our fault. We will work within the rules to keep your case moving forward but we cannot be held responsible for your spouse’s lawyers’ personality disorder or their delay tactics;

10. In divorce and family law, nothing happens quickly. That’s just the way the system is, so be prepared.

My impression? I love it! I have never seen a family law firm that has more succinctly identified some of the major client issues that cause friction between attorney and client. Certainly, many divorce lawyers operate on the same terms, they just don’t do their clients the favour of telling them.

As award-winning journalist Roberta Baskin has noted, there is a public feeding frenzy for transparency, and Pincus Law delivers all of that. Kudos to them!

Lawdiva aka Georgialee Lang

Guest Post: The Most Expensive Divorces Ever

Everyone knows that divorce can be an expensive process, but some of the sums involved in the world’s most expensive divorces are truly eye-watering.

Expensive divorces have been in the news recently with the Russian oligarch Dmitry Rybolovlev being forced to pay his former wife $4.5 billion in what has been called the “most expensive divorce in history”.

The order came from a Swiss court, with Elena Rybolovlev’s divorce solicitors branding it a “complete victory”. Her former husband is now set to lose half of his wealth.

Dmitry Rybolovlev’s spokesperson Serget Chernitsyn argued that the divorce was a “win” for him, although his lawyers are said to be launching an appeal. Query why Mr. Rybolovlev would appeal if he won his case? Pure bafflegab!

The couple was married for 23 years and it took six years for the case to be completed. Rybovelev made his money from the potassium fertilizer industry and is the owner of the Monaco Football Club. He is also famous for buying the Palm Beach Maison de L’Amitie from Donald Trump for chump change, around $95 billion!

THE DIVORCE OF MURDOCH AND DENG

Controversial media tycoon Rupert Murdoch’s 2013 divorce from Wendi Deng cost him a reported $1.8 billion even though he had a pre-nuptial agreement. This gives you an idea that prenps may not be everything they are cracked up to be, particularly if a couple’s circumstances change and children enter the picture.

They were married for 14 years and it is likely the payout to Ms. Deng was so high due to the needs of their daughters’, among other reasons. Deng, who is almost 40 years his junior, hit the headlines when she slapped a protestor who threw a pie at her husband during the phone-hacking enquiry in 2011.

Murdoch married Deng just two-and-a-half weeks after his previous marriage was finalised in 1999 with the help of divorce lawyers. He also paid a bundle to his first wife!

THE WILDENSTEIN’S DIVORCE

The 1997 divorce of Alec and Jocelyn Wildenstein cost an estimated $2.5 billion. Alec was from a family of famous art dealers and their divorce was seen as a huge scandal. Things turned sour when Ms. Wildenstein caught her husband in bed with a young Russian model.

Alec then, wielding a gun, threatened his wife and for his trouble spent a sleepless night in the local jail. Judge Marilyn Diamond, who presided over the divorce proceedings received a number of death threats.

Judge Diamond told Jocelyn that she could not use the alimony payments for cosmetic surgery, as by this time Ms. Wildenstein’s multiple surgeries led to her nickname “The Cat Woman”.

The Court gave her $2.5 billion and $100 million every year for 13 years after. Alec Wildenstein died in 2008 leaving his young Russian widow.

ECCLESTONE PAID BY FORMER WIFE

Formula One tycoon Bernie Ecclestone raised eyebrows when it was made public that he was being paid by his ex-wife following his 2009 divorce.

Documents recently released showed that Ecclestone was receiving $100 million dollars each year from his former wife Slavica’s trust fund. Information about how long the payments would continue have not been made public.

It’s said that this divorce was worth $1.2 billion, placing it high in the top ten divorces in history. Ecclestone is one of the sporting world’s most controversial figures and famously paid a significant sum to escape bribery charges in spring 2014.

It seems the richer you are, the harder you will fight to retain your wealth. Quite amazing to realize that these couples could not in a lifetime spend all the money they have.

“Money often costs too much.” –Ralph Waldo Emerson

This post was GUEST AUTHORED by RIX AND KAY, Family law solicitors from Sussex, Brighton, East Sussex and Kent in the UNITED KINGDOM, an experienced team of barristers and solicitors.

Rampant Sex Discrimination in Saudi Arabia

_DSC4179 - Version 2To be born female in Saudi Arabia is to endure a life of discrimination…on many fronts. First of all, it is legal for men in Saudi to have up to four wives who may be as young as 10-years old, as long as they can afford to support them all. It is reported that polygamy is increasingly popular with younger generations, bolstered by their oil wealth.

Saudi women cannot leave their home unless they are escorted by a male guardian, usually their father, brother or husband. They cannot marry, divorce, travel, open a bank account, or consent to elective surgery, without the approval of their guardian. They also are not permitted to drive a vehicle and women who disregard this law have been subject to punishments like flogging.

Photos of Saudi women show them covered up with only their hands and eyes showing, a custom/law that is enforced by the “religious police”.

It was not until 2005 that women were entitled to vote or run for political office, and in 2008 they were finally allowed to initiate and engage in educational studies on their own.

Family law in Saudi Arabia is equally demeaning and restrictive. A woman who socializes with a man who is not a relative can be accused of adultery, fornication, or prostitution. Sex segregation is the norm, with special female entrances and sections in banks and other public institutions. Women must sit with other women when they dine in a restaurant. It is reported that men’s sections in restaurants are usually well-furnished and welcoming, while the women’s sections are sparse and uninviting.

Divorce laws are cruel and unjust. Men may divorce their spouses anytime they want for any reason or no reason at all, while women can only divorce if their husband consents, or they obtain a judicial divorce, but only if they can prove harm or injury during their marriage. Fathers obtain custody of all children over seven-years-old.

The only obligation a man has to his ex-wife is to provide financial support for a period of four months and ten days.

Two recent divorces in Saudi have gone viral in the west, because of their unusual capriciousness. In one case an arranged marriage, which is the norm, came to a sudden end, just after the couple were declared man and wife. The couple had not met prior to the wedding and the first time the groom saw his bride was when she lifted her veil at the conclusion of the ceremony.

Her groom was taken aback when he saw his new wife’s face and according to media reports said: ““You are not the girl I want to marry. You are not the one I had imagined. I am sorry, but I divorce you.” She immediately collapsed with tears and the marriage was over.

In the second case, a Saudi man text messaged his wife to inform her that he wanted a divorce, because she ignored his previous text messages.

According to a story from Gulf News, this couple were having marriage difficulties because the husband believed his wife spent too much time on her cell phone talking to her girlfriends and ignoring him. The last straw for him was his unanswered phone messages and text messages to his wife. He knew from the app on his phone that she had received and read the text message but had not bothered to reply.

It’s no wonder the divorce rate in Saudi is 50%, but with multiple wives I guess the loss of one is not a real hardship.

Lawdiva aka Georgialee Lang