ALBANY, N.Y. (Legal Newsline) - A New York attorney won't have part of his multimillion-dollar divorce settlement set aside because he lost millions in Bernie Madoff's Ponzi scheme.
New York's highest court ruled Tuesday that Steven Simkin -- the chair of the Real Estate Department at Paul, Weiss, Rifkind, Wharton & Garrison -- will not recover half of what he lost in his Madoff investment from the $6.2 million divorce settlement reached in 2006 with ex-wife Laura Blank.
Simkin said he had $5.4 million tied up in Madoff's scheme, which culminated in Madoff's 2008 arrest and 2009 guilty plea. He was sentenced to 150 years in prison, and estimates say he defrauded investors out of $64.8 billion.
Simkin claimed that by considering the Madoff investment in the divorce settlement, the two made a "mutual mistake."
"As an initial matter, husband's claim that the alleged mutual mistake undermined the foundation of the settlement agreement, a precondition to relief under our precedents, is belied by the terms of the agreement itself," Judge Victoria Graffeo of the state Court of Appeals wrote.
"(T)he settlement agreement here, on its face, does not mention the Madoff account, much less evince an intent to divide the account in equal or other proportionate shares."
An appeals court had reinstated Simkin's lawsuit last year after a trial court ruled against him.
Simkin argued that the Madoff account was "nonexistent" when the settlement was reached, amounting to a "material" mistake of fact. Simkin said the parties believed they had a Madoff account even though none existed, due to Madoff's fraud.
"This situation, however sympathetic, is more akin to a marital asset that unexpectedly loses value after dissolution of a marriage; the asset had value at the time of the settlement but the purported value did not remain consistent," Graffeo said.
"Viewed from a different perspective, had the Madoff account or other asset retained by husband substantially increased in worth after the divorce, should wife be able to claim entitlement to a portion of the enhanced value? The answer is obviously no."
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.