Divorced man stuck with Madoff-scheme losses

Divorced couples in Massachusetts may believe their final court order settles everything. At the end of the dissolution process the court attempts to ensure that there has been an equitable distribution of assets. However, the court order is not always the end of the line for divorced spouses.

A divorced spouse may hire an attorney and bring a matter before an appeals court when something changes in the case. An ex-spouse might believe there is a substantial change in information about assets that were divided and hire a lawyer to take a new action, such as seeking relief from an appeals court. Such was the case in a New York appeals court.

A recent media report summarized how a panel of six judges for the New York Court of Appeals ruled in a divorced man’s high asset divorce case. He argued that he and his wife both made a mistake in believing their $5.4 million investment in a Bernard Madoff fund was valid.

A panel of six judges discarded the man’s claim that his ex-wife should return $2.7 million she had gotten in “an equitable distribution of property” in their divorce.

The man, an attorney, must now live with the financial losses that his Madoff investment incurred. The fund went bankrupt only two years after the couple’s divorce was finalized.

The judges decided that the divorced man could have made the decision to cash in his investment in the Ponzi scheme before the financial troubles in 2008. Also, his ex-wife would not have been able to reopen the settlement herself if that fund had increased significantly in value.

Source: Boston.com, “NY Court: Man stuck with Madoff loss in divorce,” April 3, 2012

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