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Madoff Ponzi scheme creates argument to revisit divorced couple's property division

When Steven Simkin and Laura Blank divorced in 2006, after 33 years of marriage, both individuals were ready to move on to the next part of their lives. The former couple rarely spoke to each other after their divorce except to handle issues or affairs related to their two adult sons. In 2008 when Bernie Madoff's immense Ponzi scheme was revealed, Blank received a voicemail from her ex-husband asking her to revise the former couple's property division.

Simkin and Blank are both attorneys who live in New York. Blank refused Simkin's request and Simkin filed a suit to challenge the finalized divorce settlement. The focus of the suit challenging the former couple's divorce settlement is based on an account the couple held with Bernie Madoff.

During their divorce, Simkin and Blank divided their assets evenly, but the former couple's largest asset was an account with Bernie Madoff. During the settlement, Blank no longer had an interest investing with Madoff and she cashed her share of the investment out. Simkin remained interested and kept his funds in the Madoff account. When news of the Madoff fraud broke, Simkin filed a lawsuit arguing that his former wife turn over part of the funds she received during the divorce settlement in order to be compensated for the losses suffered due to the fraud.

Generally, divorce settlements cannot be rescinded, but the reason why the case has made it all the way up to the highest court in New York is because of the infamous fraud case. Judges along the way have taken both sides and some legal experts worry that if the challenge is approved, all legal agreements that turned south for one party will be open to litigation.

Source: The New York Times, "Madoff victim seeks divorce do-over," Peter Lattman, 5/30/11

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