MAMARONECK — The state’s highest court will hear the case of a Mamaroneck man who claims his ex-wife should have to share the pain of millions of dollars in losses stemming from the Bernard Madoff Ponzi scheme.
Shortly after Madoff was arrested in December 2008, Steven Simkin, a Manhattan attorney who owns a home on tony Constable Drive, sued to rewrite his divorce settlement with Laura Blank, citing his lost investment.
Lawyers for Blank face a July 18 deadline to file a brief challenging his claims before the New York State Court of Appeals.
When the couple divorced back in 2006, they agreed to split their assets equally: Simkin, a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP, kept their former Scarsdale home and three automobiles; Blank, a labor lawyer at the City University of New York, kept their Manhattan apartment and an Audi, according to court filings.
Under that agreement, Blank also received payments totaling more than $6.6 million from Simkin — including her purported $2.7 million share of the couple’s biggest asset: a $5.4 million Madoff account.
Blank cashed out on her share, but Simkin kept much of his money in the account following their divorce.
After the Ponzi scheme unraveled, he argued that the divorce settlement should be revised on grounds that he and his ex-wife had made a “mutual mistake” in assuming the account existed when, in reality, it did not.
Blank’s lawyers contend that the account did exist, arguing that Simkin would have been able to redeem his money until the scheme unraveled; in keeping his money invested, he assumed the risk of losing it.
“It’s Monday-morning quarterbacking,” said Richard Emery, a lawyer representing Blank.
Emery said his client’s case got a huge boost from the court’s ruling in a separate appeal last Thursday. In that case, Janet Schaberg was allowed to keep the proceeds of a divorce settlement, even though that money was allegedly tainted in fraudulent business transactions that, prosecutors say, involved her ex-husband, former Greenwich, Conn., executive Stephen Walsh.
In light of that decision, “I don’t see how (Simkin’s) case exists at this point,” Emery said.
Simkin declined to comment Tuesday.
Even if he had cashed out before the Ponzi scheme unraveled, it’s possible that the funds could have been subject to a clawback by the court-appointed trustee, Irving H. Picard, on behalf of other victims.
Simkin’s case made its way to the Court of Appeals after a lower state appellate court in January ruled 3-2 that Simkin could sue to revise the original contract.