After 33 years of marriage, Steven Simkin and Laura Blank divorced in 2006. They agreed to split their considerable wealth equally. She got the apartment on the Upper East Side; he got the house in Scarsdale, N.Y....
When the couple split their assets evenly, the largest chunk of money was invested with Mr. Madoff. Mr. Simkin kept much of his funds in the Madoff account, which was held in his name. Ms. Blank, who said she had no interest in investing with Mr. Madoff, received her settlement proceeds in cash.
Shortly after Mr. Madoff admitted wrongdoing in December 2008, Mr. Simkin, a lawyer at one of the country’s most powerful law firms, Paul, Weiss, Rifkind, Wharton & Garrison, filed court papers to drastically alter the terms of his divorce settlement. Ms. Blank, he argued in the lawsuit, should be required to turn over millions of dollars that she had received in their settlement to make up for the substantial losses he had sustained in the fraud....
Mr. Simkin’s suit rests on the doctrine of “mutual mistake,” a well-established principle that allows for the cancellation of contracts, including divorce agreements, when both parties are innocently mistaken about an essential term. In a famous example, if a violinist sells another violinist what they believe to be a Stradivarius, and it turns out to be a cheap knockoff, they can void the contract.
In this case, Mr. Simkin, chairman of the real estate department at Paul Weiss, and Ms. Blank, a labor lawyer for the City University of New York, believed at the time of their divorce that $5.4 million of their $13.2 million in assets was in a Madoff account. To divvy up things, Mr. Simkin withdrew some money from his Madoff account and put it toward a $6.6 million cash payment to Ms. Blank. He continued to invest with Mr. Madoff.
But once the Madoff empire collapsed, Mr. Simkin began arguing that he and Ms. Blank were mistaken about the existence of the account. “There was in fact no account and no securities or other assets,” wrote Mr. Simkin’s lawyers in a recent filing. “There was only a Ponzi scheme of unprecedented size and duration.”...
But here's a real interesting case that has percolated up to the New York Supremes.
. I'd like to see how this plays out.