Steven Simkin is a partner at Paul, Weiss, Rifkind, Wharton and Garrison, a tony New York City law firm where partners made around $3 million each last year. He owns a $4.1 million home in leafy Westchester County. When he and his wife divorced in 2006 after 33 years of marriage, they had total assets worth $13.2 million.
So Simkin (pictured) is doing OK for himself. But perhaps not OK enough: He now wants a do-over on that divorce settlement, after being taken in by Bernie Madoff's massive fraud. Claiming "extreme hardship" and that he has been "gravely damaged" by the Madoff scam, Simkin is suing his ex-wife.
Before the divorce, he and his then-wife, Laura Blank, had $5.4 million in a Madoff account, under his name. In the settlement, Simkin withdrew some of the Madoff money and put it toward a $6.6 million cash payment--half the value of the couple's total assets--to Blank. He continued to invest with Madoff after the divorce; his ex did not. When Madoff's operation was revealed to be a Ponzi scheme in December 2008, Simkin's investments went up in smoke.
So Simkin is suing Blank, claiming that both of them were mistaken about the value of their assets at the time of the divorce, because the Madoff investments were part of a Ponzi scheme, and therefore didn't in fact exist. As a result, Simkin's lawyers argue, Blank should be forced to turn over millions to her ex to make up for his losses in the fraud.
Blank's lawyers contend that the Madoff account did exist--it's just that the couple was wrong about its future value.
As far-fetched as it sounds, Simkin's lawsuit could have legs. It was dismissed by a trial court judge last year, but in January an appeals court reversed that decision, citing the legal precedent of "mutual mistake." The doctrine allows for the cancellation of contracts, including divorce settlements, when both sides are innocently mistaken about a key issue.
One dissenting judge blasted that verdict, finding that Blank shouldn't be responsible for Simkin's decision to continue investing with Madoff. "Steven received exactly what he bargained for," Judge Karla Moscowitz wrote. "He alone took on the risk that he might not be able to recoup his investment."
And for Simkin, the chair of his firm's real estate department, there's little downside to launching the effort. He isn't paying a dime in legal fees: his colleagues at the firm are representing him free of charge.
It's clear Simkin is a heavy hitter. According to his bio on Paul, Weiss' website, he's included in The International Who's Who in Real Estate Lawyers, and in Euromoney's Guide to the World's Leading Real Estate Lawyers. He's been named by the Real Estate Board of New York as one of the most influential persons in New York City, and he was recently honored by Lincoln Center.
But whether the effort to re-do his divorce paints Simkin in the best light is perhaps more open to question. Some of Madoff's less fortunate victims might not think so. For instance, 65-year-old Miriam Siegman, who was left living on food stamps and rummaging through trash cans to eat. Or Norma Hill, a 68-year-old widowed grandmother, who was penniless after losing her entire life savings in the scam.
If Simkin's suit succeeds, it could be open season not just on other divorce agreements, but on contracts of all kinds. "Deals are done every single day based on assumptions about what things are worth," Peter Bienstock, a divorce lawyer, told the New York Times. "If the court allows this lawsuit to go forward, how can we be certain that deals will hold up?"
Simkin didn't respond to The Lookout's request for comment. Paul, Weiss declined to comment on the record.
(Photo: Paul, Weiss, Rifkind, Wharton & Garrison, LLP)
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