Home DIVORCE NEWSPAPER US Divorce Headlines Why the Janet Walsh case is a cautionary tale for Deborah Madoff...

Why the Janet Walsh case is a cautionary tale for Deborah Madoff and other trophy wives

Trophy wives are under siege! And all their earthly possessions could be confiscated when their Wall Street tycoon husbands get busted for fraud. The same is true for ordinary folks who make considerably less than these Wall Street honchos make, btw, but it definitely seems like it is open season on trophy wives.

Janet Walsh married a tycoon and when they divorced, he gave her a $3 million dollar apartment. Years after the divorce settlement the poor woman finds herself being sued to return the apartment since the money used to purchase it was allegedly investor’s money and wasn’t her husband’s to give to her. In other words, he is being accused of fraud.

It made me think of Debbie Madoff who is also divorcing (allegedly!) her husband Andrew – son of Bernie Madoff (the alleged ponzi schemer). Even if Deborah negotiates a good settlement, and even though Andrew is not now charged, she needs to be mindful. Because, it is conceivable that at some point, zealous lawyers will find something to charge Andrew with, and to pin the fraud on the whole Madoff clan, including Ruth Madoff (the wife), Peter Madoff (the brother), Shana Madoff (the niece) and Andrew and Mark Madoff (the sons). If that happens, even assuming that Deborah already got her equitable share of the marital estate, they could come back and divest her of it on the basis that it was obtained with money which her husband obtained by fraud.

At this point, I would be slightly surprised if they are able to pin anything on the rest of the family. Incredible as it seemed to me at first blush, it seems that Mr. Bernard Madoff orchestrated and pulled off this massive fraud totally alone. Because if that were not so, by now, the Feds and SEC have enough man power that they should have discovered the other players by now. The fact that nobody else has been indicted means that everybody else is probably innocent –including Andrew, who is married to Debbie Madoff.

So maybe Debbie will be fine. I am just saying she needs to be mindful, and to keep it in the back of her mind, and to look at Janet Walsh as a cautionary tale that even years later, they could come back to get whatever she got as  a  divorce settlement.

The way to handle that might be to change the form of the property settlement ASAP. But I don’t think that is going to matter. For example, even if, say, she received real property as a settlement, and she liquidated it by selling and then invested in a whole different way or several different ways, I think they would be able to trace every dime. If she put it in trust? They could probably liquidate the trust. How about liquidate and spend all the money? That would be stupid because what would be the point of spending all the money at once? Where would that leave her?

What about if she liquidated, and moved to another country? Gosh, I don’t know how or if that would work. If she sold real estate to an innocent third party that person becomes a holder in due course and may be able to keep their property but where is Debbie in all this….

Where am I going with this? I don’t have a clue. I’m just trying to say that trophy wives won’t have anywhere to run and hide once they are divorced and have received a property settlement, and the Feds decide to come after them for their husband’s fraud. That is the takeaway I get from the Walsh case.  Trophy wives need to be concerned.

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