Madoff case seeps into family court

NEW YORK, May 31 (UPI) -- A New York lawyer is attempting to use the Bernard Madoff fraud case to renegotiate his divorce contract, which was signed in 2006, court records show.

It is an unusual case in that divorce papers approved by the courts are almost always considered final, as a way, in part, to allow both parties closure and allow them to move on with their lives, The New York Times reported Tuesday.

But Steve Simkin, an attorney at Paul, Weiss, Rifkind, Wharton & Garrison, wants the courts to allow him to negotiate a new divorce agreement, not just because he lost a small fortune in the Madoff Ponzi scheme, but he and his wife both invested in Madoff when they were married and there is a long legal precedent for nullifying a contract if both parties made what the courts call a "mutual mistake."

Simkin's ex-wife, Laura Blank, and her legal team argue Simkin chose to invest in Madoff and, as fate would have it, lost money that has nothing to do with her.

Simkin argues both parties made the mistake of assuming there was an account in their names at Madoff's firm. Instead, uncovering Madoff's enormous fraud revealed there were no actual accounts at the firm at all -- it was all smoke and mirrors.

Some fear allowing the divorce contract to be re-opened "could open the floodgate for people who want to challenge agreements after they go sour," said Peter Bienstock, a divorce lawyer with no ties to the case.

The case has had mixed success in the courts. A trial judge dismissed the case in 2010, but an appellate court reversed that decision with a 3-2 vote, sending it back to the lower court.

Richard Emery, an attorney for Blank, said she would fight the decision that involves millions of dollars.

In the original settlement, Blank received the former couple's New York apartment and $6.6 million as a cash settlement.