February 5, 2009 / 5:01 AM / 10 years ago

Blaming Madoff, man sues over divorce settlement

Bernard Madoff walks back to his apartment in New York in this December 17, 2008 file photo. REUTERS/Shannon Stapleton/Files

NEW YORK (Reuters) - A New York lawyer who invested millions of dollars with accused swindler Bernard Madoff sued his ex-wife on Tuesday for the return of part of their divorce settlement, saying he was misled about his actual worth.

Steven Simkin and Laura Blank held $5.4 million in a Madoff account, according to a statement provided by Bernard L. Madoff Investment Securities at the time of the couple’s separation in 2004, the lawsuit filed in New York State Supreme Court said.

Simkin paid Blank, his wife of 30 years, half as part of their uncontested divorce settlement, the lawsuit said. That meant she avoided losses caused by Madoff’s alleged fraud.

“Unknown to Steven and Laura, the ‘account,’ whose valuation was critical to the parties’ agreement, was a sham and fiction,” the lawsuit said.

“Laura obtained a windfall and Steven did not receive an equitable share of the couple’s joint assets ... It is only fair and equitable for Laura to shoulder some of that harm.”

Blank could not be reached for comment.

Investment manager Madoff, 70, was arrested on December 11 for what authorities have described as the biggest Ponzi scheme in history. In a Ponzi scheme, early investors are paid with money from new investors.

According to prosecutors, Madoff has confessed that his money management business was “one big lie” and had racked up losses of as much as $50 billion.

Madoff is under house arrest and 24-hour surveillance in his penthouse apartment on Manhattan’s Upper East Side as a condition of his $10 million bail agreement.

Reporting by Edith Honan; Editing by Christine Kearney and Alan Elsner

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