In 1997 Nancy and Luke Weinstein, a Connecticut couple with a young daughter, decided to go their separate ways. They weren’t rich, it seemed. Nancy was a stay-at-home mom; Luke’s base salary was $48,000 a year at Product Technologies, which developed software for smart cards. On his asset disclosure sheet he valued his 19.4% stake in the firm at $40,000. The judge ordered Luke to pay his wife $100,000 as a divorce settlement.
The Weinstein marriage was dissolved in 1998. Five months later Luke’s firm was sold for $6 million (with financing), and he ultimately pocketed $1.45 million for his shares. A sudden run of luck? Not exactly; it later came out that Luke and another principal had turned down a $2.5 million offer for the company that was made while the divorce was still pending.
Nancy went back to court, saying that her ex had fraudulently understated the value of his stock. But recompense was slow and meager. Four months ago–after a decade of pursuit–an exhausted Nancy Weinstein settled with Luke. Her net settlement, after legal and expert fees, was marginally over $200,000.
It’s a quirk of our society: Fudge any number in a publicly traded corporation and Sarbanes-Oxley will have you behind bars. But fudge an asset figure in a divorce battle and nothing much happens. It’s just accepted as part of the rough play that is expected in a bitter lawsuit.
The very wealthy have long used Liechtenstein or Cayman Islands trusts to keep assets squirreled away out of the reach of enemy spouses. In the 1990s Denise and Marc Rich fought a divorce battle of epic proportions as she tried to prove he was hiding assets from his base in (where else?) Switzerland. Denise initiated an unproductive criminal investigation by authorities in Canton Zug and tried to freeze Marc’s assets; in the U.S. she filed a suit alleging he had fraudulently misused their children’s trusts. The Riches finally settled, and Denise famously went on to help her fugitive ex-husband get a presidential pardon from Bill Clinton.