Madoff Claw-back Case Reveals Flawed Asset Protection
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Madoff Claw-back Case Reveals Flawed Asset Protection

In 2008 the largest Ponzi scheme in U.S. history made national headlines.  Bernard Madoff, through his investment firm, was found to have defrauded his investors out of $64.8 billion. But the untold story of the Madoff victims can be found in those investors who managed to withdraw their funds from Madoff’s company before the Ponzi scheme came to light – only to have the Madoff bankruptcy trustee bring a lawsuit to recover the money they had withdrawn.

Attorneys Howard Rosen and Patricia Donlevy-Rosen, who themselves turned away Madoff investors seeking to protect their assets from the Madoff bankruptcy estate, have published a new article which outlines the tragic story of one such individual, James Greiff. The article, published through Donlevy-Rosen Rosen’s periodic publication The Asset Protection News™, discusses a flawed asset protection strategy that some practitioners still recommend: spousal transfers.

Asset protection through a spousal transfer consists of one spouse essentially giving his or her assets to the other, sometimes through an antenuptial agreement.  One risk associated with this strategy is that the spouse holding the assets may divorce the spouse seeking protection.  “A married individual may be comfortable putting their financial well-being in the hands of their spouse, but I recommend against this” explained Patricia Donlevy-Rosen.  She continued to say that “as a result of entering into an antenuptial contract, the individual looking to protect his or her assets may sign away property that won’t be returned during a divorce.”

As the article explains, just that happened to Greiff.  According to a Complaint filed in Miami-Dade County against Richard Cahan, Esq. and Becker & Poliakoff, P.A., (11th Circuit, Case No. 13-21888-CA) Grieff retained Cahan in hopes that Cahan would protect Greiff’s assets from the Madoff bankruptcy trustee claw-back proceedings.  Cahan recommended that Greiff transfer all his assets to his wife, and much to Greiff’s surprise, shortly thereafter his wife filed for divorce.  To add insult to injury, the Madoff estate is still seeking to recover the assets from Mrs. Greiff, claiming that she received the assets through a fraudulent transfer.

“There are important lessons to be learned from this case,” says Donlevy-Rosen, “that spousal transfers aren’t the way to protect assets against creditors, but also that proper asset protection strategies are most effective when implemented before, and not after, a claim has been brought.”

Clients and practitioners seeking a way to effectively protect assets from potential creditors should contact the law firm of Donlevy-Rosen & Rosen, P.A. at (800) 417 7134


Direct link to the article: Spousal Transfers: We Told You So

Read the complete Greiff complaint: Madoff Claw-back Case Reveals Flawed Asset Protection

About Donlevy-Rosen Rosen, P.A.

Donlevy-Rosen & Rosen, P.A. is law firm with a national practice focused on asset protection planning and offshore trusts. Attorneys Howard Rosen and Patricia Donlevy-Rosen co-founded the firm in 1991, and have since become internationally recognized authorities in the field of asset protection planning.  On the web: Protect You.

About Patricia Donlevy-Rosen, Esq.

Donlevy-Rosen is the author of Asset Protection Planning, a Tax Advisors Planning Series book published by Research Institute of America.   She concentrates her practice in the protection of immovable assets such as real estate. Full bio: About Patricia Donlevy-Rosen, Esq..

About Howard Rosen, Esq.

Rosen, an attorney and Certified Public Accountant, is the founding author of the BNA Tax Management Portfolio Asset Protection Planning (1994, 2002), and is considered an authority on offshore asset protection planning.  Rosen was an adjunct professor at the University of Miami School of Law for twenty years.  Full bio: About Howard Rosen, Esq.