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A 'Well-Heeled' Divorcee and Mandatory Self-Disclosure

Beth Shak, a famous World Series of Poker player and aficionado of expensive, designer shoes, who has been featured on MTV Cribs and Millionaire Matchmaker, is in the news again, and she gives us food for thought regarding Mandatory Self-Disclosure and Financial Statements in divorce cases.  

Her ex-husband, Daniel Shak, is suing her for a 35% share of over 1,200 pairs of her designer shoes. Daniel estimates the value of the shoes at $1,000,000. His post-divorce litigation against Beth, if successful, could be his proverbial second bite at the apple. In most divorce cases, once marital assets are divided under a final divorce judgment, the asset division between the parties is considered final. Unlike portions of divorce judgments that often need to be revisited after the divorce is final due to material changes in circumstances, such as, for example, those related to child custody, asset division is normally not subject to later modification. Therefore, a property award incorporated into a divorce judgment is usually set in stone. It is actually quite difficult to reopen property division after a divorce, even if the litigant, like Daniel, reportedly lost millions in the gold market last year, and certainly has an incentive to make up for his personal losses by suing his ex-spouse.

There are some exceptions to the general rule that the equitable distribution division is final, however, and Daniel's lawsuit is based on one of them - fraud. Daniel alleges that Beth knowingly failed to disclose the existence of over a thousand pairs of shoes, which ironically were stored neatly in the closet of the former marital home where he resided with Beth. Daniel's prior knowledge of the mere existence of so many shoes will certainly have an impact on the outcome of his case, but the Judge assigned to his case should certainly be concerned with Beth's behavior as well. Here in Massachusetts, rules regarding Mandatory Self-Disclosure and sworn Financial Statements are intended to insure that parties in pending divorce proceedings are not defrauding each other by failing to disclose the existence of marital assets in order to avoid being ordered by the Judge to divide them or account for their value during the divorce. A violation of these rules may open the door to further litigation by an aggrieved party, who, on the grounds of fraud, may seek, and obtain, relief from the prior divorce judgment, i.e. a second bite at the apple. Thus, careful attention needs to be paid to the rules on Mandatory Self-Disclosure rule and Financial Statements to help avoid future litigation. Beware of a line item like "personal effects" on a party's Financial Statement with a value listed as "unknown" or "nominal" for example. In the end, it could actually turn out to be 1,200 pairs of designer shoes that are worth a million dollars.

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