Legal Question in Banking Law in New York

Assume the following facts: Husband operates a ponzi scheme through his legitimate business at a financial institution for 10-15 years. Both the husband and the wife live a lavish life as a result of the criminal scheme of the husband. The husband uses otherwise legitimate payroll deductions to fund life insurance, 401(k) and other benefit plans offered through the financial institution. The ponzi scheme comes to light after the husband's death. There is little to no evidence that the wife was aware of the criminal nature of her husband's activities. Nevertheless, as previously mentioned, she clearly enjoyed the benefits of the scheme for many years. Now the financial institution has been forced to pay ( through voluntary settlements ) millions of dollars to customers of the financial institution who were victims of the ponzi scheme. The wife has received 1.5 million through benefits paid for as described above ( e g paid for with legitimate funds ). Can the financial institutution make any claims to those funds under these circumstance ? For example equitable subrogation or some other theory?


Asked on 5/17/10, 12:54 pm

1 Answer from Attorneys
Richard Bryan Richard Bryan Attorney PC

Of course there's no law to prevent the financial institution from "making a claim" or suing the wife. That's one. The next part though is proving their claim. So two different questions. If I wanted to, I can sue you for ruining my dry cleaning. This is America; people can sue each other for any reason at all, or for no reason. Well, not exactly, but you get the point. But after the initial claim, now you have to prove your case. So sure, the financial institution can sue the spouse under a great many principles of law. Will they win? Who knows? Significant questions of law and analysis of facts you're sure as heck not solving with free advice on the internet. Interesting fact pattern though. Very interesting.

Good luck.

Rick Bryan

New York, NY

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Answered on 5/22/10, 4:14 pm


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