In November 2020, Erika Jayne stunned fans by announcing the end of her 21-year marriage to attorney Tom Girardi. Throughout their marriage, the couple has kept a public image of extreme wealth, despite Jayne’s humble beginnings as a cocktail waitress Jayne has previously publicly announced that the pair never signed a prenuptial agreement, as she believed Girardi would easily have the agreement rendered unenforceable. A prenuptial agreement can be invalidated under certain circumstances such as coercion, unreasonable terms, and the agreement containing fraudulent information.
Girardi is a high-profile attorney who has amassed billions of dollars in client settlements throughout his career; however, a recent lawsuit filed against Girardi and his law firm has alleged that Girardi has misappropriated clients’ funds and embezzled settlement proceeds and judgments to finance the person lifestyle. The suit claims that the couple’s divorce is a sham to protect the embezzled assets from seizure and turnover. Funds and other assets received during a marriage are marital assets subject to division during a divorce. Essentially, rather than being required to surrender his assets and accounts to his former clients, Girardi is being accused of trying to pass the assets to Jayne in the divorce as her share of the marital estate. Those who have watched the Netflix sensation Tiger King will recall watching Joe Exotic blow up his household items to avoid seizure by Carole Baskin to satisfy her million-dollar judgment against him. The concept is the same. Girardi allegedly hopes to avoid seizure of his assets by allowing them to become the legal property of Jayne, while the Judgment against Girardi is unable to be satisfied as he no longer has the assets to pay the Judgment. Thereafter, if the couple were to remain together but unmarried, Girardi may benefit from Jayne’s possession of the assets while not personally owning them.
This strategy, however, is not airtight. The court may find that the transfer of assets from Girardi to Jayne is fraudulent and intended to further deprive the former clients of the assets which were rightfully theirs. As such, the divorce may simply delay the inevitable, as Jayne may be brought into the federal suit as a third-party defendant in possession of the stolen funds. Thereafter, the judgment would also be entered against Jayne, and the assets may still be turned over to Girardi’s former clients.
Interestingly, while larger and more complex in scale, the concept of fraudulent transfer in order to avoid disclosure of an asset is not uncommon. Often, a party to a divorce may transfer assets to a family member, such as by selling a home or a business for a far below market price or providing the funds to purchase a vehicle but placing the vehicle title and registration under another individual’s name. These purchases and transfers are as fraudulent as Girardi’s scheme to hide assets through his divorce, and just as Jayne may be brought into the federal matter, the person to whom property has been transferred may be brought into the divorce matter to rectify the situation and reimburse the marital estate for the lost assets. If you are going through a divorce and fear your spouse has fraudulently transferred assets, call Kiswani Law for a consult today.