Francis and Denise had a complicated, but not uncommon, marriage. Not only were they husband and wife, they were also business partners. Francis was the head pharmacist, while Denise was the bookkeeper. Over the course of their marriage and business partnership, the couple quibbled over something. I suspect many couples often do: money. He thought she was a careless spender. She said he was a penny-pincher. And so it went.
That is until Francis decided to file for divorce in 2008. Just around that time, their business was losing money badly. It was time to think about an exit strategy. Francis wanted to sell the business, but the divorce proceedings got in the way. Instead, the business filed for bankruptcy.
Meanwhile, Francis was discovering that his soon-to-be ex-wife’s financial habits were even worse than he thought. Denise was keeping a separate savings account and a safe deposit box in her name, behind Francis’ back.
Francis hired a certified public accountant (CPA) to do some investigating. The CPA’s discoveries were shocking: Denise had run off with almost $400,000 of the pharmacy’s profits over the years. This theft represented around 40% of the store’s daily income. Worst of all, Denise had apparently withdrawn money from their children’s accounts as well.
At the trial Denise offered three defenses: blame the computers, blame the employees, and blame the husband. But none of them were any use. The judge ordered that Denise give half the money back as part of equitable distribution (a fancy term for the fair division of a couple’s assets).
Despite her money mischief, Denise still went and asked for alimony. She noted that, under New Jersey law, marital fault is irrelevant to awarding alimony. The trial judge agreed. Francis was ordered to pay her $600 per week.
Francis appealed and argued that when a spouse’s behavior is truly outrageous, a court should consider marital fault in deciding whether to award alimony. The higher court agreed with Francis. His ex-spouse got no alimony.
Denise learned an important lesson. You just can’t rip-off someone, then come back and ask a court to make the victimized party pay you even more.
Only the government can do that.