Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

May My Property Settlement Agreement Be Changed If I Can Prove Fraud?

Yes.  If a lawyer is successful in proving fraud during the divorce, then a judge may vacate the Property Settlement Agreement.  Throughout my career as a New Jersey divorce lawyer,  I have witnesses many spouses trying to conceal or hide their assets from their spouse as well as a judge of a New Jersey Family Court.  This amounts to fraud, and courts take this offense very seriously. To lie about your income or assets in front of a judge of the Superior Court of New Jersey is considered perjury and, in turn, amounts to fraud upon the court.

Fortunately, the attorneys at our divorce law firm have used N.J. Court Rule 4:50-1 to obtain relief for our client who was lied to.  This court rule provides that a court has the authority to relieve a party from a final judgment or order upon a showing of fraud, misrepresentation, or other misconduct by an adverse party. That is why it is so important to have a seasoned attorney at your side with the knowledge and experience to fight for your rights, and get you justice. You cannot control how your former spouse will act during the course of litigation. However, with one of our seasoned divorce lawyers at your side, we can fight for justice.

In Von Pein v. Von Pein, ex-wife Adriana Von Pein appealed an order of the Superior Court of New Jersey, Family Part of Bergen County that denied motion to reopen the equitable distribution of assets, and a divorce action that was subverted by her ex-husband’s fraud.

            In 1992 a Family Part judge found that Adriana’s ex-husband, Werner Von Pein had committed an outright fraud that resulted in an unreasonable alimony award in 1986, the time the judgment of divorce was entered. In 1993, the New Jersey Appellate Division found that the very same fraud also resulted in an inequitable and unjust distribution of marital assets. The fraud consisted of material misrepresentations about facts relating to both Werner’s income and assets, done purposefully to evade the legal obligations he owed his wife, and to avoid a fair resolution of the financial issues revolving around the marriage and divorce. The Honorable Judge Hamer, the fifth judge to hear the case, stated that Werner was deceitful to the point of fraud, had obstructed the discovery process, and acted in a pattern of hiding marital assets, just so he might evade the legal obligations he owed his ex-wife. Judge Hamer held that Werner acted with a purpose to undermine and corrupt the judicial process when he testified that he was unemployed and misrepresented his income and assets. At the time the judgment was entered, Werner complained that he had neither a job nor income. However, in truth he was making $ 160,000 a year in salary alone. These hidden amounts of income were so huge, the Family Part judge increased the original alimony award from $ 14,400 per year to $ 48,000 per year. The judge also fixed $ 259,600 in support arrearages, and awarded Adriana $ 200,000 in counsel fees. The New Jersey Appellate Division found that the Family Part judge’s findings were supported by the record given Werner’s fraudulent, corrupt, and outrageous conduct.

            Adriana and Werner got divorced on January 16, 1986. At that time, they had $ 843,769 in assets subject to equitable distribution including a house valued at $ 475,000,located in Philadelphia, Pennsylvania which had a $ 200,000 mortgage on it and contents valued at $ 250,000, and a house in Saddle River, New Jersey, which was valued $ 328,000, and had a $ 167,000  mortgage on it, with contents valued at $ 23,750. The court divided the assets equally, and awarded Adriana $ 1,200 a month in alimony. The amount of alimony was based on that court finding that Werner was unemployed and receiving unemployment benefits.

            However, in 1992, another judge discovered that Werner was actually employed at the time of the divorce, and was earning a significant six figure salary. It was also found that he had numerous assets that he concealed in Merrill Lynch security accounts. The trial judge failed to account for this concealment because of Werner’s purposeful fraudulent conduct. The proceeds from these hidden assets were traced to a house located in Wilton, Connecticut which was bought for $ 545,000, and alleged to have been worth close to a million dollars at the time this appeal was brought.

            Adriani litigated this issue between five different trial judge’s, and appealed three orders that denied her applications to reopen the issue of equitable distribution. She appealed the order of the fourth judge which denied her motion to reopen equitable distribution because it was prohibited by Rule 4:50, a subsequent order by the same judge that denied her motion for reconsideration, in which the judge stated that the “the reopening of equitable distribution under the circumstances presented here is governed by Rule 4:50-2”; and the order of the fifth judge which denied her motion to reopen the issue of equitable distribution because he was bound by the fourth judge’s opinion, even though he expressed it would be erroneous to deny her motion without a hearing to determine the facts.

            In her appeal Ruth argued that her motion was not governed by Rule 4:50-2, but instead by Rule 4:50-3, and that both the evidence submitted at the plenary hearing in 1992, and the fifth judge’s factual findings demand that the court reopen the issues of equitable distribution. The New Jersey Appellate Division agreed.

            Rule 4:50-1 provides that a court has the authority to relieve a party from a final judgement or order upon a showing of fraud, misrepresentation, or other misconduct by an adverse party. In the 1952 New Jersey Supreme Court case of Shammas v. Shammas, Justice Brennan explained the rules when one party seeks relief from a judgment, and how those rules operate when perjured testimony, is the ground for relief as a fraud upon the court. He stated that such an inquiry should be guided by principles of equity and whether, according to the specific circumstances, justice and fairness would require relief to be granted. Furthermore, in a proper case, perjurious testimony alone may be sufficient grounds for relief as a fraud upon the court. 

The fifth judge in this litigation found not only that Werner perjured testimony, but also committed several acts to further his conspiracy to hide assets, and thus deprive Adriana of property that she was entitled to under justice and equity. The New Jersey Appellate Division held that because the unjust equitable distribution judgement was obtained by fraudulent conduct, it was necessary to reopen the issues of equitable distribution. Therefore, the New Jersey Appellate Division reversed the orders of December 19, 1990, June 16, 1990, and March 27, 1992, and ordered a remand for a new hearing to redetermine the marital assets available for equitable distribution, and reconsider the equitable distribution.