Millions of Dollars in Assets Frozen in New York Divorce
Case
In New York State, Janet Schaberg is finding out that a
$7.61 million divorce settlement doesn’t go as far as it used to. After a recent ruling by U.S. District Judge
George B. Daniels, that money isn’t going anywhere.
Schaberg is the ex-wife of Stephen Walsh, a partner at WG
Trading Co., an investment business that has collapsed under accusations of
embezzlement and doctored financial reports. Walsh and his business partner, Paul Greenwood, were indicted on July
24; they face charges of misappropriating $554 million dollars from investors
in the Greenwich, Connecticut-based investment company.
Prosecutors accuse Walsh and Greenwood of stealing
$130 million from college foundations and pension funds and using the remainder
as "earnings" with which to pay off investors or cover up losses at WG Trading
and other businesses.
Walsh and Janet Schaberg married in 1982 and divorced in
2007. As a part of their divorce, a
court-appointed receiver found that Schaberg personally received nearly $20
million from WG Trading Co. over a ten year period.
Before the couple separated, Walsh gave Schaberg $3 million
to use in the purchase of a co-op apartment in New York, which was sold in
April 2008 for $3.5 million dollars. Those funds were used to pay off mortgages on her current home in
Florida.
Schaberg’s attorney, Steven Kessler, tells Jerry Gleason of
the Lower Hudson Valley newspaper that his client is running out of money. Kessler says he will ask Judge Daniels to
reconsider the order to freeze Schaberg’s assets based on her current
circumstances: Schaberg has remarried.
Kessler says the contested money was obtained legitimately
during the divorce process.
"She has a court order giving her the money. … No one claims
she knew (it) was tainted," he says.
Daniels disagreed with this position in his ruling, stating
that the divorce proceedings alone were not sufficient to allow Schaberg to
keep funds that may have been obtained illegally. Were those funds still in the possession of
her ex-husband, they likely would have been seized.
"The divorce court may have been in a position to determine
property rights as between a husband and wife; however it could not validate a
former spouse's retention of monies fraudulently obtained during the marriage,"
Judge Daniels wrote in his ruling.
Daniels has also approved the prosecutors' request to delay
discovery proceedings in a civil case being brought against Greenwood and Walsh
by federal regulators. Prosecutors hope
to determine what funds were illegally obtained and to redistribute them to
rightful owners where possible, leaving the civil courts access only to
whatever monies are legitimately the property of the two indicted investors.
Schaberg herself has not been accused of any
wrongdoing.
Source: Lower
Hudson Valley Newspaper
