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Luke Weinstein was a very lucky man in 1998. According to his financial affidavit for his divorce settlement, his stock in the small computer company, Product Technologies Inc., was only worth $40,000 in May, when he got divorced. Five months later, his stock in the company that pioneered “smart card” technology, was purchased for $1,449,000 — thirty-six times the value his financial expert calculated. His wife, Nancy, sued to open the divorce settlement on grounds of fraud. She’s lost in two courts so far, but many divorce lawyers are hoping she’ll win at the Connecticut Supreme Court, to preserve hard-won principles of frankness and disclosure in divorce settlements. Last year Appellate Court Judge Anne C. Dranginis concluded that the wife could not attack the settlement terms because she failed to prove fraud. The court compared the rapid $1.45 million increase to “the occurrence of a windfall or an unexpected post-divorce prosperity.” Now the Supreme Court is being asked to examine just how forthcoming divorcing parties and their lawyers need to be about financial documents. The Connecticut chapter of the American Academy of Matrimonial Lawyers has filed an amicus curiae brief in the case, written by Gaetano Ferro, of New Canaan’s Marvin, Ferro, Barndollar & Kent. The brief contends that if Weinstein v. Weinstein is upheld, a 13-year period of fiduciary-like openness between divorcing parties could draw to a close, in effect reversing the 1991 precedent set in Billington v. Billington. That case removed the requirement that a spouse first prove he or she had been diligent in digging for hidden assets before being allowed to attack the fairness of a settlement on grounds of fraud. In Randall Billington’s case, he had received an offer of $380,000 for a piece of New Haven residential property, but later told the court in his financial affidavit it was only worth $225,000. He was awarded that property, and the marriage was dissolved on June 19, 1987. Three days later, he sold it for the renegotiated price of $360,000. In drafting the Billington decision for the high court, David M. Borden quoted penetrating observations about the unique reciprocal duties of a marriage, even during its death throes. In 1965, the U.S. Supreme Court, in Griswold v. Connecticut called marriage “a coming together for better or worse, hopefully enduring, and intimate to the degree of being sacred. It is an association that promotes a way of life, not causes; a harmony in living, not political faiths; a bilateral loyalty, not commercial or social projects.” And Borden quoted his own dissent in Grayson v. Grayson, a 1985 appellate case. It perpetuated the diligence requirement, holding a mere suspicion of fraud isn’t enough to mandate a finding of fraud. Borden countered, “Whatever honesty there may, or should, have been during the marriage should at least be required by the court at its end.” What Elyn Grayson failed to win from her husband in divorce court became the subject of a landmark malpractice case against her lawyers, for failing to meet the diligence requirement then in effect. In 1991, she rocked the divorce bar with a $1.5 million legal malpractice verdict against her Stamford divorce lawyers, Emanuel Margolis and Edward M. Kweskin, at Wofsey, Rosen, Kweskin & Kuriansky. They didn’t uncover assets hidden in the intricacies of Arthur I. Grayson’s bowling alley businesses and pension plans. Ferro’s amicus brief in Weinstein contends that the Appellate Court failed to recognize the fiduciary relationship of spouses in divorce, predicting that, if upheld, it will lead to escalating litigation and discovery. Spouses and their lawyers, increasingly distrustful of their counterparts, will “grapple in a system which does not require full and frank disclosure of material financial facts.” NO DEVOLUTION But Luke Weinstein’s appellate lawyer, Karen L. Dowd of Hartford’s Horton, Shields & Knox, says that the gains of Billington won’t be on the line when Weinstein is before the court next fall. Dowd contends that an issue the wife’s legal team regards as pivotal was not properly preserved as an appeal issue. Unlike Mr. Billington, Luke Weinstein never received a specific offer for his property before the divorce settlement. The “smoking gun” in his wife’s argument is a private placement memorandum seeking $5,000,000 in funding to aid Product Technologies, Inc. Dowd contends, and two courts have agreed, that there is no correlation between the $5 million request for 12,000 shares of series A PTI stock, and the company’s actual value, or that the funding request was remotely instrumental in prompting another company to acquire PTI for $6 million, yielding $1.45 million in cash to Mr. Weinstein. New Haven lawyer Lori Welch-Rubin, of Engelman & Welch-Rubin, argues in her appellate brief that her discovery requests in the divorce were broad enough to require disclosure of the private placement memorandum. If it had been, Welch-Rubin contends in her brief, “no one in his right mind” would have settled for a $40,000 valuation on the stock.

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