Wednesday, March 18, 2009

Madoff Claims Florida As Legal Residence

The story is about the Florida homestead exemption. If you are a Florida resident, it is difficult, if not impossible, for a creditor to take your home from you. It is basically exempt from seizure. We can debate the proprietary of that till the cows come home. It's the law there, it ain't gonna change any time soon, and tons of people have taken advantage of the rule. (Think Bowie Kuhn and the bankruptcy of Myerson & Kuhn.)

So no big surprise that Ruth Madoff claims her Palm Beach mansion to be her primary residence. Shielding the 9 million dollar home from creditors is not a bad idea.

But the gem in the story is the timing of that claim. In Florida, one needs to claim the "homestead exemption" in order to have the home be your residence and exempt from creditors. According to this article, after living in New York for 60 plus years, Ms. Madoff filed for the exemption in September of 2008, only three months before Madoff's arrest, according to The Business Insider. Coupled with the other pre-arrest allegations, including the allegation that she withdrew 15 million dollars or so prior to his arrest, we have an interesting set of allegations coming together for the government's forfeiture proceedings.

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