(Bloomberg) — John Paulson is seeking to shut down his wife Jenica’s lawsuit accusing him of shielding billions of dollars in assets from their divorce, claiming she’s the one who’s engaged in a “selfish money grab.”
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Both Paulsons appeared in a cramped Manhattan courtroom Thursday morning for scheduled arguments on his motion to dismiss her case. They sat quietly on opposite sides of the courtroom as at least a dozen matters were called before theirs, barely acknowledging each other’s presence.
When their case was called though, John Paulson’s lawyers asked for the courtroom to be closed to the press, of which Bloomberg News was the only outlet present. A lawyer for the billionaire said the arguments would touch on sealed financial documents and records in which he claimed the press has “no natural interest.”
Bloomberg News responded that there was high public interest in the case, and a lawyer for Jenica Paulson also said the hearing should be open. New York Judge Louis Nock adjourned the scheduled arguments for the parties to file papers on whether the proceedings should be sealed.
In court filings, lawyers for John Paulson, 66, have denied that he hid assets from her. They say that Jenica Paulson knew all along about the trusts she claims he used to hide assets because they were included in nearly two decades of joint tax returns that she signed.
“The joint tax returns were authorized by Mrs. Paulson and identified the trusts by name,” the Paulson & Co. founder said in court documents, “therefore refuting any claim the trusts were ‘secretly’ created to deceive Mrs. Paulson or to deprive her of equitable distribution on what might otherwise have been a marital asset.”
Matrimonial proceedings in New York state are mostly confidential, so the case provides a rare public glimpse into a contentious divorce that is likely to be expensive and lengthy given the assets at stake. John Paulson has a net worth of $4.6 billion, and the family has a bountiful portfolio of real estate investments, including an Aspen, Colorado, ranch formerly owned by a Saudi prince and a estate in the Hamptons.
Paulson filed for divorce from his wife of 21 years in September 2021 in New York state court in Long Island. Her July suit seeking at least $1 billion in damages claimed he used a group of “hand-picked advisors” to establish three irrevocable trusts to ensure she didn’t get her share of assets.
Jenica Paulson’s suit cast her as a loyal wife who “dutifully and thoughtfully” cultivated her husband’s business and social relationships while relying on him to handle the family’s finances. He took advantage of her trust, she claims, by “implementing a plan, over a nine-year period, to insulate assets acquired during the course of their marriage from Mrs. Paulson’s reach and thereby to deprive her of her fair and equitable share.”
Allowing the trusts to stand would “give license to wealthy spouses to jettison the requirements of financial fairness and spousal disclosure long enshrined in law,” Jenica Paulson argues in her suit.
John Paulson denied trying to deceive his wife, noting that the two were happily married when the trusts were created.
“Such evasion could not be possibly be true given that the trusts all were created during an intact and thriving marriage that witnessed for decades Mrs. Paulson execute tax returns referencing the trusts,” he claimed in court filings.
“Indeed, far from a troubled marriage, in 2009 the year Mr. Paulson created the last of the trusts, he made a significant donation to the Southampton Hospital on Long Island, which named its emergency department for Mrs. and Mr. Paulson.” That is “hardly the hallmark of a duplicitous husband planning to divorce his wife twelve years later,” John Paulson claimed.
John Paulson also argued that his wife’s suit was procedurally deficient because it didn’t name as defendants their two teenage daughters, who are beneficiaries to the trusts, and was also filed too late under the state’s statute of limitations.
Along with her husband, Jenica Paulson sued J.P. Morgan Trust Co., which serves as trustee for two of the trusts. The firm is also seeking to dismiss the suit, arguing that it fails to show how the company participated in any plan to hide assets and that it appears to be trying to “circumvent the constraints of the ongoing divorce proceedings.”
John Paulson is perhaps best-known for his successful bet against the US housing market ahead of the 2008 sub-prime crisis, which made $20 billion for him and investors in his hedge fund. He turned the fund into a family office in 2020 and was named chairman of Bausch Health Cos. in June.
He met his wife, a Romanian immigrant who had been granted political asylum, years before he became famous for his subprime trade. She served him and his staff lunch from the Bear Stearns cafeteria, and he later hired her as his assistant.
The case is Paulson v. Paulson, 652358/2022, New York State Supreme Court, New York County (Manhattan.)
(Updates with adjournment of arguments.)
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Source: finance.yahoo.com