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Pein v. Pein

Decided: October 19, 1993.


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Bergen County.

Stern, Keefe and Bilder. The opinion of the court was delivered by Bilder, J.A.D. (retired and temporarily assigned on recall).


This is a divorce matter which has as an important part of its background a finding in 1992 by a Family Court Judge of what he characterized as "outright fraud" on the part of the former husband, a fraud which produced an unreasonable alimony award at the time of the 1986 divorce judgment. The record persuades us that this fraud also produced an unjust and inequitable distribution of the marital assets.

The details of the fraud which consisted of material misrepresentations of existing facts with regard to both the husband's assets and income for the purpose of evading his legal obligations to his wife and avoiding a fair resolution of the matrimonial financial issues need not be recited at length. Suffice it to note that the fifth Judge to hear this case, Judge Hamer, concluded that plaintiff Werner Von Pein Jr. had been deceitful to the point of fraud, had been obstructionist with respect to discovery, and had engaged in a pattern of hiding assets, all to the end that he might evade his legal obligations to his former wife, defendant Adriana Von Pein, and avoid a fair resolution of the matrimonial financial issues. The fifth Judge found it was plaintiff's purpose to corrupt and undermine the judicial process. In his order of June 18, 1992, the fifth Judge said:

[P]laintiff Werner Von Pein, Jr. is found to have defrauded the court in the trial of this action by testifying he was unemployed and by misrepresenting his assets and income in testimony and certifications filed with the court;

The dimensions of the fraud may be understood by noting that the trial Judge found that when the final hearing was had and the divorce judgment entered, plaintiff was protesting a lack of employment or income, when in truth his salary alone, not counting income available from hidden Merrill Lynch investment accounts, was $160,000 a year. The hidden amounts were so large as to cause the trial Judge to increase the originally ordered $14,400 a year alimony to $48,000 a year, to fix arrearages at $259,600 (plus interest of $69,902.67), and to award the former wife legal fees of $200,000. This resulted in a judgment against plaintiff of some $529,502.67, from which plaintiff has not appealed. We are satisfied that the trial Judge's findings with respect to plaintiff's outrageous, corrupt and fraudulent conduct are fully supported by the record. See Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 484, 323 A.2d 495 (1974).


The parties were divorced on January 16, 1986 following a 21 year marriage. They had no children.

At the time of the final divorce hearing the court found the parties had the following assets subject to equitable distribution: a residence in Philadelphia, Pennsylvania valued at $475,000 but subject to a $200,000 mortgage and having contents valued at $250,000; a residence in Saddle River, New Jersey valued at $328,000 but subject to mortgages totaling $167,000 and having contents valued at $23,750; a house in Cologne, Germany in foreclosure and of doubtful value; a 1982 Oldsmobile valued at $5000; furs and jewelry as to which no value was attributed; $26,864.83 representing the proceeds from the sale of a Chicago house; 469.192 shares of Nabisco stock valued at $24,750; a Nabisco performance share plan valued at $49,640; $20,564 representing a Nabisco 1984 incentive award received by plaintiff and not shown to have been used for joint marital obligations; a U.S.

Savings Bond valued at $1200; a prospective Federal Tax refund of $6000; and IRAs belonging to each of the parties. The court found the total available for equitable distribution to be $843,769 and divided the assets equally. Almost 75% of this consisted of the two residences and their furnishings, therefore when defendant was awarded the Philadelphia home, she not only received no liquid assets but because its value including its contents exceeded half of what the court found to be the total matrimonial assets, defendant was required to surrender some $118,000 of the furnishings to her former husband. Because it found the plaintiff to be unemployed and receiving unemployment compensation, the court awarded defendant monthly alimony of $1200.

As already noted, in 1992 another trial Judge found that at the time of the final divorce hearing plaintiff was in fact employed and receiving substantial six-figure compensation and that he had substantial assets concealed in Merrill Lynch security accounts. In his oral opinion of December 12, 1985 the then trial Judge noted that a Merrill Lynch security account which had been in the name of the parties had been terminated about March 22, 1983 and that "as to funds worked through Von Pein Associates account by Ms. Piteo (plaintiff's present wife), [the divorce] court finds no wrong-doing and finds that no funds in said account were or are subject to equitable distribution." The finding was of course totally wrong; the error was entirely the result of plaintiff's purposeful fraudulent conduct (in which Piteo fully participated). The evidence makes clear that the proceeds of these hidden matrimonial assets may well be traceable into a house in Wilton, Connecticut in which plaintiff and Piteo-Von Pein now reside, purchased for $545,000 and alleged to be now worth close to a million dollars.


The history of the litigation subsequent to the final order of divorce is convoluted, encompassing, insofar as important to this appeal, efforts by defendant to reopen the order of equitable distribution; to assert in a separate suit, later consolidated with [268 NJSuper Page 12] the matrimonial action, an equitable interest in the Wilton, Connecticut residence; to reopen the original alimony order and obtain a larger award (her sole total success); to obtain an award of legal fees for the efforts required to uncover the truth and obtain Justice with respect to support and distribution; and to seek a court ordered contempt proceeding against plaintiff for his contumacious conduct. The matter was made more difficult and complex by the fact that changes in judicial assignments resulted in consideration of defendant's contentions by five different Judges. The original trial Judge, who was the victim of plaintiff's fraudulent behavior, never heard the matter again. A new Judge heard the matter in 1988 when defendant first sought to reopen the equitable distribution. Because defendant's proofs were limited at that point to post-divorce events, the second Judge denied the relief*fn1 but made a number of rulings which aided her in her efforts to pierce the fraudulent conspiracy. In 1989 the case was assigned to a third Judge who denied defendant's motion to refer the matter to the prosecutor for a contempt prosecution. This is one of the orders appealed from. In 1990 the matter was assigned to yet a fourth Judge who consolidated the Connecticut residence suit with the matrimonial action but then later denied defendant's application to reopen the equitable distribution and dismissed the Connecticut residence suit on grounds of forum non conveniens. Both of these 1990 orders, as well as a 1992 order by the same Judge denying defendant's motion for reconsideration, are subject matters of this appeal. Finally the matter was assigned to a fifth Judge who, following nine days of plenary hearings in 1992, made the findings with respect to plaintiff's fraudulent conduct (with the active participation of his present wife, Piteo-Von Pein), reopened and increased the alimony award, made the award of legal fees, and entered the half million dollar judgment against plaintiff. This last Judge also denied defendant's renewed motion to reopen the equitable distribution, expressing the view that defendant was probably entitled to the relief but that this Judge was bound by

the earlier ruling of the fourth Judge. This denial of the motion to reopen the equitable distribution as well as an alleged inadequacy in the award of legal fees for the successful efforts of her counsel to penetrate the conspiracy of her husband and Piteo-Von Pein are also the subject matters of this appeal.


(a) Criminal contempt proceedings.

In 1990 the third Judge denied defendant's motion to refer her request for a finding of criminal contempt to the Bergen County Prosecutor or other designated attorney. See R. 1:10-2 and R. 1:10-4. In his order of January 5, 1990, the third Judge said: "If perjury was committed at trial, or thereafter, either party may file a complaint with the appropriate law enforcement agency."

The use by a court of its contempt authority is a particularly sensitive discretionary matter. In appealing the denial of her motion to have such proceedings instituted defendant essentially claims an abuse of discretion. She seems to understand this because in her brief she does not deal with the question of discretion but relies on the practical considerations which impel her desire for such a prosecution.

Adriana is severely handicapped in recovering her alimony award if the court will not maintain the integrity of its own proceedings where necessary through criminal sanctions. Werner is able to change employment frequently and to conceal his assets. Court procedure is time-consuming. By the time Adriana discovers ...

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