A New York Family Lawyer said the plaintiff and defendant were previously divorced by Judgment granted in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida. The parties have three children.
A New York Custody Lawyer said that in May of 1999, the defendant pled guilty to money laundering and securities fraud in connection with his direct involvement with a brokerage. In 2001, the defendant was subsequently charged with engaging in unlicensed telemarketing in Florida. In April of 2001, six months after executing a Marital Settlement Agreement, the defendant was imprisoned. In December of 2003, he was released under house arrest.
A Staten Island Child Custody Lawyer said pursuant to the provisions of a Stipulation and Order, the defendant was to pay the sum of $3,500 per month as and for child support for two (2) unemancipated children, in addition to the sum of $2,000 per month on account of arrears pursuant to the Stipulation and another Order for a total payment to the plaintiff of $5,500 per month. Additionally, the defendant was obligated to pay a penalty of 5% if payment was not made within ten (10) days of the due date.
The January payment was returned due to insufficient funds. In February and March, 2006, the defendant paid only $3,500 per month instead of $5,500, leaving a balance due plaintiff of $4,000, together with a late penalty of $200. Accordingly, the defendant was in arrears in the total amount of $8,600 as of March, 2006. No payments had been made for the months of April, May, June or July.
Pursuant to the Domestic Relations Law §244-a notice, the total amount of arrears to the date amount to $31,700.00 ($ 8,600 + [$5775 × 4) = $31,700. Previously, the plaintiff brought a proceeding to have the defendant in contempt in or about August, 2004. By stipulation, the contempt issue was resolved only after the defendant was admonished by this Court that he faced imprisonment and the potential of violation of his federal probation due to his contemptuous behavior.
Thereafter, in March 2005 and October 2005, the plaintiff submitted an application for upward modification of child support and to adjudge the defendant in contempt for his refusal to reimburse medical expenses for the children. A hearing was scheduled on October 26, 2005 but was adjourned due to defendant’s house arrest for violation of the terms of his probation. On January 20, 2006, the defendant appeared before this Court for a hearing on plaintiff’s application for an upward modification of child support. After testimony was taken from defendant relative to his financial means, a Stipulation was entered into resolving the plaintiff’s upward modification and contempt motions.
To sustain an application of contempt, there must be a demonstration that the alleged contemptor has violated a clear and unequivocal court order which actually defeated, impaired, impeded or prejudiced the other party’s rights or were calculated to affect those rights. The movant must meet this burden by clear and convincing evidence. Upon a finding of contempt, the Court may impose a period of commitment to jail. Where a factual dispute exists which cannot be resolved on the papers, a hearing is required. The Court may not, however, hold a party in contempt where payment may be enforced by other enforcement procedures, unless such remedies would be an exercise in futility or ineffectual. The actions of defendant here have had the affect of impairing or impeding the rights of the plaintiff.
A bond for prospective payments is unobtainable, given the defendant’s sordid criminal record and propensity to litigate, settle, and default in settled support obligations. The available remedies here appear to be exhausted, if the shill corporate structure remains intact.
The defendant, who controls a closely held corporation “in name only” of his new wife, is responsible, by his own admission, for operation, sales, and day-to-day management. Piercing the corporate veil is an equitable concept that allows a creditor to disregard a corporation and hold its controlling shareholders personally liable for the corporate debt. But reverse piercing flows in the opposite direction and makes the corporation liable for the personal debt of the shareholders under certain circumstances.
In both situations, there is a disregard of the corporate form, and the controlling shareholders are treated as alter egos of the corporation, and vice versa.
Mindful that this is a Florida corporation, under Florida law, when there is an effort to pierce the corporate veil, the existence of control by the shareholder is insufficient by itself — there must also be a demonstration of improper conduct such as to mislead creditors or to “use the corporation as a means of evading liability with regard to a transaction that was personal and not corporate.”
Under Florida law, the concept of reverse piercing is compatible to New York Law and the remedy is applicable here — to hold the corporation liable for the debts of shareholders, when those shareholders have “formed or used the corporation to secrete assets and thereby avoid preexisting personal liability.”
This corporation, a manufacturing cosmetic products corporation, is clearly utilizing personal assets of the defendant (earnings) to defraud personal creditors of the controlling insider, the defendant herein. The corporate entity is a straw by which the defendant’s earnings are being funneled, to satisfy business and lavish personal expenses of the defendant and his new family, while the support obligations are being either violated or ignored.
Accordingly, while the Court makes a finding of contempt herein, it will stay execution of the jail sentence imposed herein, pending report of a receiver appointed herein, as to the viability of proceedings as against the corporation. For purposes of enforcing the defendant’s child support obligations through reverse piercing of the corporate veil, a remedy may very well present itself. If not, the incarceration ordered herein can be executed.
Under the circumstances of this case, the previous enforcement proceedings, and the efficacious representation provided, the plaintiff’s counsel is granted a judgment of legal fees against the defendant in the amount of $4,650.00.
Accordingly, it is ordered that defendant is held in contempt and is sentenced to 180 days imprisonment in the Nassau County Correctional Center; and it is further ordered that this decision be enforced by a sheriff or other enforcement officer in which the offender may be found to arrest the defendant; And, ordered that defendant shall pay to plaintiff’s counsel the sum of $4,650.00 within 15 days of service of this order upon him, after which this shall be entered as a judgment against him in the office of the Nassau County Clerk.
Family matters should be entrusted to diligent lawyers like our lawyers here in Stephen Bilkis and Associates. We have our Nassau County Family attorneys who are always updated in the developments of family laws as well as the recent pronouncements of Courts. For custody issues, don’t hesitate to consult our Nassau County Child Custody lawyers. We will be glad to help you in your dilemmas. Callus now.