Well this was a Dick move.

These guys will have egg on their faces when the appraisal actually comes back at $100.

I love that this kind of thing becomes more and more widely reported as the Internet becomes more ubiquitous. Sue shame arrest and beat corporate fatcat executives into submission is my motto.

Man he should have held out I would have given him at least $200 for it.

I read his name as Dick Fold. What an unfortunate name... lol

@Davan: So you're saying what he did is perfectly fine?

@Davan: "Sue shame arrest and beat corporate fatcat executives into submission is my motto."

Really that's your motto? Seems kinda long not to mention ungrammatical to fit on a business card no?

He took her for a ride here in Connecticut I'm pretty sure you can sell a house for "Love & Consideration."

How did she get a sub-prime mortgage
in this economy?

@Beerad: Lol I feel like Paul Rudd in "Role Models" -- Thats not a motto you're just saying a bunch of stuff.

And @ tc4b : hUh??!1?

OK I'm naive. But isn't something so appallingly transparent as "heh I just gave my wife ALL my assets so I'm broke Mr Bankruptcy Judge!" illegal? Giving large sums to any person with close personal ties - let alone someone whom you file a joint return with - won't fly will it?
Anyone with legal background please explain. It makes no sense.

If his wife was smart she'd divorce him now and keep the house. After all it's hers.

@Trai_Dep: I recall Madoff's wife has her "own" assets and a similar question: a spouse with no source of income besides dream-crusher of millions - wouldn't the courts treat "her" assets as "their" assets?

@MeSoHornsby: I see what you did there.

@Ash78: That would be Friggin awesome then have a hurricane come and take it down to the foundation! Then let them collect the $100 check form the insurance company depending of course what his deductible is! LMAO

@Trai_Dep:

Actually he probably would have gotten away with it if it wasn't for OJ Simpson - Florida used to be the only state to have an unlimited homestead exemption for bankruptcy where you could keep your house if you declared bankrupcy no matter how much your house was worth.

After OJ tried to take advantage of it the loophole was closed in the bankruptcy bill a few years back.

Henry Waxman a Democrat Congressman calculated that Mr Fuld had collected $480 million in compensation in eight years at the bank - a figure that Mr Fuld disputed pointing out that he had taken home $300 million.

You are WRONG Mr. Waxman I did not take home an average of $60000000 a year it was only $37500000 a year. Please have pity on a POOR old soul.

And just think people felt sorry for him when he got punched-in-the-face.

[consumerist.com]

All I can say is.... dumbass!

Did he really think this little nugget of info would just slip on by unnoticed?

I missed big on this one had he called me I could have paid double that

@madanthony: I don't think that loophole has been closed entirely because of the interaction between US Bankruptcy law and state law. I think the exemption doesn't apply only in very limited circumstances. Apparently its written into the FL Constitution and so changing it has proven difficult. This is especially true since anyone with a significant amount of money buys a house in FL so they have access to liquidity if they declare bankruptcy get judgments against them etc. So there is a powerful lobby to not change the rules.

@Tamer Rashdan: Hell I could scrape together $1000 for the house. Of course I'd go broke paying the first property tax bill.

Wow . . . What a DICK

Don't think you've Fuld us Dick. We're onto you.

Could someone please punch him in the face again?

I'd love to see what the IRS says about this.

Some countries have tax laws that say if you buy something for (considerably) less than fair market value you're liable for taxes on the difference because it's deemed as profit. I'm not sure if the US has such tax laws.

Didn't Al Capone got nabbed by the tax man too?

i was a tad confused when i read fuld as 'fluid' the first time

@Pixelantes Anonymous: Well a bargain sale to a related party can have a variety of income estate and gift tax consequences for a U.S. taxpayer. Off the cuff there would be a taxable gift for the difference between the FMV and consideration given for the house. I didn't dig into the facts but if the house is leveraged its net FMV might not be that much. At any rate the gift tax exemption is nowhere near the $14 million in the headline. He could be looking at a steep tax bill when (if?) he files a Form 709.

@FinanceGuru:

There are no gift taxes or returns for gifts between spouses. However I don't know about the bargain sale aspect. If true she may be required to declare the income but he can't declare the "loss" as you can't take losses when you sell to family members.

@Trai_Dep: It's continually amazing to me how many apparently-sophisticated people can make such mind-bogglingly dumb decisions. Like that pants-judge guy. I mean a first-week contracts student could look at the "consideration" here and say "Wow this is going to end badly."

What I'm wondering is why didn't he just transfer title to her? It's usually not hard to do with spouses. There must have been SOMETHING he was trying to get around. And secondly as the CEO of a major financial institution why did he not:

a) have a personal umbrella policy for just this kind of suing if he had any fear whatsoever of corporate veils being pierced and

b) protect his freaking assets years ago????

Probably someone this unsophisticated with his personal finances should not be running a bank or brokerage.

@tc4b: I would say what he did is perfectly fine (and to be honest I'd guess that most anyone in his shoes would do the same). One can blame him for oh-so-many faults but taking advantage of legal loophole isn't one of them.

Can you say "Homestead Exemption"? I thought you could.

This guy is a douche and obviously trying to limit his potential liabilities. I mean what if I sold my house to my wife for 500 bucks. I would still be on the hook for the remainder of the mortgage (which I am sole buyer on). Then I declare bankruptcy? Have we now effectively got the house for 500 dollars? IF this is legal I dont know why the law hasnt been changed.

@DaoKaioshin: New Business Idea: Coming Soon! Large Print Consumerist!

@supercereal: Just because he can do it doesn't mean he should. This move may or may not be legal but that doesn't make him any less of a weasel.

@Eyebrows McGee: That or he asked a first-year law student who said "Even $1 can be consideration." Oh hey let's make it $100 that's a HUNDRED times as good!

Dumbass.

@Pixelantes Anonymous: That's what 'fraudulent conveyance' is. It's not a real sale it's a fake one to hide assets.

I wonder if he's planning on using the loss from the home sale as a tax deduction. Of course that'd come around to screw them when they actually sell the house since the profit fromt he sale would be everything over $100.00

@Tamer Rashdan: Not only is your punctuation and capitalization astounding but you were the second person to make this joke. -2/10

@Ingram81: I assume that even though he's still on the hook for the mortgage his liquid assets can more than make his payments... and I can only guess that he is assuming he's going to be sued for far less than what that portion of the house was worth or... something...?

My guess: This is all just a ploy to distract the media law enforcement and creditors from something he's really trying to get away with.

While everyone's trying to figure out what he's hiding with the $100 house nobody's going to notice the fact the 23-year-old Belgian former housekeeper (named Anna) for his Aspen property is missing.

@RandomMutterings:

Actually the Fuld's house on Jupiter Island is not homesteaded (or at least it doesn't have a homestead exemption and one would expect they would have applied for the homestead exemption if that property was their homestead under Fla. law) so unlikely to receive the generous protection Fla. law is famous for. Why do you think O.J. moved to So. Fla.

@MrBlastotron: Ah once again I get to enjoy the irony of people with poor grammar berating people with poor punctuation.

@valarmorghulis: i was thinking the same thing although they'd only pay the cap gains on it if they sold it before death. either he's planning on living there until they die or he doesnt have the foresight to see that coming (which would be in line with the way he ran Lehman)

and nothing will happen to him his wife and they will live happily ever after. Now if I a middle class slob tried that I would go to jail. When you are rich you live under different or no laws.

@Trai_Dep: OK, let me rephrase. Say I'm married, I work, she doesn't (or he, yay, CA!). I file taxes and (simplifying) halve my taxes due because it's divided by two. No muss, standard blending of assets with nary a raised eyebrow from the IRS or authorities.
Now I'm caught in a Fuldian situation. I "give" her all my assets. Magically, those assets are untouchable by the courts?
It seems the law should either say, marriage is a blending of assets or it's not. This seems to be picking and choosing. I don't see the logic, not to mention the legality.

I'll buy it from his wife for $200. Instant 100% profit!

Seriously, that's not going to help him at all - preferential transfer to an insider is avoidable if there is litigation and the house is deemed to be the product of any fraudulent act.

@chipslave: I hope some prosecuting or plaintiffs' attorney has the genius to require him to change his last name to Head in an offer for a plea deal or settlement.

@madanthony: The TaxProfBlog article sets out how the bankruptcy loopholes were closed pretty well. See 11 USC 522(p).

11 USC 522(q) closes the O.J. Simpson loophole -

a debtor may not exempt any amount of an interest in property described in subparagraphs (A), (B), (C), and (D) of subsection (p)(1) which exceeds in the aggregate $136,875 [Adjusted every 3 years by section 104.] if--

(B) the debtor owes a debt arising from--

(i) any violation of the Federal securities laws (as defined in section 3(a)(47) of the Securities Exchange Act of 1934), any State securities laws, or any regulation or order issued under Federal securities laws or State securities laws;

(ii) fraud, deceit, or manipulation in a fiduciary capacity or in connection with the purchase or sale of any security registered under section 12 or 15(d) of the Securities Exchange Act of 1934 or under section 6 of the Securities Act of 1933;

(iii) any civil remedy under section 1964 of title 18; or

@wrjohnston19283: My parents' accountant told me you can't claim a capital loss on your own residence, period.