MANHATTAN (CN) - Steven Cohen's role at SAC Capital Advisors did not help the billionaire hide assets from his ex-wife, a federal judge ruled, paring RICO claims from her $10 million lawsuit.
Patricia and Steve Cohen separated in 1988 after nine years of marriage and Steve's recent founding of SAC Trading Corp.
She requested more child support in 1991, accusing her ex of having filed a separate income tax return in 1989 to hide "substantial income" during the negotiations of their separation.
Steve countered that their combined marital assets were about $8 million at the time of the separation after accounting for a failed $8.7 million investment in Queens co-op apartments he made in 1986. Patricia received close to $5 million, he said.
Years later, Patricia allegedly learned for the first time that Steve had won a $5.5 million settlement from his former business partner, Brett Lurie, over that failed investment.
She sued her ex; his brother, Donald Cohen; and Lurie for violations of federal anti-racketeering law in December 2009.
The Cohen brothers moved to dismiss the third amended complaint, but U.S. District Judge William Pauley III tossed only the RICO claims Monday after finding that Patricia failed to plead that the alleged "concealment of the settlement was either (1) possible by virtue of Steven's position in the enterprise or (2) related to the activities of SAC.
"Though treble damages are a tempting way to spice things up, civil RICO and marriage do not go together like a horse and carriage," Pauley wrote.
Indeed the ruling opened with the emphasis that the case, at its heart, "is a family dispute."
"The only thing that distinguishes it from countless others is the seemingly inexhaustible legal resources that each side has brought to bear," Pauley added.
Steve Cohen must still face claims of common-law fraud and breach of fiduciary duty, according to the ruling. The fraud claim also remains pending against his brother, who faces a claim as well for aiding and abetting breach of fiduciary duty.
"This is a case to restore faith in the old-fashioned idea that divorce is something that lasts forever," Pauley concluded. "Indeed, factoring in Patricia's 1991 motion, the Cohens' legal battles have covered a span over twice the length of their marriage."
SAC Capital pleaded guilty to insider trading charges, carrying a $1.8 billion fine, in November 2013. Former SAC employee Michael Steinberg was convicted a month later of insider trading, and similar charges remain pending against former SAC money manager Mathew Martoma.
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