Mr. and Mrs. Solow shuffled nearly $6.5 million into a Cook Island Trust by mortgaging their homes. This fortuitous transfer happened to occur before the SEC filed suit against Mr. Solow alleging that he had participated in a fraudulent trading scheme. Mr. Solow, being a somewhat clever man and facing $5.2 million in damages, begged the court’s mercy under the impossibility defense as he, a paper-pauper, could clearly not pay the debt. Unmoved, the court noted: “where assets are held in an offshore trust, the ‘burden of proving impossibility as a defense to contempt will be especially high.’” Continuing, the court also held that Mr. Solow’s defense claiming he could not pay the debt was not available “where the inability was created by the defendant.”
See Hale Stewart, The Foreign Asset Protection Trust Failures Continue in Solow, Hale Stewart’s Law Blog, September 13, 2017.
