Pay ... or Else!

If you have not heard of a writ of capias ad satisfaciendum, you are not alone. The writ is an obscure instrument of judgment that creditors can use to incarcerate debtors who have the means to pay but refuse to do so.

Warren Matthei, a stockbroker from New Jersey, is now in the Essex County Jail under a writ obtained by Ellen Marshall, a solo practitioner from West Orange, NJ. She wants payment for Matthei's divorce work over a decade ago. He has been sitting in jail since 1996 for not paying child support and other debts. Matthei claims he no longer has money to pay Marshall, but he has not provided the necessary accounting to prove it, creating a stalemate at least until November, his next scheduled court date. Marshall is not waiting. On March 3, she filed a federal suit in Newark, NJ, against High Swartz Roberts & Seidel, a venerable Norristown, PA, firm whose associate, Ronald Fenstermacher, prepared trust and commercial documents for Matthei in 2001 while Matthei was in the Federal Detention Center in Philadelphia.

The Suit

The suit alleges that the documents were designed to create a false record that Matthei had transferred ownership of a $1 million flat in London years earlier to his second wife, Emma Dawson, and charges that Fenstermacher and his firm committed fraud by helping Matthei hide assets that could have been used to pay Marshall. Furthermore, Dawson, now divorced from Matthei, called in a U.S. lawyer whose communications would be privileged. That way, Marshall and law enforcement officials would not find out about the transactions, which Matthei needed to distance himself from assets he actually controlled, according to the suit, prepared by Clark Alpert of West Orange's Alpert Goldberg Butler Norton Bearg & Peach.

According to the complaint, “Fenstermacher knew that his role was to act 'under color' of his law license but to actually act as a middle person or 'mule' to transfer papers and bring about the desired result.” Fenstermacher and his firm decline to comment. Their outside counsel, Arthur Lefco of Philadelphia's Marshall Dennehey, Warner, Coleman & Goggin, says they are confident that “when the facts are developed it will be clear that they have no liability, have done nothing wrong and will be completely vindicated.”

Most Stubborn Prisoner?

Matthei could not be reached for comment at the jail. His 8 years behind bars — first for not paying alimony and child support of $150,000 and now on the capias writ — makes him a candidate for America's most stubborn prisoner. Candor about his money may be his way out, but he refuses to take it. “It is up to Mr. Matthei as the defendant to show that he really has no control over any of these assets or control over Miss Dawson,” Essex County Superior Court Judge Jared Honigfeld said in February when he refused to let Matthei out. “Quite frankly, that has not been shown or demonstrated to this court.”

Matthei hired Marshall in 1992 to represent him in a divorce from his first wife that resulted in child support, alimony orders and a requirement that he keep his former wife informed about the outcome of negotiations over a wrongful-termination claim against his former employer, Merrill Lynch. He moved to England, but on a return visit in 1996 he was arrested for not paying child support. Further proceedings determined he also had not told his wife he had received a $2.74 million settlement from Merrill Lynch. Most of the time since then he has been in the Federal Detention Center in Philadelphia awaiting trial for violating the federal deadbeat dad statute.

That case is pending, but when his father posted bail for him last year, he was detained and shipped to Essex County on Marshall's capias writ, outstanding since 1996. Over the years, Matthei has tried to have the writ lifted, and one judge who determined that Matthei would never pay was poised to let him out, but the Appellate Division, and now Judge Honigfeld, have said he has to be more forthcoming about his finances.

Marshall's suit claims that in 2000, when Matthei was in Philadelphia, Emma Dawson's British solicitors at Slough's Hetherington & Co. contacted Fenstermacher, saying Matthei needed “someone to actually visit him personally to discuss matters with him and get him, if necessary, to sign any papers,” because federal authorities were intercepting his mail. (U.S. prison authorities are allowed to read inmates' non-legal mail and even have the right to read correspondence from lawyers if it is opened in the presence of the inmate.) Among the papers needed were documents confirming that Matthei — years earlier — had signed over to Dawson shares of a Bahamian company that owned the posh London apartment. According to the suit, after the documents were filed with a London court in 2003, Dawson was able to sell the apartment for $900,000. (Dawson and Hetherington & Co. are also named as defendants.)

If the fraud suit survives the usual federal threshold arguments for dismissal, Fenstermacher is likely to argue that if fraud was afoot he had no reason to know it, that he owed no duty to Marshall and that the tasks he performed were ministerial or innocuous.

Marshall said in an interview that the totality of a deposition Fenstermacher gave in the capias proceeding suggests he knew what was going on. As for Matthei, Marshall says she is not hounding him by pursuing the capias writ because most of the time he has spent in jail has been for the charges stemming from his nonpayment of child support, including the pending federal indictment. With interest, her fee claim is now about $150,000, she says. She thinks he will realize that putting his life on hold for such a long time is not worth it and he will decide to pay what he owes.

In the suit against High Swartz, she hopes to collect the cost of pursuing Matthei and Fenstermacher, for which $250,000 in fees has been expended, she says. Although her colleagues think she is insane and should have written off the $83,000. “But,” she adds, “that was one-fifth of my practice income for a year and I am principled and think people who give services deserve to be paid.”

If you have not heard of a writ of capias ad satisfaciendum, you are not alone. The writ is an obscure instrument of judgment that creditors can use to incarcerate debtors who have the means to pay but refuse to do so.

Warren Matthei, a stockbroker from New Jersey, is now in the Essex County Jail under a writ obtained by Ellen Marshall, a solo practitioner from West Orange, NJ. She wants payment for Matthei's divorce work over a decade ago. He has been sitting in jail since 1996 for not paying child support and other debts. Matthei claims he no longer has money to pay Marshall, but he has not provided the necessary accounting to prove it, creating a stalemate at least until November, his next scheduled court date. Marshall is not waiting. On March 3, she filed a federal suit in Newark, NJ, against High Swartz Roberts & Seidel, a venerable Norristown, PA, firm whose associate, Ronald Fenstermacher, prepared trust and commercial documents for Matthei in 2001 while Matthei was in the Federal Detention Center in Philadelphia.

The Suit

The suit alleges that the documents were designed to create a false record that Matthei had transferred ownership of a $1 million flat in London years earlier to his second wife, Emma Dawson, and charges that Fenstermacher and his firm committed fraud by helping Matthei hide assets that could have been used to pay Marshall. Furthermore, Dawson, now divorced from Matthei, called in a U.S. lawyer whose communications would be privileged. That way, Marshall and law enforcement officials would not find out about the transactions, which Matthei needed to distance himself from assets he actually controlled, according to the suit, prepared by Clark Alpert of West Orange's Alpert Goldberg Butler Norton Bearg & Peach.

According to the complaint, “Fenstermacher knew that his role was to act 'under color' of his law license but to actually act as a middle person or 'mule' to transfer papers and bring about the desired result.” Fenstermacher and his firm decline to comment. Their outside counsel, Arthur Lefco of Philadelphia's Marshall Dennehey, Warner, Coleman & Goggin, says they are confident that “when the facts are developed it will be clear that they have no liability, have done nothing wrong and will be completely vindicated.”

Most Stubborn Prisoner?

Matthei could not be reached for comment at the jail. His 8 years behind bars — first for not paying alimony and child support of $150,000 and now on the capias writ — makes him a candidate for America's most stubborn prisoner. Candor about his money may be his way out, but he refuses to take it. “It is up to Mr. Matthei as the defendant to show that he really has no control over any of these assets or control over Miss Dawson,” Essex County Superior Court Judge Jared Honigfeld said in February when he refused to let Matthei out. “Quite frankly, that has not been shown or demonstrated to this court.”

Matthei hired Marshall in 1992 to represent him in a divorce from his first wife that resulted in child support, alimony orders and a requirement that he keep his former wife informed about the outcome of negotiations over a wrongful-termination claim against his former employer, Merrill Lynch. He moved to England, but on a return visit in 1996 he was arrested for not paying child support. Further proceedings determined he also had not told his wife he had received a $2.74 million settlement from Merrill Lynch. Most of the time since then he has been in the Federal Detention Center in Philadelphia awaiting trial for violating the federal deadbeat dad statute.

That case is pending, but when his father posted bail for him last year, he was detained and shipped to Essex County on Marshall's capias writ, outstanding since 1996. Over the years, Matthei has tried to have the writ lifted, and one judge who determined that Matthei would never pay was poised to let him out, but the Appellate Division, and now Judge Honigfeld, have said he has to be more forthcoming about his finances.

Marshall's suit claims that in 2000, when Matthei was in Philadelphia, Emma Dawson's British solicitors at Slough's Hetherington & Co. contacted Fenstermacher, saying Matthei needed “someone to actually visit him personally to discuss matters with him and get him, if necessary, to sign any papers,” because federal authorities were intercepting his mail. (U.S. prison authorities are allowed to read inmates' non-legal mail and even have the right to read correspondence from lawyers if it is opened in the presence of the inmate.) Among the papers needed were documents confirming that Matthei — years earlier — had signed over to Dawson shares of a Bahamian company that owned the posh London apartment. According to the suit, after the documents were filed with a London court in 2003, Dawson was able to sell the apartment for $900,000. (Dawson and Hetherington & Co. are also named as defendants.)

If the fraud suit survives the usual federal threshold arguments for dismissal, Fenstermacher is likely to argue that if fraud was afoot he had no reason to know it, that he owed no duty to Marshall and that the tasks he performed were ministerial or innocuous.

Marshall said in an interview that the totality of a deposition Fenstermacher gave in the capias proceeding suggests he knew what was going on. As for Matthei, Marshall says she is not hounding him by pursuing the capias writ because most of the time he has spent in jail has been for the charges stemming from his nonpayment of child support, including the pending federal indictment. With interest, her fee claim is now about $150,000, she says. She thinks he will realize that putting his life on hold for such a long time is not worth it and he will decide to pay what he owes.

In the suit against High Swartz, she hopes to collect the cost of pursuing Matthei and Fenstermacher, for which $250,000 in fees has been expended, she says. Although her colleagues think she is insane and should have written off the $83,000. “But,” she adds, “that was one-fifth of my practice income for a year and I am principled and think people who give services deserve to be paid.”