Mrs. Kennedy first learned of her husband’s fraud in May 1991. As noted
above, Kennedy was indicted on charges of mail fraud and unlawful monetary
transactions a little less than four years later, on January 27, 1995; this was the same
day that the Government recorded its notice of lis pendens on the Sunset Way
residence. Two months later, Mrs. Kennedy filed for a divorce. At a domestic
mediation conference held to establish the financial terms of the divorce, the parties
agreed that Mrs. Kennedy had a “special equity” in the beach house; this was largely
because, including the funds Mrs. Kennedy had used to repay her husband for his
contributions at the time of purchase, Mrs. Kennedy produced checks totaling more
than $392,412 that she had invested in the property.
Accordingly, Kennedy agreed
to transfer any rights he possessed in the property to her. On September 19, 1995, the
state court entered a divorce decree which adopted the mediation agreement, awarded
the Sunset Way property to Mrs. Kennedy because of her agreed upon special equity
in the residence, and dissolved the marriage.
More than a month later on November
($40,000). Her last check to her husband was actually written for $119,000, but it
included his share of the proceeds from the sale of their former residence ($79,000).
In addition to repaying her husband, the district court found that Mrs.
Kennedy made 87% of the mortgage payments, paid the taxes on the property, and
took care of most of the maintenance costs.
Through an oversight, the final divorce decree entered on September 19, 1995
did not address the disposition of the Sunset Way property. The Kennedys brought