I am a single dad of three kids, one of which with special needs. This piece is part of a series of articles I am authoring about my experiences with the seemingly broken Maine Family Court System. My hope is that others can learn from my experience and protect themselves accordingly.

About My Business

I started a small software business 22 years ago right out of college. It has been a side venture that has generated some decent side cash for me and my kids over the years. While I worked for other software companies as my primary job, my dream all along was to run my own. I was well on my way. My little Maine LLC started to makes some headway. I accumulated assets, reinvested in the business, opened a small office in the coastal Maine community I live in, hired three outside consultants, etc. All was great until my marriage had failed and me and my ex dragged us down the path of a highly contested divorce. This was a process I did not want to be part of. Not the divorce itself, but the idea of an ugly, expensive, drawn out divorce, filled with made for TV drama and theatrics (this is an unbelievable story I will soon publish as well). The last thing I ever expected was for the Maine Family Court system to Order the death of my business and essentially crush my dream. My office is closed. My consultants no longer work for me. My business is left in an upside down state. All courtesy of the Maine Family Courts.

I share my story with the masses in hope that this exposure will ensure no other small business is ever sentenced to death by the Maine Family Court system in this manner again. I worked hard for many years to build my business, and just like that, a rogue Court Order can wipe it all away. I’m still holding on to hope for my business, but have quickly realized that the world of Family Court is not a place that reason and common sense apply.

LLC vs C-Corp: One mistake I made was that my business was an LLC and not a C-Corp. That might have protected the business a bit more. Though my experience tells me that the Family Court could still do whatever it wanted. Still, my advice to anyone is to make sure your business is organized as a C-Corp. It will cost a bit more money to setup, and more time to manage, but in the end, could make a big difference.

Divorce and Distribution of Business Assets

During my divorce, which started in 2015 and has lasted nearly four years (story for another day), my ex, now a medical doctor who I share two young sons with 50/50, coldly decided she wanted to go after the assets of the business that predated our relationship and hired a financial expert to go through my business finances. This despite the fact that she was in medical school for the whole marriage and this side business helped support her, our kids, and her quest to become a doctor.

It is worth noting that we used a referee and not a Judge (big mistake). Thought that we would be able to get through this faster and more thorough if we paid someone to give this the attention it deserves versus the overloaded Court system. Turned out to be one of the the worst decisions of my life.

The Referee, despite the fact the business was made prior to the marriage, found the whole business marital. Two financial experts (I had to hire one too) agreed and recognized that my business had a large sum of back taxes and other credit debt owed. All were immediate debts, meaning they needed to be paid immediately. The taxes compiled as through the divorce I hadn’t filed taxes because we were not in agreement as to how to file (Lesson for another day, I should have filed anyway like the IRS said after). The business held mostly cash assets, just enough to cover the tax and credit debt. This should have been a simple exercise: subtract the outstanding business debt from the business assets to come up with a business value or liquidation value that can be divided. Simple right?

The Referee had other ideas. The Referee decided the business had no discernible value, and even though she adopted and recognized the debts declared by the financial experts, she refused to consider those debts in the distribution of the marital business assets. The Referee decided to just take all the business assets (mostly cash) and split them up. Not only did she give my ex half of those assets, but also paid herself, the Guardian Ad Litem, and my ex’s attorney fees from those funds. So what’s the problem? This gave all of those parties tax free distributions from the business and in turn left the business insolvent. The money in the business account that was supposed to pay the business debts was gone. The Referee took advantage of the fact I hadn’t paid the taxes yet. Otherwise those funds would not even be there in the first place.

Now the business is left with an extremely large immediate debt it has to pay and no cash to address it. This essentially bankrupted my business and ceased operations. At the time I had three consultants working for me. All of them I had to let go. The business and the project I was working on stalled. The Referee essentially ordered a death sentence for my business. Ironically, the Referee used the business income as a basis for calculating ongoing child support, but killed the business at the same time. Creating a child support order that was going to be impossible to comply with.

Medical School Debt

The Court and Referee’s tried to justify their ruling by calling out the fact that my ex was awarded all of her medical school debt. Keep in mind, that my ex is planning on taking advantage of the Public Service Loan Forgiveness program which forgives all her loans, and the Courts know this. The Courts also know that her degree is an asset that only benefits her and that she started medical school before the marriage. Still, they thought it appropriate to call the loans derived during the marriage as marital debt and essentially saddled me with that debt with no offset.

My Advice: If you are going to marry someone who is in medical school or any other graduate school, wait until your significant other is done before getting married or you can be saddled with the debt as marital debt despite the fact the State of Maine doesn’t recognize a degree as an asset with any value. They don’t have to offset you contribution to the attainment of the degree. If your ex was out to destroy you as mine was, they can use this loop hole and Law Court will support it.

A Broken Process That Couldn’t Care Less

The Referee process gives the Referee the ability to share the report with the parties in a collaborative effort before submitting to the Court. My Referee did not. She just sent her report to the Courts. I was devastated that she did that. Naturally I objected to her report, asking she fix the various injustices in her report. She refused. She said she considered the debts in her decision. Umm, no ma’am you didn’t.

Naturally, I objected to the Referee report to the District Court, who is supposed to give this process oversight. This was a no brainer to fix, right? I had a lawyer construct a well thought, and descriptive objection. The District Court, simply denied it with one sentence and no explanation or discussion. No hearing, nothing. Just a one sentence denial. The impression was that they didn’t even really look at it. What?!

Naturally, I appealed to the Maine Law Court / Supreme Court. Certainly, this was a no brainer to fix, right? The Maine Law Court didn’t even bother to write an opinion on this matter. Instead it just issued a memorandum affirming the District Court Decision. Unreal.

You would think the State of Maine would bend over backwards to ensure that businesses stay afloat in a state that has an already horrible reputation for attracting new businesses in the State, and keeping those businesses.

Fun fact: Forbes ranks Maine the third worst state to conduct business in America (Ranked 48th out of 50) in front of only West Virginia and Alaska.

Cascading effect

The affects of this decision was disastrous. Like I do every year for 20 years, I expected the business to pay off its tax debt. Now the business can not. The problem got worse and worse; was like quick sand as every-time I would try to fight this injustice, I would take on more legal fees, get further in the hole, and eat more into the business finances.

Then enter my ex. Only forty somewhat days after the Law Court affirmed the decision, and after I asked her for flexibility to figure this disastrous Judgement out, I logged into my personal bank accounts and noticed I was broke. My ex and her attorney obtained a Writ of Execution and had a Sheriff go to my bank to levy her share of the business assets. Rather than take the money from my business accounts, the Sheriff took all of my personal savings and checking, creating a financial crisis for me. I have a daughter with needs that requires special schooling. Her tuition money was taken. The money I need to take care of three kids as a single dad and pay for living expenses such as mortgage, utilities, food etc., gone. Many Maine family attorney’s I spoke to have said that this move really pushes the boundaries of ethics as they other party knew there were kids involved here, and that this move is unheard of in Family Court. Again, this was only forty days after the Law Court judgement. They didn’t even give me a chance.

As if this wasn’t enough, my ex and her attorney filed a Contempt motion against me, placed liens against my properties, and in parallel the IRS placed a Federal Lien against me for taxes owed from my business earnings. Talk about a lose-lose situation. If I address the IRS, the Family Court comes at me. If I address the Family Court, the IRS comes after me. I filed an injunction trying to stop my ex from taking my personal funds. Rather than give me the money back, the Judge ordered my ex’s attorney hold the money. We had a hearing on the injunction and contempt and I’m still waiting to hear back on that, though nothing has gone my way so I doubt that will be anything positive.

The affects of the Judgement went beyond just hurting my pride and wallet. It also added unnecessary strain to my home where I am a single parent of three kids. One of those kids, who is from a previous relationship and resides with me full time, is on the autism spectrum and attends a specialized private school of which the tuition I am responsible for (the tuition money was taken from the writ of execution carried out by my ex). The Courts have basically told me tough to this point that this child is not a party in this divorce. She does not matter. To the Court, she is acceptable collateral damage. My ex has also asked the Court to force the sale of my primary home where me and three kids reside to facilitate the flawed judgement now. All of this stemming from a Referee’s rogue method of distributing business assets.

A Broken Process

The Referee process is supposed to have oversight. The District Court is supposed to look it over and fix any mistakes or anything unjust. The process is supposed to come an equitable conclusion for both parties so everyone can move forward. The mark was wildly missed here. My business and personal finances left in shambles, while my ex who brought nothing into the marriage, and contributed nothing to the attainment of assets in the marriage as she was in medical school, was rewarded handsomely. I was left with no retirement, a cash deficit, and far less than what I came into the marriage with. My ex, for her efforts in attending medical school, walked away with more than most people save in a life time.

Discussion of the Law

Ok, now back to my business that is left upside down. The standard practice recognized by the Maine Law Court is to distribute the net business value. I could not find a single case where the Maine Law Court sentenced a business to death as they did with mine. In fact, all I could find is case after case after case where the Law Court used any evidence of business value, limited or not, to come up with a net distributable value. In all cases, they left the business in a good operating state.

One such case was Starrett v. Starrett, 2014 ME 112. In this case, you can clearly see the way the Law Court determines how business assets should be divided and, unlike the Referee in this case, arrives at a clear distributive value. Here the Law Court uses a liquidation calculation which subtracts outstanding business debt from business assets to determine current business value to distribute. In that case, the Court determined the net value of the business to be $47,039 after subtracting the business debts from the business assets. See table below which is an excerpt from that case:

Had the Law Court used the same methodology as in my case in Starrett v. Starrett, they would have distributed all of Irv’s Drywall Assets, and left the business upside down, as they did with me. But they didn’t, because that is nonsense and irrational. So how is this happening? I ask myself this everyday. It eats at me that the Court system is allowing this, especially as it affects three little lives. I’ve heard horror stories about Men and the Maine Family Court system, and here I am now, another casualty or statistic. I have fought diligently to fix this. I thought that was the right thing to do. Ethics matter, don’t they?

What’s Next For Me?

I filed a 60(b)(6) motion with the same Family Court, and naturally the Judge did not care and denied it. The Judge in my case seems to think I just am whining about not liking the Order. Really?! I just want to keep my business alive and my house standing up right. I have appealed the decision with the Maine Supreme Court. I’m hoping for the best but prepared for the worst (denial and probably more absurd sanctions for trying to protect my business). I should matter. My kids should matter. My business had a right to survive. I am not sure who out there can help, but thought it was important to share part of my story.

Until then, my business remains on death row and time is running out. Praying for a stay of execution.

NTah0e, Maine.