Festinger v. Edrich

In Festinger v. Edrich, 32 AD3d 412, 820 N.Y.S.2d 302 (2nd Dept 2006), after he was indicted, the plaintiff gave property for safekeeping to his sister, then told the U.S. District Court he was indigent. He was convicted of fraud and ordered to pay more than Two Million Dollars in restitution to those he defrauded. He was subsequently convicted of 49 counts of violation of probation regarding his failure to report assets and income which were available to make restitution. Ten years after he gave his sister the property to hold, and after all of his criminal proceeding had ended, and after his sister had died, he sued her children and former husband for the return of the property. The court affirmed the dismissal of the action on two grounds, unclean hands and judicial estoppel. The court noted that on the unclean hands theory, he had endeavored to place the assets out of the reach of his creditors, so he could not recover them as a matter of public policy.