What is the test for equitable distribution of assets between spouses when one spouse is involved in a criminal enterprise?
The following excerpt is from Commodity Futures Trading Comm'n v. Walsh, 17 N.Y.3d 162, 2011 N.Y. Slip Op. 05366, 927 N.Y.S.2d 821, 951 N.E.2d 369 (N.Y. 2011):
6. Of course, an entirely different situation is presented if it is known that both spouses participated in or were aware of the fraud or illegal conduct. In such cases, courts have held that it would be contrary to public policy to encourage illegal activity by making an equitable distribution of the fruits of a criminal enterprise ( LaPaglia v. LaPaglia, 134 Misc.2d 1030, 1032, 514 N.Y.S.2d 317 [Sup. Ct., Kings County 1987] ).
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