Premarital Agreements (cont'd): Ken gambles early and Donna late; who wins?

January 24, 2013, by

deadwood sd.jpg
It probably wasn't Coldplay on the radio when Ken proposed. Ken was a little old for that, 75 or 76. And it probably wasn't in a car, because Ken was rich. More likely over dinner, or after dinner at his nice place.

Deadwood, South Dakota was featured in an earlier blog: Musings on Gambling. Wild Bill Hickock was fatally shot in Deadwood while holding what is called the Dead Man's Hand. Our wealthy and romantic Ken, the legality of whose premarital agreement was ultimately called into question, was an investor and a gambler.

Ken was an investor. His Deadwood connection went way back. At about 20 he spent a winter managing a coffee shop in the Franklin Hotel there. He moved to Blaine, Washington near the Canadian line and built up a chain of 17 duty-free border shops between there and Minnesota. He sold those for millions and bought a bank in Ferndale, Washington, and hotels and casinos back in Deadwood.

Ken was a gambler in his approach to the premarital agreement. A more calculating suitor would have insisted on more time between the signing of the agreement and the marriage, to avoid an argument it wasn't freely and voluntarily entered into by Donna. He would also have included full financial statements as attachments to it. These precautions are indicators of procedural fairness in the making of a premarital agreement, which must be either made with procedural fairness, or prove fair in its economic effect, to be enforceable.

Ken was also a gambler in his investing. In general, it's pretty unlikely to amass a fortune (Ken's $77 million) in one generation without risk. And Ken had a practice, once he'd reached the maximum number of permissible South Dakota casino licenses, of taking still more in the names of associates. Once he and Donna were married, she was deputized for this. In her application she assured the Gaming Commission that their premarital agreement allowed her ownership apart from Ken: "...because of a prior marriage, I had financial problems and I didn't want that to happen again, and because Ken had a substantial amount of money, I'm sure he wanted to protect his assets as well. So we've always kept our assets and everything, our financials separate." It turned out that Donna was doing a little gambling herself here. These statements were later used against her in her effort to undo the premarital agreement.