Clipped: Court Orders Girlfriend of Former Clippers Owner Donald Sterling To Repay Roughly $3 Million In Gifts To Sterling’s Wife

gavel2A California judge has ruled that the girlfriend of former Clippers owner Donald Sterling must pay back the $2.6 million given to her in gifts from Sterling in a surprising ruling that defines these gifts as community property even though the couple was separated and moving toward divorce. Judge Richard Fruin Jr. awarded Shelly Sterling most of the nearly $3 million she had sought. I have previously discussed how the case highlights the often troubling line of what constitutes prostitution and what constitutes a gifts. [Notably both Sterling and Stiviano deny having a sexual relationship] If Sterling had given V. Stiviano money directly for sex, it would be illegal. Instead, he gave her millions in gifts as part of a relationship. Regardless of where to draw that particular line, Fruin said that the line on community property is drawn to include the house, luxury cars and expensive gifts given to Stiviano as she served as the companion of the octogenarian Sterling.

The decision is obviously sweet justice for Shelly Sterling, particularly after tape conversations showing Stiviano laying the groundwork for claiming that these are gifts, including one conversation played in court where she tells Sterling “The truth is that everything that I have, you’ve given me from your heart without me begging or asking or throwing myself all over you.” Very creepy. Stiviano also claimed that, while Sterling paid for most of the luxury duplex, she contributed an unknown amount of small bills that she kept in a dresser drawer.

In just over two years, Sterling gave her a Ferrari, a Bentley and a Range Rover, and paid the lion’s share of a $1.8 million duplex. Anyone looking at (or listening to) Sterling might conclude that Stiviano still got the worst end of the deal. However, I am still unclear as how this line is drawn. Clearly, both Sterlings gave gifts to various people during this period. However, the size of the gifts appear the determinative factor.

In the meantime, Stiviano has insisted that their relationship was not romantic and that Sterling was more of a “father figure.” Sterling also insisted that they never had sex.

Mrs. Sterling initially sought about $3.6 million but secured $2.8 million, based on evidence at trial and Stiviano’s own admissions.

Clearly, given the $2 billion sale of the Clippers, this was not about the money for Mrs. Sterling.

89 thoughts on “Clipped: Court Orders Girlfriend of Former Clippers Owner Donald Sterling To Repay Roughly $3 Million In Gifts To Sterling’s Wife”

  1. Maybe the focus should be on declaring Sterling incompetent, appointing a guardian

    @ Beldar.

    This is a good idea.

    This can be done using various trust mechanisms. Ones where the client/beneficiary of the trust is not allowed access to the trust assets and is allowed income or maintenance instead. It protects the assets from creditors and from being squandered or dissipated.

    Spendthrift Trust. I’ve set up several of those in my career to protect the incompetent heir from spending all their assets or being robbed through their own stupidity or gullibility. Sometimes these have a sunset provision where by a certain age, say 40, the beneficiary will be given control of the assets. Often set up for children/adults who are into drugs.. One of my clients was set to inherit a very LARGE sum of money but had a stroke and really wasn’t able to make coherent financial decisions. His father set up a trust for the funds and a trustee to manage and distribute the income.

    Special Needs Trust. For example client has a child who is mentally incompetent or severely ill with a genetic disease and needs life long care and needs to qualify for medical assistance. Too many assets under the child’s actual control would disqualify him/her.

    If Mr. S is afflicted with alzheimers, he might qualify for a trust of these types.

    1. DBQ – if Mr. Sterling has Alzheimer’s he is going to fight any restrictions put on him.

  2. Squeeky … I could cite another case like that vis a vis gambling debts. My daughter made that recovery part of her divorce filing…and she got her money back, a substantial sum. The spouse made the argument that it wasn’t really a loss because you can always earn more. Judge didn’t buy that one.

    1. I remember that for my divorce. The amount I could recover on Barbies alone could set me up for life.

  3. Maybe the focus should be on declaring Sterling incompetent, appointing a guardian, allocating so much per week for rolls in the hay with the hookers, and put the rest away for wifeypoo to use while they both are alive and the rest to her when he croaks. Octobenerian?

  4. Chinggis not turn down money if Chinggis can use money to buy yaks and sheep. Better to turn down bed than turn down money. Especially if bed made of down. If girlfriend leave with down bed, down and out.

  5. I remember reading about this kind of stuff in one of my BFF Fabia Sheen, Esq., an attorney’s, law books, Community property laws can play heck with pre-divorce transfers. I remember there was this one case where a wife got back the money her husband lost gambling, because it was community property. I also remember that some property is fungible(?) and can be replaced with money, but some property is unique, like real estate and must come back to the community estate.

    Squeeky Fromm
    Girl Reporter

  6. Karen S … I can take no real credit or pleasure for how the break up impacted our daughter. Yes, she got more benefit than most kids of divorced parents, but I still have a nagging guilt about the necessity of the breakup and why I couldn’t manage it better without divorce…for the kid’s sake. We’ve all got our weaknesses and I try to acknowledge mine. Thank you for your remark.

  7. We have an octopus here at the marina. But we don’t know what an “octogenarian” is. Could it be a human with 8 genders? HumpinDog says its some person over 80 years old. That cant be. A guy that old would not be frequenting a hooker. And I agree with Platos Cave above. Why does the gal have to pay anything back? God knows what she went through with 8 gender guy. Jeso.

  8. I agree the wife deserved to get her fair share of the community property, but shouldn’t the difference be coming out of Donald Sterling’s pocket, not his mistresses? When he gave her those gifts he was essentially committing fraud, giving away things that didn’t really belong to him. Why shouldn’t he be the one who pays the penalty for that? So he took advantage of the young woman’s time and companionship (escorting is not illegal), paid her fraudulently and suffers no penalty?

  9. Say a husband wife are in Nevada and on the same day the guy goes to the Mustang Ranch and before he leaves takes out two hundred dollars and spends it all on sex acts. Wifeypoo meanwhile takes out two hundred from the same ATM and same bank account and goes to one of those hairdressers and spends the same amount there. Both jobs are legal in Nevada. Does she have a claim against him and yet is free to spend money on a ponytail job on the same day? What if he does not enjoy it?

  10. I wonder how a judge in Nevada, in one of those prostitution is legal counties, would rule if it was just a straight up payment to a hooker, even though the cash came out of a joint account with wifeypoo. I think the perspective of the judge matters.

  11. I believe the situation is analogous to the fraudulent transfer of assets to evade a creditor.

    Yes. Similar to the cases where the wife or husband decides to secretly empty the accounts, charge up all the credit cards, sell the assets and pocket the proceeds before the divorce is final in an attempt to defraud the other spouse of their share of the community property.

  12. I don’t find the result particularly surprising. I agree that the value of the gifts was an important consideration. However, I believe the situation is analogous to the fraudulent transfer of assets to evade a creditor.

  13. What if, instead, the husband would have made some very disappointing investments,

    Another good point. However, in that case the money would be gone, vanished, no recourse. In this case the hard assets are still available to be “clawed back” into the asset base. Thus making Mrs S whole and solving some of the estate/gift tax issues.

    This might be the reasoning behind the court’s decision.

    She could have had her signature required, along with his, on all personal and company checks. She didn’t.

    She could have…….., but be aware that the banks are not necessarily required to reject checks requiring two signatures. Most banks will not even open those types of accounts because of the work involved in monitoring checks, the liability to the bank if they let one slip through and also because many transactions are now electronic and there is no way to monitor the transaction.

    The two signatures required can be a part of the corporate by laws of the business or some sort of other legal agreement between the two parties. This would leave the bank or financial institution out of the mix…..AND still end up in court for fraud if one or the other of them were violating the agreement.

  14. DBQ

    If the court deems these gifts to be transactions which were somehow unlawful, then I still say to have the wrongdoer, Mr. Sterling, take the hit with regard to his share of the assets when distributed. I truly don’t see the justification of forcing the recipient of gifts to return such absent very specific criteria. At what point is the wrongdoer held accountable for his actions? I see no accountability and no repercussions for him.

    What if, instead, the husband would have made some very disappointing investments, which would negatively impact their finances? Her lack of knowledge, with regard to investments, could not be used to demand the money be credited to her in the case of a divorce. I view this the same way. He made some poor choices with regard to three million dollars. If the wife wanted a say in all expenditures, there is a solution to that. She could have had her signature required, along with his, on all personal and company checks. She didn’t.

  15. The only thing surprising about this case is that Gloria Allred did not represent V. Stiviano.

  16. Also….just to further confuse the situation. There is the concept of Gift Taxes and the lifetime limit on gifts.

    You can give $14,000 a year without gift taxes being due. More than that and it begins adding to your lifetime limit.

    You have lifetime limit on gifts that is excluded from gift taxes. If you exceed that then your heirs have to pay a huge amount in taxes over that. For most people this isn’t an issue, but again… the level we are talking about here. It is.

    What happens if you exceed those limits? If you do, the gift would go toward reducing your lifetime gift exclusion of $5.34 million, which the IRS raised for 2014 from $5.25 million this year. Once a person’s lifetime exclusion is exceeded, a gift tax of up to 40 percent will apply to you or your heirs.

    So Mr. S is already well into his lifetime limit and it would be adversely affecting his heirs.

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