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RI divorcee seeks Marital Deduction on Estate Feds Claim Fraud

Feds: RI divorcee seeks $1.7M marital deduction

August 18, 2011|Laura Crimaldi, Associated Press


A woman has been accused by federal prosecutors of trying to have a divorce judgment thrown out after tax collectors levied $2.8 million in taxes and fines against her dead ex-husband’s estate on the grounds it wasn’t entitled to a marital deduction.

In a civil complaint filed on Tuesday in U.S. District Court in Providence, the federal government accuses Jo-Ann DerManouelian of trying to get her divorce judgment voided in an “improper and collusive attempt’’ to claim a marital tax deduction for her ex-husband’s $17.7 million estate.

DerManouelian, a former waitress living in Johnston, is among three co-executors of the estate of businessman Aram DerManouelian, who died in 2006 at age 67, the complaint shows. The couple’s divorce was finalized on Jan. 6, 1994. She claims in state court filings, however, that her husband fraudulently obtained the divorce.

After Aram DerManouelian died, his estate filed a federal tax return that claimed a marital deduction of nearly $1.7 million, according to the complaint. The Internal Revenue Service rejected the deduction and issued a fraud penalty of $1.1 million in March.

On June 3, the estate petitioned the U.S. Tax Court to rule it had properly declared a marital deduction, the complaint said. Rhode Island state court spokesman Craig N. Berke said Jo-Ann DerManouelian filed a motion on July 7 in the Family Court of Newport County to have her divorce judgment voided.

A motion hearing on the divorce case has been scheduled for Sept. 29, Berke said. The judge assigned to the case hasn’t taken any action, he added.

Jo-Ann DerManouelian claims in state court that her husband initiated divorce proceedings in 1993 because his marriage to her prohibited him from leaving real estate and pension proceeds to his son from a previous marriage. The couple had no children together, court records show.

“When Jo-Ann asked Aram why he was filing for divorce, Aram would only tell Jo-Ann that she should not fight what he was doing and that he, Aram, would pay his lawyers $2.00 for every $1.00 that his lawyers kept from her if she contested the divorce in any way,’’ her attorney Keith Kyle wrote in court filings.

He also claims the couple lived together as husband and wife from the 1980s until Aram DerManouelian’s death.

“On January 6, 1994, there were no irreconcilable differences between Aram and Jo-Ann, Aram and Jo-Ann were living together as husband and wife, there was no irremediable breakdown of the marriage between Aram and Jo-Ann and the entry of the (divorce judgment) January 4, 1994 was procured by fraud on the court by Aram,’’ Kyle wrote.

Kyle didn’t return a message seeking comment Thursday.

Federal prosecutors, however, say Aram DerManouelian’s marital status was listed as “divorce’’ on his death certificate. It also says he twice referred to Jo-Ann DerManouelian as his “former wife’’ in his will. She also is referred to as his “former wife’’ each of the 12 times she’s listed in trust documents related to the estate, the complaint said.

The complaint states Aram DerManouelian listed his filing status as “head of household’’ or “single’’ until 2005, when the estate filed a joint income tax return that listed Jo-Ann DerManouelian as his spouse. He also deducted alimony payments to his ex-wife from his adjusted gross income, the complaint said.

A spokesman for the U.S. Department of Justice, which is handling the case, had no immediate comment on Thursday.

An obituary for DerManouelian published in The Jamestown Press said he was the “beloved husband’’ of Jo-Ann DerManouelian. He was the founder and president of Warwick-based National Velour Corp. and Johnston-based American Foam Corp., said the obituary, which didn’t cite a cause of death.

American Foam sold the foam blamed for fueling a West Warwick nightclub fire that killed 100 people on Feb. 20, 2003. The fire, at The Station nightclub, began when pyrotechnics for 1980s rock band Great White ignited the foam, which was used as soundproofing around the stage. The company later agreed to pay $6.3 million to settle lawsuits from survivors and victims’ relatives.

DerManouelian also was the owner and developer of Portsmouth Industrial Park in Portsmouth and Omni Park in Middletown, the obituary said.

Jo-Ann DerManouelian, 61, and the other estate co-executors did not return messages on Thursday. Attorney Michael S. Marino, who’s handling the tax court case, also did not return a message.