Home Radio Segments Guest Segments Divorce, Scandal, And The Road To Financial Recovery

Divorce, Scandal, And The Road To Financial Recovery

Janet Lombardi, Financial Recovery

With Janet Lombardi, Author of Bankruptcy: A Love Story and Financial Coach

Fraud, Debt, Secrets, And Addictions Bring Down A 25-Year Marriage

While most of us are familiar with Bernie Madoff and the story of his massive Ponzi scheme and the wreckage it caused when it collapsed, there are myriad stories on a smaller scale of fraud, hidden debt, and other financial mischief and the damage it inflicts on victims, including the families of the fraudsters themselves.  Today’s guest Janet Lombardi has recently published a memoir, Bankruptcy: A Love Story, about her secrets-riddled 25-year marriage to attorney Josh Lombardi and its dissolution after Josh was exposed for fraud, disbarred, and ultimately convicted and sent to jail.  The book also documents her long road to recovering from the financial and emotional fallout from Josh’s fall from grace and offers advice for people in similar predicaments.

Steve asks Janet to describe the buildup to the discovery of her spouse’s misconduct and the financial collapse that ensued.  Janet admits that there were signs that something wasn’t right well before the bigger revelations rocked her family and, in hindsight, she sees certain events that lead to the breakdown.   She mentions that Josh had witnessed the World Trade Center towers come down on 9/11 and speculates that this may have contributed to his drug and alcohol problems, as well as a new habit of borrowing and hiding debt in his business accounts.  Later on, she discovered after some research of her own that he was being charged and prosecuted for “white collar crimes,” in this instance spending money from escrow accounts.

Realizations Sink In: Marriage Is Unsalvageable And She Takes Control Of Finances

Janet says that once Josh had lost his law practice—but before he was sentenced to jail time—she realized that she needed to act decisively to secure her own “financial restoration.”  Her salary as a writer and editor for a non-profit was not in itself going to provide a safety net for herself and her two children.  She explains that she undertook a very serious effort to separate herself financially from her husband and achieve her own solvency. This entailed taking a number of drastic steps, including some emotionally difficult ones necessary to break longstanding habits of co-dependency and enabling within her marriage.   Steve mentions a scene from the book where Josh asks her to withdraw money from her 401(k) to help him pay down some of his debts, and Janet finds the resolve to say no.  She claims that not allowing her husband to plunder her retirement account was one of the best decisions she had made.

Hard Truths And Help From Al-Anon

Janet recalls how, after she had made contact with a lawyer to talk about her situation, Josh badgered her to let him provide legal advice.  It took some effort to stop listening to him and trust her own instincts.  Gradually, she was able to do that, at one point getting help from Al-Anon, a program for families of addicts that teaches members to see and change patterns of enabling, co-dependence, and passivity in their relationships to ones based on healthy boundaries and inter-dependence.  Steve asks whether it was only after Janet finally recognized that her husband’s constant need for bailouts was a bottomless pit that she found the wherewithal to confront and break that dynamic.  She agrees with that assessment, adding that Josh had long used money like a drug and was a compulsive spender and borrower in addition to his other addictions.  Her realization of this hard truth—and also the fact that she had enabled this behavior for years by trusting Josh, by not asking the right questions, by offering money when he asked for it—occurred over a period of time, finally culminating with the realization that she was truly on her own and had to assert her need to do things for herself.

Secrets On Both Sides Reflect Damaged Relationships

Steve changes tack and brings up a different secret that Janet talks about in the book: an extra-marital affair she was having with another woman.  Janet admits that she isn’t proud about her infidelity but decided to include it in her book so that it wasn’t a completely one-sided blame fest directed at her husband, and also for the sake of truthfully representing the way that “normal” middle-class families can be “pulled down into something like this.”

How To Recognize And Head Off Financial Problems In A Marriage

Picking up on this thread, Steve mentions that some of their listeners may be personally relating to Janet’s story, and he asks Janet to talk about the aftermath of her marriage’s collapse and what people in a similar situation might do to help themselves out of it.  For starters, she says, if there is financial trouble rearing up in your relationship, the most important thing is to have a conversation about it.  She says she regrets not sitting down for conversation based on a “complete reveal on all our finances” years earlier than she did.  The fact that finances might be somewhat complicated—as they were in the case of her husband’s business accounts—is no reason to postpone this conversation.  Steve adds that if your partner seems to be glossing over certain things or deflecting questions this may be a red flag that they’re not disclosing everything.  Janet agrees, noting that her husband would often say that “now is not a good time” or “let’s talk about this tomorrow,” repeatedly deferring the conversation.  Other signs of trouble, she opines, include your spouse scrutinizing your spending without offering transparency about their own or ignoring their mail, particularly bills, credit card statements, etc.

Seven Steps To Financial Recovery

Janet recently blogged about “Seven Steps to Financial Recovery,” and Steve asks Janet to outline her recommended steps towards financial reform for people trying to crawl out from under the financial wreckage of a marriage gone astray.  She describes the first step in basic terms: “When financial disaster hits, don’t just sit there.”  Fear can lead to paralysis and, when finances start to unravel, it can be very intimidating.  Janet says she struggled to keep her emotions out of the way as she attempted to set goals and follow through on them.  Acting right away kept things from getting significantly worse.  The second step is knowing what your financial situation really is—what you own and what you owe—which is something she takes pains to explain to clients in her money coaching business.  Steve says he works with a lot of people in his financial planning business who don’t know this basic “big picture” information either.  The third step is to stop relying on debt.  Janet states that even though she didn’t use debt excessively, she attended some Debtors Anonymous meetings because she felt that her relationship with money needed work.  She became solvent and, ten years later, debt free.  Steve points out that this is the second mention of her seeking out 12-step groups for help and with good results.

The last major step she advises people who are climbing their way out of a financial mess to take is to develop a spending plan.  This doesn’t come together overnight, and many find that they can achieve this more quickly by working with outside help, professional or otherwise.  A spending plan broadly encompasses what money you have coming in and going out within a framework of what you need to do to take of yourself.  You can use Excel or various apps to pin down the details.  From this jumping off point, you have to stick with the plan.  From there you can create a “punch list” of financial problems and goals, and go through these methodically.  For her, the first thing on her list was selling her home, which also entailed moving in with her sister for a period of time.  Her final admonition: “Be bold with your money moves.”

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: How many of you have seen the Bernie Madoff biopic The Wizard of Lies on HBO? While Madoff’s crime was of monstrous proportions, there are many, many such crimes which don’t hit the national news but have devastating consequences, not only for the victims but also for the families of the perpetrator.

My next guest’s marriage held many secrets from both partners and eventually ended with her husband going to jail for fraud. She is rare in that she has written about it, and she shares her lessons learned in her new memoir, Bankruptcy: A Love Story. Welcome Janet Lombardi. Hey, Janet, welcome to the show.

Janet Lombardi: Hi, thank you for having me.

Steve Pomeranz: So, you were the wife of an attorney for 25 years who hid substantial debt, was disbarred, prosecuted, and then incarcerated. So, how did you lead up to this and did you experience financial collapse afterward?

Janet Lombardi: Yes, there were some events that were leading up to it, of course, nothing happens in a vacuum.

So there were a string of events including my husband was an eyewitness to the collapse of the World Trade Center, he developed a drug habit, he had mounting debt that I didn’t know about that he was running up in his attorney’s account. Eventually, and I discovered all these things, it wasn’t what you came for, that was happening, eventually, I also found out that he was being prosecuted for his white collar crime.

Steve Pomeranz: That crime being that he was spending escrow funds as an attorney.

Janet Lombardi: Yes, that’s correct.

Steve Pomeranz: Yeah, that’s serious stuff.

Janet Lombardi: Yes.

Steve Pomeranz: So, he was disbarred; he lost his livelihood. Were you working at the time?

Janet Lombardi: Yes, I was.

Steve Pomeranz: What did you do?

Janet Lombardi: I worked for a non-profit. At the time, I was an editor and writer. And to answer your first question, yes, we definitely got caught holding the financial bag. I have two sons. And once my husband…he had no practice anymore and he was kind of doing other fields, kinda sketchy…so it became apparent to me that I could not look to him anymore—even before I knew he was going to prison—for any of the financial restoration. So, I got on a very serious…I wanted to get myself solvent. I wanted to survive; I wanted to separate myself financially from him, which I did. And I took some pretty drastic steps financially to get myself into better shape, much better shape.

Steve Pomeranz: I think there was a part in the book where he was still asking you for more money, to take money out of your 401k to help him with something.

Janet Lombardi: That’s correct. And one of the best things I did was never do that.

Steve Pomeranz: Yeah. [LAUGH].

Steve Pomeranz: Lesson number one.

Janet Lombardi: Yeah. Number one, even though he was asking me to that, he’d already emptied his accounts. He was in pretty desperate straits by that point. And he owed a lot of money. And you know, I did say no. And I also want to say, being in a long-term marriage, is very, very emotional for me because there was a certain point where I realized I had to separate myself not only financially but emotionally.

Steve Pomeranz: Yeah.

Janet Lombardi: And you know, he was a lawyer and he was telling me things. And there’s one part in the book where I go to get myself a lawyer myself. Which I did. And you know he kept saying, why do you need to get a lawyer, that kind of thing, and kind of dogging me around the house, saying why do you need to get a lawyer.

And the truth was I needed to get representation, and I was entitled to get representation. But it was very difficult for me, so I had to kind of stop listening to him and listening to myself and trusting myself and doing things that I knew were right for me and my family.

Steve Pomeranz: Yeah, so you had to recognize that to some degree you were an enabler and you could continue to be sucked into this and really it’s just a bottomless pit. It kind of never ends, and you realized, I guess, at one point that you couldn’t really go any further down. It was time to just stop. Kind of like an alcoholic or a gambler, who’s got an addiction.

Janet Lombardi: Yeah, absolutely. Absolutely, and I did say that my husband used money like a drug. He had other addictions, and he was a compulsive debtor, and he was spending obviously way, way over what we earned. And, yeah, there was definitely a point in there—well, actually, several points, and I do recognize that I was enabling. That I wasn’t asking the right questions, do you know? That I was trusting him, that I was believing him.

Steve Pomeranz: Yeah.

Janet Lombardi: And I was helping him at some level. So, in fact, it’s interesting because he did have an alcohol problem, and I personally went to Alanon which is for families of alcoholics. And I learned how to recognize my own enabling behavior. And there was definitely one point where I recognized that I needed to do things for myself, as I said before, for myself. I realized I needed to sell my house. And it’s things like saying, no, that there is no money coming from me anymore.

Steve Pomeranz: Well, you know, he wasn’t alone in the secrets. According to your book, you had them too. So, what part did all the secrets play in the destruction of your family life?

Janet Lombardi: Yes, I did have a secret myself. I had been having a relationship with another woman. He did know about it and that became something that, certainly, it was not my proudest moment just in terms of the infidelity nature of it. And we were kind of in our own world.

Steve Pomeranz: A lot of blame to go around, I guess?

Janet Lombardi: A lot of blame to go around, you know, not functional obviously.

And the reason that they wrote about that, to be honest with you, Steve, is because I didn’t want to finger point completely in the book. Far from it, I actually wrote the book to try to explain the complexity of these kinds of things. And how people with good middle-class lives and children and soccer games, and all that, can actually get pulled down into something like this.

And so I wanted to kind of write about my own participation and my role in it at some point and how we’re not completely honest with each other.

Steve Pomeranz: My guest is Janet Lombardi, the book is Bankruptcy: A Love Story and it’s really about kind of a spiraling down with a family full of secrets and a husband who broke the law and went to jail, and what the aftermath was. Let’s talk about the aftermath. I’d really like to get to a point here where we’re talking to those people who are listening maybe a little bit more closely than others, for personal reasons.

And they want to know what they can possibly do. What are some of the steps that people can take to help themselves?

Janet Lombardi: Well, certainly, if there is financial trouble brewing in your relationship, one of the most important things to do is to obviously have a conversation about it.

One of the things that I wish I had done was, some years back, just sitting down and having a complete reveal on all of our finances. Even though they were complicated because my husband takes some things out his attorney account, so it’s really important to have that conversation.

Steve Pomeranz: Watch out for the glossing over, right? You can ask questions but if the other person is talking over you and maybe acting in a defensive way or something, I mean that’s something you should take note of.

Janet Lombardi: Absolutely. One of the things my husband did whenever I did want to have a conversation, he would leave, he would kind of leave the room or say this isn’t a good time for me or let’s do it tomorrow or I’m working on x. So, it was always kind of this deflection.

Steve Pomeranz: Mm-hm.

Janet Lombardi: Just having a normal conversation about money. That’s absolutely a red flag. And the other thing, like a partner kind of scrutinizing your spending and not talking about their own. I think that’s another sign. And the other thing that in my experience was that my husband was afraid to open the mail.

Steve Pomeranz: Was what. Say that again.

Janet Lombardi: Was afraid to open the mail.

Steve Pomeranz: Open the mail. Okay.

Janet Lombardi: Right, so there were bills and there were credit cards. Right, and then when I did finally kind of excavate things in our home office, I found piles of that. That was obviously another sign.

Steve Pomeranz: So crawling out from the wreckage, there’s some key steps to financial reform, that’s how you put it your notes in your book.

What are some of those key steps to financial reform?

Janet Lombardi: Okay, I did write “Seven Steps to Financial Recovery” on my website and I’ll just go through them quickly.

Steve Pomeranz: Sure.

Janet Lombardi: The first thing is that when disaster strikes, don’t just sit there.

Steve Pomeranz: Don’t just sit there?

Janet Lombardi: Don’t just sit there.

Steve Pomeranz: Okay.

Janet Lombardi: When you see that the finances are starting to unravel, it’s very easy to ignore them. It’s very easy to get…you get scared, right. And you don’t kind of want to look at it. But one of the things that I did, my experience was very difficult.

I took the emotion out of it and tried to get on my road to…I set goals, basically, financial goals, but that was not an easy thing to do. But I did take action immediately, so I didn’t let the situation get worse financially for us. The second thing to do is to know what you own and what you owe.

So, very simple but a lot of people don’t. I do some money coaching and a lot of people, just the very first step, they don’t have any idea of what their financial situation is.

Steve Pomeranz: Yeah, I meet with people like that as well in my financial planning practice, everything is so vague. They don’t know what they own, and I never heard the other part of it because I’m always telling people toknow what you own, but I never heard the part—know what you owe, I like that part too.

Janet Lombardi: Yeah, they go hand in hand, but getting the big picture, the holistic picture of what your financial life is like, it doesn’t have to be a scary thing, it’s just real. The third thing is if you have a lot of debt you have to stop debting. Okay? So cash can turn your life around, and that’s a change in behavior. One of the things that I did was I joined a debtors anonymous group.

Even though I wasn’t really a good debtor, I did have a questionable relationship with money. So, I got to learn about myself and got solvent, and today, ten years later, I don’t have any debt. Really, really helpful.

Steve Pomeranz: You also mentioned you went to Alanon, which is for the families of those who are addicted. So, there’s a pattern there for you, of trying to seek out some help and, in those two situations, they’re kind of structured help with emotional support.

So that was very good for you.

Janet Lombardi: Yes, exactly. You described it very well. And the next step to create a spending plan and to stick to it. And that’s another thing that doesn’t happen overnight. You might work with other people like I did. I was able to develop a spending plan which is— I don’t like to call it a budget—it’s a spending plan, which is you kind of taking care of yourself, seeing what’s coming in, what’s going out, and sticking to that plan. You can do it in Excel, you can do it in apps, there’s lots of ways to do it, but it’s very important to have that. And then tackle money problems with a punch list, which what I did was recognize what are the three things I really to take care of. So, number one was I sold my home because I had a really ugly subprime mortgage on my home, which I also go into detail about in the book. How that happened and all that. So tackling many problems one by one. And then, be bold with your money moves.

Steve Pomeranz: Be bold.

Janet Lombardi: So, for instance, I sold my home after my husband went to prison at that time, and I moved in with my sister, as I mentioned. So, that was a big move because I needed to get back on my feet.

Steve Pomeranz: I’m going to have to stop you there, unfortunately, we’re out of time. What’s the name of the website, Janet?

Janet Lombardi: It’s JanetLombardi.com.

Steve Pomeranz: And that’s L-O-M-B-A-R-D-I.

Janet Lombardi: That’s correct.

Steve Pomeranz: The book is Bankruptcy: A Love Story and again you can see that if you’re experiencing this situation yourself you are not alone.

There’s a lot of good resources and I think this book is one of them. Janet Lombardi, thank you for joining us so much.

Janet Lombardi: Thank you, thank you very much, Steve.