A Case Review of Lawrence v. Goldberg
Most offshore asset protection cases teach the same lesson twice: don’t keep control, don’t build late. This one teaches something nobody else does.
It is the case where a court took a duress clause apart and explained, in a sentence, precisely why that kind of clause fails.
And the reason is not that duress provisions are illegitimate. It is that this one let the settlor help decide when duress existed — which the Eleventh Circuit read as a device to “evade contempt while merely feigning compliance.”
If you have an offshore or hybrid trust, that sentence is the test to run against your own instrument.
Key Points
- The duress clause was held void — not because duress provisions are invalid, but because of who got to decide.
- He never gave up the power to appoint trustees. That alone defeated the impossibility defense.
- Being declared an “excluded person” didn’t help, because the exclusion could be undone.
- The timing was brutal. Trust settled sixty-six days before a $20.4 million award.
- The offshore jurisdiction actually held. The assets were never recovered — which is why the court reached him personally.
- ⚠️ And there is a limit on civil contempt — the same opinion says so, and almost nobody publishes it.
What Happened
In January 1991, Stephan Lawrence settled an offshore trust worth roughly $7 million.
He was an options trader and an MIT graduate. The bankruptcy court that later examined him called him “extremely sophisticated.” He had been trading through Bear Stearns until Black Monday in October 1987 left him with a margin deficit and a dispute that went to arbitration.
That arbitration ran forty-two months.
He settled the trust on January 8, 1991 — sixty-six days before the arbitrator’s award.
The award came down around March 15, 1991: more than $20 million. It was confirmed in February 1993, and a corrected final judgment entered in April 1993 for $20,412,115.
The amendments tell the story
The trust was settled in the Jersey Channel Islands. A month later, on February 7, 1991 — thirty-six days before the award — it was amended.
That amendment did two things: it added the spendthrift provision, and it moved the governing law to Mauritius.
The bankruptcy court’s read was direct: “the original trust document did not provide the Debtor with sufficient protection from his creditors, necessitating the subsequent execution of the amendment.”
In January 1993 came the duress amendment — providing that the settlor’s powers could not be exercised under duress or coercion, and that his life interest would terminate on bankruptcy.
In March 1995, a declaration made him an “excluded person” under the trust.
And in 1999, after the bankruptcy was underway, the trustees issued a “Declaration of Intent” stating that the excluded-person status was irrevocable.
He filed Chapter 7 in June 1997.
The Testimony
Before any of the legal analysis, there was a three-day evidentiary hearing. It did not go well.
The bankruptcy court described eleven hours of what it called “disingenuous and untruthful testimony,” and found it “clear that over the course of the Debtor’s testimony he committed perjury on several occasions.” It referred the matter to the United States Attorney.
The specifics are worth reading, because they are the texture of a case like this.
He testified the trust was for estate planning and retirement security — then could not identify any retirement goal beyond being protected in old age, and could not explain how being permanently excluded from the trust served that purpose.
He said a purpose was providing for charities. The court reviewed every amendment and found no charity named anywhere.
He transferred more than ninety percent of his liquid assets. The court: “This Court finds it impossible to believe that the Debtor surrendered ninety percent of his assets to a stranger on the other side of the world without maintaining some control.”
He testified he had no feelings one way or the other about being stripped of his beneficial interest, and that he had taken no steps to protest it. The court found it “impossible to believe the Debtor simply walked away from virtually all of his assets without any sort of struggle.”
And he had sworn in an earlier affidavit that he had never had “any communications or dealings” with the Mauritian trustee — directly contradicting his own interrogatory answer and his testimony at the hearing.
Asked repeatedly whether shielding assets from creditors was a purpose, he refused to say yes. The court called that answer absurd, “given the fact that absent this shielding effort, there would be no money left for his retirement as creditors would have taken every penny they could find.”
The holding on intent: “placing assets this far from the reach of creditors inherently evidences a singular intention. … The timing of the trust’s creation is further evidence of this intent.”
The trust corpus was held to be property of the estate under 11 U.S.C. §541.
Goldberg v. Lawrence (In re Lawrence), 227 B.R. 907 (Bankr. S.D. Fla. Sept. 23, 1998).
Then Came the Turnover Order
In July 1999 the bankruptcy trustee sought an order directing Lawrence to turn over the trust assets. It was granted.
At a September status conference the court found he had control, through retained powers to remove and appoint trustees and to add and exclude beneficiaries, rejected his impossibility defense, and held him in contempt.
On October 5, 1999, it ordered him incarcerated pending compliance — with a fine of $10,000 per day.
The district court affirmed in July 2000. The Eleventh Circuit affirmed on January 23, 2002.
⚠️ Why the Impossibility Defense Failed
The standard is demanding, and he did not come close.
A contemnor must “go beyond a mere assertion of inability and establish that he has made in good faith all reasonable efforts to meet the terms of the court order.”
He still held the appointment power
The instrument said so plainly: “Lawrence had the sole power to appoint Trustees.”
The Eleventh Circuit adopted the district court’s finding:
“the appellant, as settlor and prospective beneficiary, retained de facto control over the Trust through his ability to appoint Trustees who could in their absolute discretion reinstate the appellant as a beneficiary and assign the entire proceeds to him.”
Being an “excluded person” did not close that door. The 1995 declaration never said whether the exclusion was revocable, and the trustees’ discretion was absolute — so they could put him back in whenever they chose.
The last-minute fix made things worse
He claimed that on September 13, 1999 he executed a document naming the bankruptcy trustee as trustee of the trust, and that this was the limit of his power.
The court was unmoved. He had to have known the appointment would be ignored under the very duress clause he had inserted. That is not “all reasonable efforts,” and it was not made in good faith.
And the 1999 declaration was disregarded entirely
The trustees’ statement that his exclusion was irrevocable violated the automatic stay and was given no effect. The district court called it:
“nothing more than a smoke screen meant to obfuscate the issues and hide Lawrence’s latent control over the Trust.”
⭐ The Holding That Matters Most
This is why the case is worth reading even if you never touch bankruptcy law.
The Eleventh Circuit held the 1993 duress amendment void as to current and future creditors under Florida law, where a settlor creates a trust for his own benefit and inserts a spendthrift clause.
And then it explained the mechanism:
“this provision was specifically designed to prevent permanent revocation of the settlor’s powers. Rather, it leaves to the settlor and the Trustees the discretion to determine when an event of duress has occurred. The sole purpose of this provision appears to be an aid to the settlor to evade contempt while merely feigning compliance with the court’s order.”
Read what that does and does not say.
It does not say duress provisions are invalid. Courts have never held that, and offshore trust legislation is built around them.
What it identifies is a specific defect: the settlor was one of the people deciding whether duress existed. That converts the clause from a fiduciary safeguard into a switch the debtor controls — one he can flip while telling a court he is trying to comply.
The court’s phrase for that is “feigning compliance,” and it is the whole problem. Lawrence could point at the clause and say his hands were tied, while the clause existed precisely so his hands would appear tied.
On Self-Created Impossibility
Lawrence made the argument you would expect. His acts creating the impossibility, he said, occurred before the contempt proceeding — so the impossibility was not self-created in the relevant sense.
The court: “This contention clearly lacks merit.”
“We agree with the district court that Lawrence created this Trust in an obvious attempt to shelter his funds from an expected adverse arbitration award.”
Sixty-six days before a $20.4 million award is not early planning. It is reactive planning with a short head start — and the court treated it accordingly.
The rule the Eleventh Circuit applied: “where the person charged with contempt is responsible for the inability to comply, impossibility is not a defense.”
How a Properly Drafted Hybrid Trust Answers Lawrence
Take the four things that decided this case and ask what a correctly built structure does with each one. The answers are specific, and they are all drafting decisions made at formation.
1. The settlor has no role in declaring duress
This is the holding, so it is the first thing to fix.
Lawrence’s clause left the determination to “the settlor and the Trustees.” That is what made it, in the court’s words, an aid to “evade contempt while merely feigning compliance.”
In the Bridge Trust®, an Event of Duress is declared in writing by an independent Trust Protector — an attorney exercising professional judgment, who is not the settlor, holds no beneficial interest, and is not subject to the same court order.
The settlor has no part in it. He cannot trigger it, cannot prevent it, and cannot reverse it. The mechanism the Eleventh Circuit condemned is not narrowed here. It is absent.
And the declaration is made before any restraining or turnover order issues, which matters because Lawrence‘s clause was designed to operate against an order that already existed.
2. The power to appoint trustees is suspended, not retained
Lawrence held “the sole power to appoint Trustees,” and never gave it up. That single fact carried the case. The Andersons lost on the same axis. And in United States v. Grant, the drafting lesson was identical.
Here, the instrument suspends it. Once the Protector declares, the grantor’s powers to appoint or remove the Trust Protector, the Special Successor Trustee, and the Investment Advisor are suspended by the document itself. Standing consents are revoked. Distributions are suspended. The trustee cannot resign or transfer assets without the Protector’s consent.
The settlor does not have to act, and cannot act.
Which removes the question the court actually asks. Lawrence looked for a lever the debtor still held and found one. When the powers are suspended by operation of the instrument, there is nothing for a court to order the settlor to exercise.
3. The offshore trustee is already engaged
Lawrence picked his trustee after meeting him four or five times at social occasions in London, ran no due diligence, checked no references, and could not say what the trustee charged. The court found that testimony “not credible or believable.”
The Special Successor Trustee here is a party to the trust agreement and signs it directly, alongside the settlors, trustees, and Protector. KYC, due diligence, compliance review, and onboarding are completed at inception. Annual fees fund a standing engagement.
That is a record a court can examine. A relationship documented years before any claim looks nothing like a stranger selected under pressure — which is exactly the contrast Lawrence drew.
4. Timing is the condition, not a feature
Sixty-six days. That is the distance between Lawrence’s trust and his arbitration award, and no amount of drafting survives it.
Nothing in this structure is designed to work when funded late, and it should never be sold that way. A Bridge Trust funded two months before an expected judgment fails on the same facts Lawrence failed on, because intent is proved from circumstances and those circumstances would be identical.
What the structure changes is the cost of building early. A fully foreign trust asks for offshore administration and foreign-trust reporting every year, whether or not a threat ever appears. That burden is the reason most people who should plan early don’t. Removing it during the years nothing is happening is the entire point — not because timing matters less, but because it makes the only variable that can’t be fixed later achievable.
⚠️ And what it does not fix
It does not eliminate contempt exposure. If a court concludes an inability to comply was self-created, it can pursue contempt regardless of who declared duress and regardless of where the assets sit.
What the four facts above change is what a court finds when it looks for a retained lever. In Lawrence it found the appointment power and a clause the debtor helped operate. Those are the findings a properly drafted structure is built to make unavailable — not a guarantee of any outcome, and no honest attorney will describe it as one.
Asset protection answers what a creditor can collect. Contempt answers what a court can order you personally to do. Lawrence is the case that proves those are different questions, because he lost the second one while winning the first.
⚠️ But Civil Contempt Is Not Unlimited
The same opinion contains a limit almost nobody in this field publishes, because it does not help a sales pitch.
Civil contempt is coercive, not punitive. When it stops being capable of coercing compliance, it becomes punishment — imposed without the protections that attach to criminal process.
The Eleventh Circuit said so, and then acted on it:
“When civil contempt sanctions lose their coercive effect, they become punitive and violate the contemnor’s due process rights.”
“If the bankruptcy judge determines that, although Lawrence has the ability to turn over the Trust res, he will steadfastly refuse to do so, the judge will be obligated to release Lawrence, because the subject incarceration would no longer serve the civil purpose of coercion.”
It instructed the bankruptcy court to reconsider his incarceration at reasonable intervals — “although incarceration for civil contempt may continue indefinitely, it cannot last forever.”
Nobody should read that as comfort. Lawrence spent years in custody. The settlor in Harnack has been in the Cook County Jail since June 2022.
What it establishes is that courts recognize a boundary, and that a judge who concludes confinement has stopped working is required to end it — not out of mercy, but because the constitutional basis for holding someone has run out.
Why This Case and Anderson Belong Together
They were decided within three years of each other, in different circuits, on nearly identical reasoning — and the Eleventh Circuit expressly relied on the Ninth.
FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999) is the case the Eleventh Circuit turned to first, devoting several paragraphs to it.
The parallel is exact on the point that decided both.
In Anderson, the settlors were trust protectors with power to certify that no duress existed. The Ninth Circuit found the protector’s “affirmative” powers — particularly the power to appoint a new trustee — compelling evidence of control. When they tried to resign as protectors to escape, that attempt itself proved they had the power.
In Lawrence, the settlor held the sole power to appoint trustees. Same lever, different label.
And the Ninth Circuit’s line, quoted by the Eleventh: “While it is possible that a rational person would send millions of dollars overseas and retain absolutely no control over the assets, we share the district court’s skepticism.”
Two circuits, two structures, one holding: the offshore trustee refused, the assets stayed put, and the person who built the structure went to jail for the control he never gave up.
Why This Trust Failed: The Four Pillars
Timing — fatal. Settled sixty-six days before a $20.4 million award, amended thirty-six days before, with more than ninety percent of his liquid assets.
Control — fatal. Sole power to appoint trustees, never relinquished, plus a duress clause he helped operate.
Jurisdiction — the only pillar that performed. The Mauritian trustee claimed no U.S. jurisdiction and did no business in the United States. The assets were never recovered.
Collectibility — and this is the uncomfortable part. The creditor never collected from the trust. The court reached the person instead, which is what happens when jurisdiction holds and the other three pillars don’t.
What to Take From This
Read the duress provision in your own instrument
One question: who decides that an event of duress has occurred?
If the settlor is among them, the Eleventh Circuit has already written the opinion against you. If an independent party makes the determination and the settlor’s powers are suspended by the document, the defect Lawrence identified is absent.
Check for any power to appoint or remove trustees
Unrestricted removal and appointment power in the settlor’s hands is the single most reliable way to lose an impossibility argument. It was the defect in Lawrence, it was the defect in Anderson, and in United States v. Grant the drafting lesson was the same — suspend that power during duress so the question never arises.
And the timing rule is not a technicality
Sixty-six days. That is the distance between this case and a defensible structure.
A trust funded years before any claim, for a purpose a court can identify, does not generate the facts that decided this case. There is no pending arbitration to shelter from, no amendment adding protection right before an award, no need to explain why ninety percent of your liquid assets went overseas in the same quarter.
FAQs
Are duress clauses illegal?
No. The Eleventh Circuit held this duress clause void, on Florida law, because it let the settlor and trustees decide when duress had occurred. The defect identified was who held the discretion.
So how should a duress provision be drafted?
So the settlor has no role in the determination. When an independent Trust Protector — not the settlor, holding no beneficial interest — declares in writing, and the settlor’s powers are suspended by the instrument, the mechanism the court condemned is absent.
What made the impossibility defense fail?
He retained the sole power to appoint trustees, who could reinstate him as a beneficiary at any time. His late attempt to appoint the bankruptcy trustee was not “all reasonable efforts” made in good faith, because he knew it would be ignored under his own duress clause.
Didn’t being an “excluded person” remove his interest?
Not in a way the court credited. The 1995 exclusion never said it was irrevocable, and the trustees’ absolute discretion meant they could reverse it. A later declaration that it was irrevocable violated the automatic stay and was disregarded.
Does self-created impossibility apply if I built the structure before the lawsuit?
It depends on when the claim became foreseeable, not when the complaint was filed. Lawrence made exactly that argument and the court called it meritless, because the trust was created two months before an expected award.
Can I be jailed indefinitely?
No. Civil contempt is coercive, and the Eleventh Circuit held that once sanctions lose coercive effect they become punitive and violate due process. A court concluding a contemnor will steadfastly refuse is obligated to release him — and must reconsider at reasonable intervals.
Did the offshore jurisdiction work?
On its own terms, yes. The Mauritian trustee claimed no U.S. jurisdiction and the assets were never recovered. That is precisely why the court reached him personally instead.
Does a properly built structure eliminate this risk?
No, and nobody should say otherwise. It changes what a court finds when it looks for a retained lever. It does not remove a court’s power over a person within its jurisdiction.
What is the single lesson?
The person who decides duress cannot be the person the court is ordering to comply.
The Bottom Line
Lawrence built a structure that worked exactly as designed and went to jail anyway.
The offshore jurisdiction held. The trustee refused. The assets never came back. In the narrowest sense, the planning succeeded.
And he spent years in custody, because he had kept the power to appoint trustees, and because the clause meant to protect him was one a court could read as a device for feigning compliance.
The two failures are the same failure. A structure only protects you when the decisions that matter have genuinely left your hands. A duress clause you help operate is not a barrier — it is a lever with your fingerprints on it, and a court will say so.
I spent the early part of my career on the plaintiff’s side of civil litigation. The structures that came apart came apart for the same two reasons every time: the debtor still controlled what he claimed to have given away, or he built it after the claim was already in view.
Lawrence did both, sixty-six days apart.
Structure before stress.
📞 For a confidential legal consultation, contact Bradley Legal Corp. at (888) 773-9399, or complete the intake questionnaire at btblegal.com.
By: Brian T. Bradley, Esq. — National Asset Protection Attorney
Case References
Lawrence v. Goldberg (In re Lawrence), 279 F.3d 1294 (11th Cir. 2002), aff’g 251 B.R. 630 (S.D. Fla. 2000)
Goldberg v. Lawrence (In re Lawrence), 227 B.R. 907 (Bankr. S.D. Fla. 1998)
FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999)
United States v. Grant, No. 9:00-cv-08986 (S.D. Fla. May 27, 2008)
Commodity Futures Trading Comm’n v. Wellington Precious Metals, Inc., 950 F.2d 1525 (11th Cir. 1992)
Pesaplastic, C.A. v. Cincinnati Milacron Co., 799 F.2d 1510 (11th Cir. 1986)
Maggio v. Zeitz, 333 U.S. 56 (1948)
In re Portnoy, 201 B.R. 685 (Bankr. S.D.N.Y. 1996)
11 U.S.C. §§362(a)(3), 521, 541
