Judge, Husband Settle Bankruptcy Dispute

A prominent Summerville lawyer and his wife, a Circuit Court Judge, will pay a combined $500,000 to settle a lawsuit that claimed the pair improperly transferred real estate holdings that were tied up in a $61 million bankruptcy.

Arnold S. Goodstein and his wife, Circuit Court Judge Diane S. Goodstein, agreed to pay the settlement, but they have not admitted guilt and they continue to dispute the trustee's claims, according to the terms of a settlement filed in U.S. District Bankruptcy Court last week.

The case is associated with a 2010 bankruptcy in which Arnold Goodstein's real estate empire collapsed. The trustee overseeing the repayment of more than $61 million in Goodstein's debt alleged that the Goldstein's improperly transferred property that was involved in the bankruptcy.

The transfers, termed "fraud" in the settlement, were roughly $2 million below fair value, the settlement states. The sale of property between relatives is permissible during a bankruptcy, but the trustee has the right to review what's fair value.

The settlement allows the Goodstein's and the trustee from going to trial on the matter. The trustee was seeking $2 million for the improper land swap, but a trial would have prolonged the already complex bankruptcy and cost the state even more money, the trustee wrote in her filing with the bankruptcy court.

At the peak of his professional career, Arnold Goodstein sat at the helm of the Charleston region's largest homebuilding company, Summerville Homes. The company stopped building in 2008 and debts to banks, contractors and family creditors began to mount.

In all, he owed $61 million to 85 creditors, according to court records.

A former state senator and one-time South Carolina Department of Transportation commissioner, Goodstein still is a lawyer in the region.

Diane Goodstein was not named in the bankruptcy, but she was transferred unspecified property during or within a year of the bankruptcy filing. She's paying her portion of the settlement from annuity she owns.

The bankruptcy court judge has final say on the terms of the settlement.