Knapp Files Suit to Revoke Divorce Settlement : Litigation: The suit comes at a time of financial trouble for the financier. His business, Trafalgar Holdings, has suffered heavy losses.
Controversial Los Angeles financier Charles W. Knapp, under siege because of business difficulties, has sued his ex-wife, aviator N. Brooke Knapp, seeking to cancel an expensive divorce settlement that was costing him as much as $40,000 a month.
Knapp claimed that he agreed to the divorce settlement in 1986 only because he was “suffering from a severe personality disorder and depression” that left him “exceedingly self-destructive,” according to his lawsuit. The litigation was filed last month in the Santa Monica branch of Los Angeles County Superior Court.
Brooke Knapp is seeking to hold Knapp in contempt of court for falling more than $400,000 behind in monthly support payments. A hearing on her motion is scheduled for Feb. 21. Brooke Knapp is a well-known pilot, who in 1983 set an around-the-world speed record for business jets. Charles Knapp is the former head of Financial Corp. of America, once the country’s largest savings and loan company.
She could not be reached for comment. He declined comment.
The litigation comes at a time of financial troubles for Knapp, who now operates his own investment banking firm in Westwood known as Trafalgar Holdings, a firm that has suffered heavy losses.
Knapp recently moved to change the name of one of its subsidiaries, Trafalgar Securities, to St. Helier Securities because business had turned sour in the wake of negative newspaper articles.
“As a result of several factors brought about by highly adverse publicity, the value of our fee-generating activities has suffered significantly,” the firm said in a recent letter to its shareholders.
Knapp had been chief executive of Financial Corp. of America until thrift regulators forced him out in August, 1984. FCA, once the parent company of American Savings, is now defunct.
Until his ouster, Knapp had been a high-living, controversial figure whose unconventional lending and deposit-taking practices alarmed regulators. Knapp left amid a huge deposit run at American Savings, but not before the board gave him a $2-million severance payment.
Knapp’s lawsuit against his ex-wife seeks to set aside an agreement that provided her with monthly payments of $25,000, plus business expense funds of $10,000 to $15,000 a month. Knapp said in the lawsuit that he signed the agreement against the advice of attorneys because he was not thinking clearly.
At the time, Knapp was under severe pressure because his actions at FCA were being investigated by the FBI and several grand juries. He was never charged with any criminal wrongdoing.
The monthly support payments, scheduled to run at least until 1993, could be canceled in case either individual died or if Knapp exercised an option to buy out his wife’s stock in Trafalgar Holdings for at least $9 million, court records show.
The divorce agreement also gave Brooke Knapp the couple’s luxury home in Bel Air, plus securities and investments valued at more than $1 million. Knapp, who later married movie actress Lois Hamilton, kept his Ferrari, yacht and vintage airplanes, court papers show.
