Madoff Trustee Sues Family Members' Companies to Get Funds for Investors
Companies owned by members of Bernard Madoff’s family should pay tens of millions of dollars to help victim’s of his Ponzi scheme, the trustee recovering funds for investors said in three lawsuits.
Madoff’s family members used the money to fund their personal business ventures, said trustee Irving H. Picard in the complaints filed yesterday in U.S. Bankruptcy Court in New York. The companies include a hedge fund, a biotechnology company, energy companies, and Primex Holdings LLC, a company designed to replicate an auction process, according to the filings.
“Foremost among the recipients of Madoff’s gifts of customer funds were his closest family members, including his wife Ruth Madoff, his brother Peter, his two sons Andrew and Mark, and his niece Shana,” Picard said in one of the complaints.
In addition to using almost $250 million of customer funds from the fraud at Bernard L. Madoff Investment Securities LLC to fund their lavish lifestyles, Picard said in the filings that he seeks to recover millions funneled from BLMIS to finance the family members’ personal business ventures.
Primex Holdings LLC, a joint venture between Madoff Securities and several large brokerages designed to replicate the auction process on the New York Stock Exchange, is named as a defendant in one of the complaints filed yesterday.
Madoff, 72, is serving a 150-year term in federal prison in Butner, North Carolina, after pleading guilty to orchestrating history’s biggest Ponzi scheme. When Madoff was arrested in December 2008, account statements showed $65 billion in nonexistent client investments in 4,900 accounts, according to Picard. Investors lost about $20 billion in principal.
Picard, who has so far recovered $1.5 billion for Madoff’s victims and other creditors, didn’t immediately return a call seeking comment after regular business hours.
Martin Flumenbaum, an attorney who has represented Madoff’s sons in earlier cases, and Peter Chavkin, a lawyer for Ruth Madoff, didn’t immediately return calls after business hours yesterday. Charles Spada, a lawyer for Peter Madoff, also didn’t immediately return a call.
One of the adversary cases is Irving H. Picard v. Madoff Family LLC, 10-03485, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Madoff bankruptcy case is In re Bernard L. Madoff Investment Securities LLC, 09-11893, U.S. Bankruptcy Court, Southern District of New York (Manhattan).