Madoff Investors Sued by Bankruptcy Trustee Over Alleged Fictitious Profit
Trustee Irving Picard
Daniel Acker/Bloomberg
Irving Picard, the trustee overseeing the Madoff bankruptcy.
Irving Picard, the trustee overseeing the Madoff bankruptcy. Photographer: Daniel Acker/Bloomberg
Nov. 11 (Bloomberg) -- The U.S. Marshals Service on Saturday is auctioning almost 500 lots of clothing, furniture, jewelry and knickknacks recovered from Bernie Madoff’s former Manhattan penthouse and Montauk, New York, beach house. It has a total presale estimate of $1.5 million to $2 million. Margaret Brennan reports on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Nov. 15 (Bloomberg) -- Five of Bernard Madoff’s former employees were sued by the trustee overseeing the bankruptcy of the con man’s investment firm in an effort to recover at least $70 million in allegedly fraudulent transfers. Separately, a New York auction of the spoils of Madoff’s fraud raised more than $2 million for his victims -- as souvenir hunters snapped up his canopy bed, footwear and even his underwear. Bloomberg's Deirdre Bolton reports. (Source: Bloomberg)
Madoff Victim Claims Exceed Available SIPC Funds
Jin Lee/Bloomberg
Bernard Madoff, founder of Bernard L. Madoff Investment Securities LLC, leaves federal court in New York in 2009.
Bernard Madoff, founder of Bernard L. Madoff Investment Securities LLC, leaves federal court in New York in 2009. Photographer: Jin Lee/Bloomberg
Bernard Madoff’s investors, employees and family members including his wife were sued by a trustee seeking to recover as much as $69 million in fake profits they received before the con man’s firm collapsed.
New York attorney Irving Picard, appointed trustee by a federal bankruptcy court, yesterday sued people who allegedly invested with Madoff and withdrew more money than they contributed. Picard, with the approval of the Manhattan judge overseeing the liquidation of New York-based Bernard L. Madoff Investment Securities LLC, has filed such “clawback suits” in an attempt to obtain as much as $17.5 billion for victims of the largest Ponzi scheme in U.S. history.
Picard said in a statement late yesterday that those targeted in this latest round of lawsuits are family members and employees, or their relatives. In some of the complaints filed yesterday in U.S. Bankruptcy Court, he didn’t identify the defendants as having such connections to Madoff.
“The transfers received by defendant constitute non- existent profits supposedly earned in the account, but, in reality, they were other people’s money,” Picard said in a complaint seeking $2.8 million from David Washburn, a Madoff investor. Washburn didn’t return a phone call seeking comment.
$14.1 Million
Among those sued were Bernard Madoff’s wife Ruth, Picard said in the statement. Also named in a complaint was Marion Madoff, the wife of Madoff’s brother Peter, who Picard said received $14.1 million in customer funds that should be returned. Picard already sued Peter Madoff in October, 2009.
Charles Spada, a lawyer for Peter Madoff, didn’t immediately return a call to his office after business hours yesterday. Peter Chavkin, a lawyer for Ruth Madoff, didn’t immediately return an e-mail or call seeking comment made after regular business hours today.
“We have been in touch with each defendant and their counsel, seeking a prompt settlement of these claims and an out- of-court resolution,” Picard said in the e-mailed statement. “However, as these attempts have not reached a satisfactory conclusion, we are moving ahead with litigation.”
The new complaints follow more than two dozen filed by Picard seeking to recover more than $17.5 billion from various parties, including Madoff’s friends and family, and from feeder funds, which directed most or all of their clients’ money to Madoff. One of the suits, filed Nov. 23, seeks $2 billion from UBS AG over claims the Swiss bank aided Madoff’s fraud.
Madoff, 72, is serving 150 years in prison after pleading guilty to orchestrating the fraud that destroyed his New York- based firm, which collapsed in December 2008.
At the time of his arrest, Madoff’s financial statements reflected 4,900 accounts with $65 billion in nonexistent investments, according to Picard. Investors lost about $20 billion in principal.
The bankruptcy case is SIPC v. Bernard L. Madoff Investment Securities LLC, 08-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Bob Van Voris in U.S. District Court in New York at rvanvoris@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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