Madoff Investors Object to Trustee's $7.2 Billion Picower Estate Accord
Madoff Trustee Irving Picard
Ramin Talaie/Bloomberg
Irving Picard, the trustee liquidating the Madoff firm.
Irving Picard, the trustee liquidating the Madoff firm. Photographer: Ramin Talaie/Bloomberg
Dec. 17 (Bloomberg) -- The estate of Jeffry Picower, an investor with imprisoned con man Bernard Madoff, has reportedly agreed to pay $7.2 billion to recover money he made from the fraud. Picower’s estate will pay $5 billion to Irving Picard, the trustee overseeing the liquidation of Madoff’s firm, and $2.2 billion to U.S. authorities, according to two people familiar with the matter. Bloomberg's Jon Erlichman reports. (Source: Bloomberg)
A group of victims of Bernard L. Madoff’s Ponzi scheme objected to a settlement in which the estate of Jeffry Picower agreed to forfeit $7.2 billion he made in the fraud.
The investors filed their objection today in U.S. Bankruptcy Court in New York. They said the Picower settlement, which leaves them out, could make it harder for them to get money from the estate. Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, doesn’t represent them because they didn’t lose principal in the fraud.
“By the trustee’s settlement, the Picower entities are paying Picard more than twice what he could recover if he won completely on his pending complaint,” Helen Davis Chaitman, a lawyer for the investors, said in an e-mail.
Picard sued Picower in May 2009, claiming he withdrew $7.2 billion more than he invested and should have known Madoff ran a Ponzi scheme. Picower died in October 2009 at age 67.
Picard and U.S. Attorney Preet Bharara, who is probing the Madoff fraud, on Dec. 17 announced the settlement with Picower’s widow, Barbara. The settlement brought the amount collected by authorities over the Madoff fraud to $9.8 billion.
Amanda Remus, a spokeswoman for Picard’s law firm, Baker & Hostetler LLP in New York, didn’t have an immediate comment on today’s filing.
Evidence-Gathering
In the settlement, Picard would attempt to stop other claims against the Picower estate, though that wouldn’t be a condition of the pact, according to the court filing. The trustee lacks the right to release the estate from their claims, the objecting victims said. The investors asked to be able to engage in evidence-gathering over the proposed settlement. A hearing is scheduled for Jan. 13.
Picard and U.S. Bankruptcy Judge Burton Lifland have said that losses are to be calculated based on the amount of principal lost to Madoff. His victims say losses should be calculated based on the final account statements issued by Madoff’s firm before his arrest in December 2008.
Picard said that investors in Madoff’s Ponzi scheme, the largest in U.S. history, lost $20 billion in principal. Account statements at the time of Madoff’s arrest in December 2008 showed total balances of $65 billion. Picard filed hundreds of lawsuits seeking $50 billion.
Late 1970s
Picower began investing with Madoff in the late 1970s, controlling dozens of accounts. He, his family and related entities deposited $619.4 million with Madoff and took out $7.8 billion, according to a forfeiture complaint filed last month by Bharara. Picower had a heart attack and drowned in his swimming pool in Palm Beach, Florida.
“I am absolutely confident that my husband Jeffry was in no way complicit in Madoff’s fraud,” Barbara Picower said when the settlement was announced. The estate admitted no wrongdoing in settling the case.
The Picower settlement must be approved by the bankruptcy court before it can take effect.
Lifland today approved a settlement in which Union Bancaire Privee, a private Swiss bank, will pay as much as $500 million to Picard, who accused it of helping Madoff commit the fraud.
The case is Picard v. Picower, 09-1197, U.S. Bankruptcy Court, Southern District of New York Manhattan).
To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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