Madoff Investor Asks Appeals Court to Toss Picower Accord

An investor in Bernard Madoff’s Ponzi scheme asked a federal appeals court to throw out a lower- court decision barring her from suing over a $7.2 billion settlement by the U.S. with the estate of Jeffry Picower.

Giving Madoff trustee Irving Picard priority in dealing with the Picower estate, the district judge denied the investor, Adele Fox, the right to sue the estate herself, she said in a filing yesterday in the U.S. Court of Appeals in New York.

Fox said she is among the Ponzi scheme’s so-called net winners who took out more money than they put in. The trustee and the government have determined that “not a penny of the forfeiture” by the Picower estate will go to her and other net- winner investors, she said.

The appeal of the settlement struck in December means that the majority of the $8.7 billion gathered by the trustee for distribution to investors who lost money with the con man remains tied up in court.

Picower, one of the largest of Madoff’s investors, may have suspected the con man was running a Ponzi scheme, according to Picard. Picower drowned in 2009, and his estate forfeited the money to the U.S. and Picard.

The settlement also is being challenged in district court by lawyer Helen Chaitman on behalf of investors.

Picard, who has filed more than 1,000 suits seeking money for Madoff investors, has estimated allowed claims on the estate at more than $17 billion. He and his law firm, Baker & Hostetler LLP, have collected about $224 million in fees since Madoff’s 2008 arrest.

The case is U.S. v. $7.2 billion, 11-2898, U.S. Court of Appeals for the Second Circuit (New York)

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net