Madoff Sons’ Wives Sued by Trustee for $57.5 Million

The trustee liquidating Bernard L. Madoff Investment Securities Inc. revised a lawsuit to add the spouses of Bernard Madoff’s two sons as defendants on $57.5 million in claims.

The new claims, filed May 4, are part of Irving Picard’s existing $255 million complaint against the Madoff family seeking to recoup money taken out of the Ponzi scheme. The revised complaint adds Stephanie Mack, Mark Madoff’s widow, and Deborah Madoff, Andrew Madoff’s wife, as defendants on $54.5 million in claims for unjust enrichment. Picard also is suing for $3 million that allegedly was transferred to the two women and to Susan Elkin, Mark Madoff’s first wife.

The revision was made possible by a ruling last month by U.S. Bankruptcy Judge Burton Lifland in Manhattan, who allowed Picard to make some claims against the spouses for money they later received that was orginally given to other family members. Lifland said Picard could sue for constructive trust and unjust enrichment, though the judge might later rule that the claims are barred.

In the same decision, Lifland said it was too late for Picard to sue the spouses on most of the claims pending against the family. In the lawsuit originally filed in October 2009, Picard sought to recover $255 million from Madoff’s sons and other family members that was allegedly stolen from customers.

The Madoff firm began liquidating in December 2008, with Picard’s appointment under the Securities Investor Protection Act. Bernard Madoff is serving a 150-year prison sentence following a guilty plea. Mark Madoff committed suicide in December 2010.

The family lawsuit is Picard v. Estate of Mark Madoff, 09-01503, U.S. District Court, Southern District of New York (Manhattan). The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 09- cr-00213, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net.

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

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