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Ruth Madoff’s Lawyers Can’t Collect Legal Fees, Judge Rules

April 4 (Bloomberg) -- Lawyers who represented Ruth Madoff in a partnership dispute in New Jersey federal court can’t collect legal fees, a federal judge in New York ruled.

The firm Epstein, Becker & Green PC in New Jersey filed a third-party suit in federal court in New York, saying that it was entitled to legal fees totaling $24,790 from Madoff’s forfeited settlement funds.

Attorney Robert S. Gettinger sued Madoff in federal court in Newark in 2007 alleging that he and Madoff entered into a limited partnership that in 1993 with Magnetic Services Inc. to buy a magnetic resonance imaging machine, lease offices in Hoboken, New Jersey, and provide space for physicians. Dr. Mark Berger, who ran Magnetic Services, is also a defendant.

Madoff and Gettinger, who each invested $150,000, said they were entitled to 25 percent of the partnership’s profits. Madoff and Gettinger filed a breach-of-contract complaint last year, claiming Berger and the partnership didn’t pay them all they were owed to end the arrangement in 2005. That lawsuit was settled in May 2009.

After Madoff’s husband, Bernard Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history, Denny Chin, the federal appeals court judge who is still presiding over the Madoff case, issued a criminal forfeiture judgment of $170.8 billion in June 2009 just before he sentenced Madoff to serve 150 years in a federal prison in North Carolina. Ruth Madoff also agreed to be bound by the terms of the forfeiture order.

Chin said that Epstein Becker, which submitted the petition last year, wasn’t entitled to the funds because “it cannot assert a legal interest in the forfeited property.”

Daniel Levy, a lawyer representing the firm, didn’t return a voice-mail message left at his office seeking comment about the judge’s ruling.

The case is U.S. v. Bernard L. Madoff, 09-CR-213, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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