N.Y. Must Submit to Bankruptcy Judge, Trustee Picard Says

The liquidator of Bernard Madoff’s firm said New York Attorney General Eric Schneiderman must submit to bankruptcy law that bars him from completing a $410 million settlement with Ezra Merkin, one of the con man’s former investors. Asking U.S. District Judge Jed Rakoff not to grant Schneiderman’s request that he review the case, trustee Irving Picard, who says only he can take Merkin’s money and share it among Ponzi victims, said he “seeks to protect estate assets from being dissipated,” according to a filing in federal court in Manhattan.

The attorney general, who has said the settlement money will go to investors not eligible for compensation by Picard, told Rakoff that Picard is interfering with his ability to enforce the law.

“Determination of this action will have broad ramifications for the ability of state law enforcement and regulatory agencies to exercise their authority to prosecute violations of state laws,’’ he said.

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