Trustee Picard sues Madoff family for $198.7 mln
By Wallace Witkowski, MarketWatch.com
Irving Picard, the trustee charged to liquidate Bernard L. Madoff Investment Securities LLC, on Friday sued four members of disgraced financier Bernie Madoff’s family, seeking to recapture at least $198.7 million for the benefit of defrauded investors. Named in the lawsuit are Madoff’s brother, Peter Madoff; Madoff’s two sons, Andrew and Mark; and Madoff’s niece, Shana Madoff. Picard alleges that the family members’ “management responsibilities extended through trading operations, customer relationships and legal and regulatory compliance, yet they were completely derelict in these duties and responsibilities.” The trustee claims that this enabled and facilitated Bernie Madoff’s multibillion-dollar Ponzi scheme. Picard also said that each family defendant took “huge sums of money” out of the firm “to fund personal business ventures and personal expenses such as homes, cars and boats.”
Chais Accounts Temporarily Blocked in Madoff Suit
By Erik Larson, Bloomberg.com
Stanley Chais, the philanthropist sued for $1 billion for profiting from Bernard Madoff’s fraud, has been temporarily restricted from using his money while a liquidator seeks to prove the cash belongs to victims.
A temporary restraining order, signed yesterday by U.S. Bankruptcy Judge Burton Lifland in New York, runs through Oct. 22 and may be extended. Irving Picard, who sued Chais and is liquidating Madoff’s business, ultimately seeks an injunction blocking the bank accounts for a longer period.
The order permits the 83-year-old Chais and his wife, Pamela, with homes in New York and Los Angeles, to spend as much as $50,000 on legal fees and $50,000 on other expenses. Chais hasn’t said how much money is in the accounts and didn’t challenge the restrictions.
“The source of the money is irrelevant,” Chais’s lawyer, Eugene Licker, said today in a phone interview. “The money belongs to Stanley and Pamela Chais. Mr. Picard thinks he’s going to win, and while reasonable people can disagree with that, until he wins it isn’t his money.”
Chais agreed to give Picard new evidence about the disputed accounts at Goldman Sachs Group Inc. and City National Bank. Chais claims that he and his family were wiped out by Madoff’s fraud, and that Picard wrongfully cut off access to the Goldman Sachs account by earlier threatening to “go after” the New York-based bank if it released the funds.
Clawback Suits
Picard wants the cash preserved to repay investors if he wins his lawsuit against Chais, who was one of Madoff’s biggest investors. The lawsuit is among more than a dozen “clawback” cases seeking the return of as much as $15 billion in fake profit from Madoff’s family members, offshore hedge funds and feeder funds that directed investors’ money to the scheme.
Madoff, 71, is serving a 150-year sentence for running the $65 billion Ponzi scheme. Chais invested with the con man since at least the 1970s, making him and the entities he controlled some of the biggest beneficiaries of the fraud, Picard claims.
The case is Picard v. Chais, 09-01172, and the bankruptcy case is In re Bernard L. Madoff, 09-11893, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Ruth Madoff sued for $45 million
From CNN. com
Ruth Madoff, wife of imprisoned Ponzi schemer Bernard Madoff, was sued Wednesday by a court-appointed trustee seeking $45 million in funds to compensate victims.
Madoff’s client list is released, and lots of people are on it
By, Michael Sallah Miami Herald. From BND.com
Hundreds of prominent South Florida names and institutions — from Miami car dealer Norman Braman to St. Thomas Aquinas High School — are on the list of customers who invested money with accused swindler Bernard Madoff.
The list, released for the first time on Wednesday in bankruptcy court in New York, includes 562 clients from Broward and Miami-Dade counties who did business with the disgraced investor’s brokerage.
”It had a tremendous impact on this area,” said Broward securities lawyer Mark Tepper. “To a lot of the people here, it’s been life changing.”
Madoff, 70, the once prominent Nasdaq chairman who recruited clients from his home and private club in Palm Beach, is charged with securities fraud in the nation’s largest Ponzi scheme, estimated at $50 billion.
Of the 11,374 customers, nearly one in five — or 2,070 — are from Florida, the hardest hit state outside New York, according to a Miami Herald analysis of the 162-page list.
One of the local residents on the list: Adele Fox, 85, of Tamarac, a career high school administrator. Not only was her money in the brokerage, but her cousin, Jerome Horowitz, is one of the original accountants for the Madoff funds. He recommended it.
She was an investor for ”a very long time,” but now she’s “wiped out. . . . All my life savings gone. It’s just awful.”
Braman, 76, the car dealer, has two foundations and one personal account on the list.
From the foundations, he said Thursday, ”All obligations that we have made by our foundations have been honored and paid, by myself personally.” He wrote checks to honor those commitments, he said, but declined to say how much he was invested in Madoff’s brokerage.
Beyond Florida, the list reveals a Who’s Who of celebrities in sports, business and entertainment: Hall of Fame pitcher Sandy Koufax, actor Kevin Bacon and World Trade Center developer Larry Silverstein.
The list emerged late Wednesday, shortly after a whistleblower in the case, Harry Markopolos, told House lawmakers at a hearing that he had discovered that additional funds had relayed investments to Madoff in Europe — and that the managers of these ”feeder” funds may have ignored signs of the massive fraud scheme.
He plans to present his findings to the Securities and Exchange Commission’s inspector general Thursday. If proven, they would substantiate the assertions of many analysts that the alleged fraud was far too large for Madoff to have conducted alone.
House lawmakers on Wednesday also sparred with SEC officials, accusing them of impeding their probe into how the agency failed to uncover the alleged fraud.
Prosecutors say Madoff admits he lost more than $50 billion belonging to investors. Defense lawyers say he has cooperated with authorities to help identify assets.
The list of client names, including those of Madoff’s relatives, numerous celebrities, dead people and charitable institutions, are listed on the 162-page document. Each page carries 84 single-spaced lines. Some customers are listed multiple times, presumably because they had multiple accounts.
The customers include prominent people and institutions that already had been publicly revealed, such as the Wilpon family, owner of the New York Mets.
Also listed were more than two dozen accounts involving the Mets and companies affiliated with their owners, many with addresses at Shea Stadium.
The amount each person or institution invested with Madoff isn’t listed.
One client is Ira Sorkin, the attorney who’s defending Madoff against charges he perpetrated the biggest financial fraud in history. Others include Madoff’s wife, sons, brother and other relatives.
The list was compiled by AlixPartners LLP, a Dallas company hired as claims agent by the trustee overseeing the liquidation of Bernard L. Madoff Investment Securities.
Claims Total Over 15,400 in Fraud by Madoff
The New York Times (7/9/09) is reporting…
The final tally of claims from victims of Bernard L. Madoff’s vast Ponzi scheme comes to more than 15,400, substantially higher than the 8,800 claims that had been filed by the first of June.
The total was included in an interim report filed on Thursday in Federal Bankruptcy Court in Manhattan by Irving H. Picard, the trustee overseeing the liquidation of Mr. Madoff’s estate.
Click link above for complete article.
Already Burned, Madoff Victims Now Face “Clawbacks”
by Peter Gorenstein, finance.yahoo.com
Last week U.S. District Judge Denny Chin guaranteed scammer Bernard Madoff would spend the rest of his life in prison – sentencing him to 150 years behind bars. But as Tech Ticker learned first hand at last week’s sentencing hearing, the financial woes are just beginning for many of his victims’.
Court-appointed trustee Irving Picard has recovered about $1.2 billion of $13.2 billion in estimated net losses so far, The Wall Street Journal reports. He is now looking to victims who pulled out their money in previous years for the rest. To this end, he has filed so-called “clawback” suits.
Picard wants “to get all of these assets back so he can now give them to all of Madoff victims rather than have them only benefit a few,” says Ken Rubinstein, senior partner at Rubinstein & Rubinstein, and a specialist in areas of estate and tax planning.
What’s a victim in this situation to do? Rubinstein, who represents a number of Madoff clients, is telling them to engage in pre-bankruptcy planning. “You’re allowed under the law to convert non-exempt assets… into exempt assets.” In plain English, that means put your money where the government (or Irving Picard) can’t touch it. Such exempt assets include life insurance policies, retirement accounts and annuities.
On the bright side, there is a chance some of these same victims can get back money from the IRS. In what may be a rare moment of positive PR for the tax authority, they are allowing victims to get refunds on phantom profits by filing an amended return. Rubinstein says, “The IRS is cooperating and helpful in this regard.” A phrase not often uttered in America.
Madoff Claims for $231 Million Approved for Payment
By Erik Larson, Bloomberg.com
Securities Investor Protection Corp., the government-chartered agency liquidating Bernard Madoff’s defunct business, said $231 million has been committed from its reserves to pay 543 claims by the con man’s victims.
The agency, known as SIPC, said today the same claimants were approved to receive as much as $2.74 billion in future payments, depending on how much money is recovered in the wake of Madoff’s $65 billion Ponzi scheme. The 543 are the first of thousands of claims to be evaluated, according to SIPC. Tomorrow is the deadline for filing claims.
The actions announced today represent “major progress” in the effort to pay victims for their losses, SIPC President Stephen Harbeck said in a statement. The victims can get as much as $500,000 each from SIPC and more if the trustee, Irving Picard, recovers enough assets.
Madoff, 71, pleaded guilty in March and was sentenced two days ago to 150 years in prison for using money from new customers to pay off earlier investors. Trades reported on years of customer statements were never executed, according to Picard.
In addition to lawsuits, Picard has asked hundreds of victims to voluntarily return their “fictitious” profits from Madoff’s firm, New York-based Bernard L. Madoff Investment Securities LLC.
Loss Calculation
Picard, a lawyer at Baker & Hostetler LLP in New York, has been sued by some victims for calculating each investor’s loss by subtracting withdrawals from deposits.
Hundreds of victims argue that, under federal law, claims must be based on their final account statements including bogus returns.
Picard sued Madoff investors including financier Ezra Merkin and philanthropists Stanley Chais and Jeffry Picower. He claims the men knew or should have known of the fraud, and that they profited from years’ worth of fake profits.
Harbeck said in May that the liquidation could take more than 10 years. Picard’s spokesman, Kevin McCue, didn’t immediately return a call today for comment.
Last-minute filers can deliver their claims by hand to AlixPartners LLP in care of Baker & Hostetler LLP, 45 Rockefeller Plaza, New York, N.Y. 10111, until midnight tomorrow, SIPC said in its statement.
The case is In re. Bernard L. Madoff, 09-11893, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Madoff sentenced to 150 years in prison
By Grant McCool and Martha Graybow, Reuters.com
Disgraced financier Bernard Madoff was sentenced to 150 years in prison on Monday for perpetrating the biggest and most brazen investment fraud in Wall Street history.
The courtroom erupted in cheers and applause as U.S. District Court Judge Denny Chin imposed the maximum possible prison sentence on the 71-year-old defendant.
Madoff stood facing the judge with his hands clasped in front of him as he learned his fate.
“The fraud here was staggering,” Chin said, after listening to angry statements from some of Madoff’s victims.
Before his sentencing, Madoff addressed the court.
“I cannot offer you an excuse for my behavior,” he said, speaking in a calm voice. “How do you excuse betraying thousands of investors who entrusted me with their life savings?”
Wearing a dark business suit, leaning forward with his hands resting on a table, he said he tried to undo his crimes but “the harder I tried, the deeper a hole I dug for myself.”
He added, “I live in a tormented state now, knowing the pain and suffering I have created.”
Earlier, Madoff sat still, his eyes lowered, as victims came before the judge to tell how they were ruined financially, many having to sell their homes and live off Social Security.
“How could somebody do this to us? How could this be real? We did nothing wrong,” said Dominic Ambrosino, a retired New York City corrections officer. “We will have to sell our home and hope to survive on Social Security alone.”
“You have left your children with a legacy of shame,” said Tom FitzMaurice, 63, calling Madoff “an evil low-life.”
“He has shown no remorse … His crime was premeditated and calculated. He was planning to scam investors days before his arrest. If he could, he would still be stealing from investors,” FitzMaurice said.
“He cheated investors out of money so that he had his wife Ruth and two sons could live a life of luxury,” he said.
Madoff confessed to running a multibillion-dollar “Ponzi scheme” in which investors were paid returns from money paid by later investors.
Investigators do not know how much was stolen, according to court papers. Prosecutors say $170 billion flowed through the principal Madoff account over decades, and that weeks before the financier’s December arrest the firm’s statements showed a total of $65 billion in accounts.
The trustee winding down the Madoff firm has so far collected $1.2 billion to return to investors.
(Reporting by Grant McCool and Martha Graybow; editing by John Wallace)
‘Monster’ Madoff Deserves ‘No Hope,’ Victims Say
By David Glovin, Bloomberg.com
Victims of Bernard Madoff’s record- setting Ponzi scheme described him as a “monster” and “serial criminal” who deserves “no hope” and “no forgiveness” in 113 letters sent to the judge who will sentence him on June 29.
Federal prosecutors today filed a court document that includes letters written to U.S. District Judge Denny Chin, who will sentence Madoff for defrauding investors of as much as $65 billion. Eight victims have asked to speak at the sentencing, where Madoff faces as many as 150 years in prison.
“Mr. Madoff has wreaked havoc on our family,” Patricia Brown, a 61-year-old widow, wrote in one letter.
“I can’t tell you how scattered we feel,” wrote another investor, Elle Bussi-Sottile. “It goes beyond financially. It reaches to the core and affects your general faith in humanity.”
Madoff, 71, pleaded guilty March 12 to defrauding investors by using money from new ones to pay off old ones. He’s been held in prison since then. Before his arrest, he told his clients they had $65 billion invested with him.
Defense attorney Ira Sorkin said in an interview that Madoff’s response, if there is one, will come in his own court submission or at sentencing. He declined to say when he would file a brief.
‘Bankrupt’
The letters include dozens of accounts from investors who were living off their Madoff accounts and believed their retirements were secure. Some of the letter writers are retirees in their 70s or 80s, and others are from investors in feeder funds that placed money with Madoff.
“According to Madoff’s last statement for November 2008, I had $2.3 million,” wrote investor Morton Chalek. “Two weeks later, I was bankrupt.”
Michael Schwartz, who lives in New Jersey, told Chin his parents lost their life savings, which was to be used for “my brother who is mentally retarded.”
Carla Hirschhorn said she’s lost faith in the U.S. government since the fraud came to light, and that she’s now being “threatened with ‘clawback’ suits” by the trustee of Bernard L. Madoff Investment Securities. The Securities and Exchange Commission investigated Madoff and didn’t discover his fraud.
‘Life of Hell’
Korean War veteran Allan Goldstein, 76, said that he’s now destitute after selling his home in upstate New York. He said he surrendered his car, can’t afford long-term health insurance, and is living in a room in his daughter’s house.
“You are a murderer,” investor Phyllis Lerner wrote. “You committed ‘generational theft.’”
“He has condemned his investors to a life of hell, while his hell will be the prison you sentence him to,” wrote Emma De Vita, 81, an investor from Chalfont, Pennsylvania.
The case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York (Manhattan).
Whistle-blower says a lot of Madoff money is gone
From Boston.com
Bernard Madoff probably had large sums of money in offshore accounts that will never be recovered, whistle-blower Harry Markopolos said at a financial conference at Boston College tonight.
Markopolos, the now-famous financial investigator who tried unsuccessfully for 10 years to alert the Securities and Exchange Commission to Madoff’s fraud, said his study tracked Madoff’s investors around the world, particularly those in ‘‘feeder funds’’ in Europe.
Beyond the well-known funds like Fairfield Greenwich, Markopolos alleged, there are probably other large investors staying below the radar so they won’t be forced to repay the gains they reaped from investing with Madoff.
The trustee in the Madoff bankruptcy case is charged with recouping as much money as possible for the convicted Ponzi artist’s victims. As part of that effort, Markopolos said, it is fair for the trustee to go after large longtime investors, who were almost certainly paid profits from the funds of other investors.
‘‘The investors who took distributions for sometimes decades took a heck of a lot more out of this than they put in,’’ he said.
Fairfield Greenwich, Markopolos said, hired three auditors in three years in what he called ‘‘a clear case of auditor shopping.’’ Fairfield Greenwich has denied any wrongdoing.
Markopolos, who cut a stern figure when he testified before Congress earlier this year, appears to have become accustomed to his new role as a celebrity speaker. He walked easily through the audience in a chartreuse suit as he spoke, making jokes about regulators, lawyers, and his own paranoia during his long investigation of Madoff.
Markopolos said he is working on a book, a documentary, and a film. ‘‘I like chasing bad guys,’’ he said. ‘‘What doesn’t kill you makes you better.’’
(By Beth Healy, Globe staff)