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).
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.
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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).
Trustee: Nearly 9,000 claims in Madoff scam
By Tom Hays, Associated Press
NEW YORK (AP) — A court-appointed trustee unraveling Bernard Madoff’s massive fraud signaled Thursday that he may go after the disgraced financier’s family to pay victim claims, which have grown to almost 9,000.
Legal action against the family “is a matter that’s being looked into,” trustee Irving Picard said during a telephone conference call with reporters.
Picard already has filed lawsuits in bankruptcy court in Manhattan to try to force hedge funds and other large investors to return $10.1 billion in fictitious profits paid by Madoff’s firm, alleging they should have known about the fraud. As of Wednesday, there were 8,848 customers claiming losses, he said.
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Trustee Announces Winning Bid of up to $25.5 Million for Madoff Market Maker Business
From PRNewswire.com
Irving H. Picard, the SIPA Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”), announced that following the completion of the Bankruptcy Court approved auction conducted today at the midtown Manhattan offices of Baker Hostetler, where Mr. Picard and his counsel are based, Castor Pollux Securities LLC (“Castor Pollux”) is the winning bidder for the acquisition of the assets related to the market making business of BLMIS. Castor Pollux will pay $1,000,000 at closing and up to $24.5 million in deferred compensation through December 2013. Three bidders competed in the auction. One entity that had submitted a bid on April 22, 2009 withdrew its bid prior to the auction.
On March 27, 2009, the Trustee entered into a definitive agreement with Castor Pollux, subject to higher and better offers, for the sale of the market making business. That bid was for $500,000 to be paid at closing and payments of up to $15 million based on gross revenues generated and shares traded through 2012. As a result of the auction, the closing date cash consideration is twice what was initially proposed and the earn-out consideration is also substantially higher than the original bid.
“The auction today yielded a higher and better offer for the market making business. The additional consideration that we will receive as a result of the auction will benefit Madoff’s victims. Not only is the initial payment higher than the original bid, the transaction allows Madoff’s victims to participate in future earnings of the business in a higher amount than the original bid,” said Mr. Picard. Trustee Picard also noted that all of the costs associated with the marketing and sale of the market making assets have been funded by the Securities Investor Protection Corporation.
The Bankruptcy Court will hold a hearing on April 30, 2009 where the Trustee will present the winning bid to the Court for approval.
Madoff Trustee Demands Investors Return $735 Million
By Christopher Scinta, Linda Sandler and David Voreacos, Bloomberg.com (4/23/09)
The trustee liquidating Bernard Madoff’s defunct money management firm told 223 investors to return as much as $735 million or face legal action, said a person familiar with the matter.
“The trustee demands that you immediately return such amounts to the trustee for the benefit of all defrauded creditors” of Bernard L. Madoff Investment Securities LLC, according to a copy of the letter obtained by Bloomberg News.
Trustee Irving Picard mailed the so-called clawback letters to customers who redeemed investments over the past six years, the maximum period for which he can seek recovery under New York law, according to the person. Picard contacted mostly individuals, not so-called feeder funds, the person said. The 223 letters constitute the bulk of expected clawback letters, according to the person.
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Trustee for Madoff firm in U.S. sues Kingate funds
From Reuters.com
The trustee recovering money for the defrauded customers of swindler Bernard Madoff’s firm has sued Kingate Global Fund Ltd, Kingate Euro Fund Ltd and Bank of Bermuda Ltd for the return of $255 million.
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Madoff Trustee Seeks $150 Million From Gibraltar Bank
By Christopher Scinta and David Glovin, Bloomberg.com
The trustee appointed to liquidate Bernard L. Madoff Investment Securities LLC is seeking $150 million transferred from the firm to Banque Jacob Safra (Gibraltar) Ltd., the first such action aimed at recovering assets withdrawn by a Madoff client.
Irving Picard, appointed under the Securities Investor Protection Act, filed the lawsuit today in U.S. Bankruptcy Court in New York. The October transfer was for the benefit of British Virgin Islands-based Vizcaya Partners Ltd., also named as a defendant.
“The Trustee seeks to set aside such transfer and preserve the property for the benefit of BLMIS’s defrauded customers,” according to the complaint filed by Picard’s lawyers at Baker & Hostetler LLP.
The Vizcaya account was opened on Dec. 21, 2001, by its custodian, Banque Safra-France SA, and Vizcaya invested $327.2 million with Madoff through 26 wire transfers to an account at JPMorgan Chase & Co. in New York beginning in January 2002, according to the complaint.
Banque Jacob Safra (Gibraltar) is based in London and operates in Gibraltar. Picard has said he is seeking assets in Gibraltar and recently sought permission to hire lawyers to represent him there.
Banque Safra-France is a unit of Banque Safra-Luxembourg SA, a closely held bank based in Luxembourg. A message left at Banque Safra’s Geneva office wasn’t immediately answered. Efforts to contact Vizcaya were unsuccessful.
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