Image: Steve Hillebrand / U.S. Fish and Wildlife Service
Investors who profited because of Allen B. Stanford’s suspected securities fraud / Ponzi scheme may face clawback lawsuits under the Bankruptcy Code, according to Bloomberg.Com’s "Stanford Receiver May Need a Decade to Pay Victims". Investors who collected profits from Bernard Madoff’s Ponzi scheme could
My last post "Forced Collections Against A Fraudster Like Madoff" mentioned the problem of numerous plaintiffs competing to recover assets from someone like Mr. Madoff. This issue of "competing interests" during forced collections, is the subject of this "Asset Search News Roundup":
Forced collection proceedings against a fraudster like Mr. Bernard Madoff can involve an extraordinary number of prospective plaintiffs with competing interests in the fraudster’s assets. In Mr. Madoff’s case, some of these plaintiffs competing over assets might even include foreign governmental authorities seeking asset forfeiture because of Mr. Madoff’s money laundering in the United Kingdom or perhaps elsewhere.
Another prospective plaintiff in Mr. Madoff’s case, is Irving H. Picard, Trustee for the liquidation of Mr. Madoff’s assets on behalf of thousands of victims, pursuant to the Securities Investor Protection Act and the Court’s Order. As "Madoff Trustee Seeks to Recover Assets in Gibraltar" reported, Mr. Picard just made a bankruptcy court filing seeking to retain special counsel to recover property in Gibraltar which belongs to Madoff.
Given all of the foregoing, I asked Swiss counsel to examine some of the complexities in pursuing forced collection proceedings against a fraudster like Mr. Madoff. My discussion with Swiss counsel was based on the hypothetical that someone similar to Mr. Madoff had hidden assets in banks in Switzerland. Swiss counsel’s comments are as follows:
"Complex forced collection proceedings may combine several competing recovery actions involving civil, criminal and administrative recovery remedies. To add to the complexity, these actions may be originated in various jurisdictions.
To take a concrete example, I am currently representing a client who was the victim of a fraud perpetrated in a far-eastern country. A criminal action against the perpetrator of the fraud was conducted in this country. The proceeds of the crime were transferred by the fraudster to the US where the fraudster managed to escape.
The fraudster was arrested at the request of the far-eastern country and sat in jail for three years for extradition purposes. Ultimately, he was extradited to that country and has now been sentenced to several years’ imprisonment.
The defrauded client chose to file a complaint for fraud, intentional misrepresentation, active concealment and several other counts including a RICO action against the fraudster in a Californian court.
The US attorney sought from a district court, an arrest warrant in rem of several assets in the US and also of funds deposited in a bank in Geneva.
Continue Reading Forced Collections Against A Fraudster Like Madoff
USA v. Madoff, is the topic of this "Asset Search News Roundup" because it illustrates how asset forfeiture can be used to help fight money laundering and other crimes. Prosecutors specifically mentioned their asset forfeiture claims against Bernard Madoff at pages 23 – 25 of the Information they filed on March 10, 2009.
Among
The Wall Street Journal article "Madoff Used U.K. Office in Cash Ploy, Filing Says", states that Bernard Madoff is expected to plead guilty today to 11 felony counts arising out of his alleged Ponzi scheme. That article also mentions that Mr. Madoff is accused of concealing assets by money laundering in the U.K
The "Asset Search News Roundup" for this week explores the vital role financial institutions have in detecting assets concealed through money laundering. This kind of issue arose in a most recent phone conversation I had with an investigator who works for a Financial Intelligence Unit located offshore. The investigator had read one of my articles herein
When assets are hidden in a foreign bank account or are otherwise offshore, domestic authorities might be able to seek asset forfeiture, discovery or other relief pursuant to a Mutual Legal Assistance Treaty (“MLAT”). Depending on the circumstances, MLAT’s can particularly help domestic authorities trying to locate, (and then possibly forfeit), criminal proceeds which have