A September 27th article explained that Madoff trustee Irving Picard will sue Bernard Madoff’s brother, sons and a niece this week for $198 million dollars. Trustee Picard could assert causes of action in the suit for: negligence, breach of fiduciary duty and possibly unjust enrichment. He will be filing suit because he seeks to interdict assets and then equally distribute them to defrauded Madoff investors, as contemplated by the Securities Investor Protection Act.
The $198 million dollar suit is however, just one of the steps trustee Picard is taking to recover assets on behalf of defrauded Madoff investors. Trustee Picard for instance, retained the corporate financial consulting company FTI on December 30, 2008. A May 5, 2009 affidavit indicates that FTI is basically conducting a financial fraud investigation on behalf of the trustee, regarding the assets of Bernard L. Madoff Investment Securities, LLC.
As described at the August 5, 2009 "Asset Search News Roundup", trustee Picard is also trying to recover assets by suing Ruth Madoff for $45 million dollars. He brought the suit under the United States Bankruptcy Code (title 11, United States Code) and New York State’s version of the Fraudulent Conveyance Act, codified at N.Y. Debt. & Cred. Law §§270-281. Trustee Picard has similarly used some of these laws as a basis for the "clawback" lawsuits against the Madoff investors described by my "Asset Search News Roundup" from September 4, 2009.
In these clawback suits, investors’ profits from Madoff’s Ponzi scheme are deemed presumptively fraudulent and can be subject to a turnover order. Meanwhile, an alleged 82-year-old former Madoff investor filed a letter about clawback with the Bankruptcy Court. The letter, (redacted below for privacy reasons), claims that this investor would be forced into bankruptcy, if clawback is ultimately applied to him:
Copyright 2009 Fred L. Abrams