"Forced Collections Against A Fraudster Like Madoff" & "Competing Over Mr. Allen Stanford’s Assets" described the problem of competing claimants trying to recover from a limited pool of funds. This same problem has been encountered by the plaintiffs in The Lautenberg Foundation v. Madoff, 09-Civ-00816, whose lawsuit I mentioned at "Suing Peter Madoff For Bernard Madoff’s Securities Fraud".
The Lautenberg plaintiffs are damaged investors of Bernard Madoff’s Ponzi scheme and their lawsuit alleges they were injured by Bernard’s younger brother Peter. As mentioned by their lawsuit, Peter Madoff is allegedly liable for his supposed tortious conduct while working as a "control person" at Bernard L. Madoff Investment Securities LLC ("BLMIS").
While the Lautenberg plaintiffs argue that Peter Madoff is liable to them, a complaint filed in an adversary proceeding claims that the Lautenberg lawsuit tries to wrongly recover BLMIS assets from Peter Madoff. This May 27, 2010 adversary complaint filed by Bernard Madoff Trustee Irving Picard, asserts that the Launtenberg plaintiffs were participants in Trustee Picard’s claims process for damaged investors.
During this claims process, the Lautenberg plaintiffs relinquished their rights to recover BLMIS estate assets by reportedly executing partial assignment & release documents in favor of Trustee Picard. Trustee Picard then apparently sent them claim monies, like the following check partly sanitized for privacy reasons:
Trustee Picard also asserts that unlike the Lautenberg plaintiffs, he possess legal authority under U.S. bankruptcy law to recover BLMIS estate assets from Peter Madoff. The Launtenberg plaintiffs contrarily allege at their "Ninth Affirmative Defense" of their July 15th answer that their claims are not BLMIS assets and they can therefore seek a recovery from Peter Madoff.
The Lautenberg plaintiffs additionally argue in their June 21, 2010 letter reproduced below, that they "assert direct claims against Peter Madoff who is not the debtor and undoubtedly has assets that are not the property of the estate":
(Click On The Letter To Read it)
Copyright 2010 Fred L. Abrams