Madoff wives to face trustee claims in Ponzi case

Friday, 6 April 2012 00:01 - - {{hitsCtrl.values.hits}}

Reuters: The trustee seeking money for victims of Bernard Madoff’s Ponzi scheme, who lost an estimated $20 billion, may pursue claims against wives of the imprisoned swindler’s sons, a US federal court judge said on Wednesday.

US Bankruptcy Judge Burton Lifland in Manhattan said the trustee Irving Picard may pursue about $43 million of claims against Deborah Madoff, who married Andrew Madoff; and $33 million of claims against Stephanie Mack, the widow of Mark Madoff.

The judge said Picard may do this by adding the women as defendants to an earlier complaint against several defendants including Andrew Madoff and the estate of Mark Madoff, who committed suicide in December 2010.

These added claims cover alleged unjust enrichment and constructive trust under New York law, according to Lifland’s 21-page ruling. The judge said the trustee could not pursue similar claims against Susan Elkin, Mark Madoff’s first wife, because they took place too long ago.

The trustee had sought to recover more than $255 million from Madoff’s family, whom he said used the former Bernard L. Madoff Investment Securities LLC as a family “piggy bank.”

Lifland also said the trustee may pursue smaller so-called subsequent transfer claims against Deborah Madoff, who began divorce proceedings against Andrew Madoff in 2008; and Elkin, who divorced Mark Madoff in 2000. But the judge said the trustee may not pursue bankruptcy law claims against Deborah Madoff and Mack, as the women could reasonably have believed their omission from the original complaint was not a mistake and was part of the trustee’s strategy.

Trustee spokeswoman Amanda Remus did not immediately respond to a request for comment. Lawyers for Deborah Madoff, Mack, Andrew Madoff and Mark Madoff’s estate also did not immediately respond to requests for comment. Thomas Goldberg, a lawyer for Elkin, declined immediate comment, saying he had not fully reviewed the decision.

Picard has said he has recovered $9.1 billion for Madoff victims, whom he estimates lost $20 billion. Much of the $9.1 billion remains tied up in litigation.

Bernard Madoff, 73, is serving a 150-year prison term after pleading guilty in 2009 to running his Ponzi scheme.