Irving Picard, Madoff Trustee, Wants $28 Million For Costs
NEW YORK — A judge presiding over civil claims filed against disgraced financier Bernard Madoff says he may be willing to consider extending relief from an investors' fund to those who invested in Madoff's business through third parties.
U.S. District Judge Louis L. Stanton told Daniel R. Goldenson and his wife in a letter dated Dec. 24 and made public Monday that their request to be eligible for relief from the Securities Investor Protection Corporation comes "early in the large and complex procedures which are under way with respect to Madoff's affairs."
He said that before considering the issues involved in changing the terms of SIPC's coverage, he would need a formal application and briefing from SIPC, the Securities and Exchange Commission, a trustee for Madoff's business and representatives of investors.
The SIPC, which was created by Congress and funded by the securities industry, can give customers up to $500,000 each if it is determined their money was stolen. A telephone message seeking comment from the SIPC was not immediately returned Monday.
Madoff was arrested several weeks ago on securities fraud charges after the FBI said he confessed to top executives of his company, Bernard L. Madoff Investment Securities LLC, that his private investment business was a fraud.
The FBI said Madoff claimed he had lost more than $50 billion belonging to investors, including major banks, small charities, schools and retirees he met through social circles.
Madoff hasn't been indicted and hasn't spoken publicly about the accusations against him.
In a letter dated Dec. 17, Goldenson wrote that he and his wife had lost $2.5 million, well over half of their assets, through investments in the Ascot Fund, which had invested with Madoff.
"We ask that you broaden access to SIPC to any investor whose money ended up with Madoff, directly or via a feeder fund like the Ascot Fund," Goldenson wrote. "We are truly all in the `same boat,' and access to the $500,000 insurance would go a long way to help people like ourselves restore our lives, often on the doorstep of retirement."
Goldenson said he believed SIPC guidelines were strict, "but in this devastating case we feel it is appropriate to broaden investor eligibility beyond direct investments in Madoff's security company to include comparable investments that `his agents' collected for him through other parallel funds."
Goldenson, who built his wealth as a publisher of educational and medical books, said he had never heard of Madoff until he was arrested even though 100 percent of his money with Ascot was invested with Madoff.
"This was an intertwined system of deceit and theft within our financial markets that has left retirees like ourselves having to sell our homes and raise money any way we can," he wrote. "The entire financial system failed us _ the federal regulatory agencies, the independent audit firms and the dishonest money managers who used the security accounts and wire system of primary investment institutions."
Ascot Partners LP was managed by the chairman of GMAC Financial Services, J. Ezra Merkin. Among those who lost large amounts of money with Ascot through the Madoff connection are the New York Law School and Tufts University.
In a letter, Merkin has told investors in Ascot, a hedge fund managed by his Gabriel Capital Group, that he was "shocked, as I know you are, by this fraud" and that he also had suffered major losses "from this catastrophe."
Meanwhile, a trustee presiding over the liquidation of Madoff's investment firm has asked a bankruptcy court to approve $28 million for expenses, including employee salaries and benefits.
Trustee Irving Picard outlined the terms of an agreement reached with the Bank of New York Mellon Corp. in court papers filed with the court Friday. A hearing was scheduled for Tuesday.
The court papers said the trustee was in "urgent need of funding for immediate costs of administration of the debtor's estate."
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LARRY NEUMEISTER | December 29, 2008 07:05 PM EST |
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