Thousands Of Ex-Madoff Clients Ineligible To Net Recovery Funds, Judge Rules
All these years later, the bad Bernie Madoff news keeps coming.
Clients linked to the infamous fraudster's now defunct Bernard L. Madoff Investment Securities through feeder funds, or funds that conduct most of their investing through a different master fund, are now ineligible to pursue money directly from Irving Picard, the trustee in charge of recovering Madoff's clients' money, U.S. District Judge Denise Cote ruled earlier this week,
according to CNNMoney.
Madoff, who pleaded guilty to 11 federal felonies in March 2009 relating a Ponzi scheme that cheated thousands of investors out of billions of dollars, is currently serving a 150-year sentence in a federal prison in North Carolina. Last February, he claimed that those financial institutions with which he dealt with most frequently "had to know" about his scheme but decided to practice "willful blindness" instead of investigating.
The decision upholds Picard's prior assertion that third-party investors were not directly customers of Madoff's and therefore not entitled to claim funds in the bankruptcy case, the Wall Street Journal reports.
However, in certain cases the funds themselves may claim stakes in the money recovered by Picard, so far totaling over half of the estimated $20 billion stolen by Madoff, CNNMoney reports. In turn, clients may eventually pursue lost money through the feeder funds.
Indeed it's been a busy week for Picard, the man appointed as the bankruptcy trustee for the Madoff funds by the Securities Investor Protection Corp. three years ago. This week he filed a lawsuit against California Attorney General Kamala Harris on the grounds that she is interfering with his efforts to recoup customer funds by filing a parallel lawsuit against one-time Madoff client Stanley Chais, who died in September 2010.
Picard filed a lawsuit against Chais in 2009 and says if Harris' lawsuit goes through there would be no funds remaining for thousands of other Madoff customers who were victims of the same fraud, BusinessWeek reports.