Legal News

With Dueling Letters, A Squabble Over Madoff Funds Begins

By Ashby Jones

The sparring over Bernie Madoff’s recovered assets is likely to go on for years. But there’s a battle shaping up as we speak that’s worth paying attention to. The players: Irv Picard (pictured), the trustee for Madoff’s business, and Andrew Samuels, the 22 year-old student at Brooklyn Law School who recently sued Bernie’s brother, Peter Madoff, alleging that Peter squandered some $470,000 of his inheritance by investing through Bernie.

Here’s the latest: Picard’s lawyer has sent a letter to Samuels, letting him know that he may not be able to keep any of the money he wins in his lawsuit. Late last month, Samuels obtained a freeze on Peter Madoff’s assets. Samuels is seeking to recover the lost fund and as much as $2 million in damages. Click here for the April 3 letter from Picard’s lawyer, Baker Hostetler’s Marc Hirschfield, to Samuels’s lawyer, Steven Schlesinger.

Bankruptcy trustee Irving Picard "reserves the right, without limitation, to seek to recover from Mr. Samuels" any money that Samuels collects "from Mr. Madoff in the lawsuit or otherwise in order to distribute such amounts to all of the victims of the fraud" at Bernard L. Madoff Investment Securities LLC, wrote Hirschfield, who moved to Baker & Hostetler from Ropes & Gray in March.

Schlesinger fired back to Hirschfeld this letter, in which he asserted, essentially, that the allegations against Peter have nothing to do with the bankruptcy proceeding involving the Madoff firm.

"An attempt by you or Mr. Picard," Schlesinger said, "to recover any amounts that our client may be successful in recovering from Peter Madoff would run afoul of the general principles of equity and fairness."

In this Bloomberg story, Schlesinger elaborated: "I wish that the trustee would spend the time trying to help the real victims of the Madoff fraud and leave Andrew alone," Stephen Schlesinger, Samuels's lawyer, said in a phone interview. "This is a threat to my client, who had a personal claim against Peter Madoff. He was wronged by Peter."

Full post as published by Law Blog - WSJ.com on April 08, 2009 (boomark / email).