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: JURIST - The Paper Chase

Federal judge rules Madoff can be forced into personal bankruptcy

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

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[JURIST] A federal judge ruled Friday that investors who lost money in Bernard Madoff's alleged Ponzi scheme can force Madoff into personal bankruptcy to recover lost funds. The ruling from Judge Louis Stanton of the US District Court for the Southern District of New York removes a restriction on Madoff's bankruptcy that was established by Stanton in a December 2008 ruling granting a preliminary injunction and asset freeze against Madoff. Stanton's ruling was opposed by the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ), which argued that the appointment of a personal bankruptcy trustee would cause unnecessary delay and complexity to the Madoff proceedings. Last month, Madoff pleaded guilty to security fraud charges for his alleged involvement in a multi-billion dollar Ponzi scheme. In February, Madoff consented to a partial judgment with the SEC over civil charges brought by the SEC to obtain a preliminary injunction and asset freeze against him. The same day, then-SEC Division of Enforcement Director Linda Thomsen announced she was stepping down from her post. In the week following Madoff's charges, then-SEC Chairman Christopher Cox said that he would launch an immediate investigation into how the fraud allegedly perpetrated by Madoff went undetected for so long.

Full post as published by JURIST - The Paper Chase on April 11, 2009 (boomark / email).