Legal News

No Bull: Milberg Files Involuntary Chapter 7 Petition Against Madoff

By Ashby Jones

We’ll admit to doing a bit of head-scratching back in January when Milberg LLP hired Jonathan Landers away from Gibson, Dunn & Crutcher. For starters, it’s not often that an AmLaw 100 partner decamps to a high-profile plaintiffs’ firm like Milberg. Also perplexing: Landers is a specialist in bankruptcy, not an area Milberg is especially well-known for.

But perhaps Milberg had Monday in mind when they made the hire. A small group of investors led by Milberg and Landers on Monday filed an involuntary Chapter 7 petition against convicted Ponzi-schemer Bernie Madoff, arguing that Madoff bilked them out of $64 million. Click here for the AP story; here for the WSJ story.

The SEC and DOJ and the Justice Department had urged the court to block the customers from filing the involuntary bankruptcy petition against Madoff. Judge Louis Stanton, however, said the Bankruptcy Code provides the customers with the appropriate tools to seek property that isn’t forfeitable criminally nor included in the liquidation of Madoff’s firm, which is already under bankruptcy-court protection.

The investors who sought bankruptcy believed it was the best way to make sure "all the property available would go to the victims," said Landers on Monday. The petitioning creditors repped by Milberg include Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno and Steven Morganstern.

Landers said he expected the bankruptcy court to appoint a second trustee to oversee distribution of his personal assets since Mr. Madoff "can't conduct his affairs from jail."

In a document prepared for the Securities and Exchange Commission late last year, Madoff claimed that he and his wife had $823 million in assets at the end of last year, including $22 million in properties stretching from New York to the French Riviera, a $7 million yacht and a $2.2 million boat named Bull.

Full post as published by Law Blog - WSJ.com on April 14, 2009 (boomark / email).