Legal News

Madoff Trustee Files $5.1B Lawsuit Against Florida Investor

By Ashby Jones

We’re hoping that over at Baker & Hostetler, Irv Picard (pictured) has set up a macro on his keyboard that allows him, in a few keystrokes, to conjure up the outline of a suit against former Madoff investors. Given the number of suits the Madoff trustee seems poised to file, it could save him some serious time.

The latest: Picard on Tuesday filed suit against Palm Beach, Fla., investor Jeffery Picower, his wife, Barbara, and the Picower Foundation, saying evidence suggests “complicity” by the defendants in Madoff’s fraud. Picard is seeking the return of $5.1 billion that the defendants withdrew from the Madoff firm. Click here for Amir Efrati’s WSJ story; here for the NYT’s story; here for the complaint.

The suit appears to be more than a garden-variety ‘clawback’ suit, in which a trustee for a bankrupt entity sues individuals that had received payouts from the bankrupt entity shortly before falling into bankruptcy.

Rather, the suit alleges a certain level of complicity, that in several instances Picower or an associate of his directed the Madoff firm to credit certain gains to his accounts, including gains that would be applied to prior months and years. By asking to backdate gains more than a year in the past, the lawsuit says, Picower and others at his firm “knew or should have known that they were participating in fraudulent activity.”

The Picowers, who had two dozen accounts with Mr. Madoff, received annual returns of more than 100% in 14 instances, Picard said.

William Zabel, a lawyer for the Picowers, said they were “totally shocked” by Mr. Madoff’s fraud and “were in no way complicit in it.” He said they and their foundation, now closed, lost billions.

Full post as published by Law Blog - WSJ.com on May 13, 2009 (boomark / email).