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Madoff trustee defeats U.S. appeals court challenge to his authority

By Jonathan Stempel

 

Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo. REUTERS/Brendan McDermid/File Photo

 

NEW YORK (Reuters) - A federal appeals court on Wednesday blocked new litigation against the estate of a Florida investor accused of helping Bernard Madoff commit fraud, after the estate had reached a $7.2 billion settlement to benefit Madoff's customers.

 

The decision by the 2nd U.S. Circuit Court of Appeals in Manhattan is a victory for Irving Picard, the court-appointed trustee liquidating Bernard L. Madoff Investment Securities LLC after its December 2008 implosion.

 

Picard has said allowing the $11 billion lawsuit by A&G Goldman Partnership and Pamela Goldman against Jeffry Picower's estate would undermine his authority to obtain settlements, while assuring settling parties they would not be sued again.

 

Joseph Galardi, a lawyer for the Goldman plaintiffs, did not immediately respond to requests for comment. A lawyers for Picard had no immediate comment. Gary Stein, a lawyer for the Picower estate, also had no immediate comment.

 

Picard has recovered $13.26 billion, or 76 percent, of the $17.5 billion he said Madoff's customers lost, including this month's $280 million settlement with New York hedge fund manager Ezra Merkin.

 

Picower died in October 2009 by drowning in a swimming pool after a heart attack.

 

Picard's settlement with the estate is his largest, and the trustee had won a permanent injunction barring competing claims.

 

But the Goldman plaintiffs said their claims were different, including that Picower's ability to "control" Madoff's firm gave him a direct role in the fraud, which he furthered by making loans and serving as a fake counterparty on options trades.

 

By a 3-0 vote, however, the appeals court found no evidence that Picower directed Madoff's firm to lie in its financial disclosures, or had control over "the primary violator of the securities laws," Madoff himself.

 

"The only harm alleged in the operative complaint that appellants have legally attributed to the Picower Parties is ... for fraudulent withdrawal of assets," the court said. "That is a derivative claim, which is barred by the injunction."

 

Madoff, 80, pleaded guilty to fraud and is serving a 150-year prison term.

 

Wednesday's decision upheld a January 2017 ruling by U.S. District Judge Gregory Woods in Manhattan.

 

The case is A&G Goldman Partnership et al v Picard et al, 2nd U.S. Circuit Court of Appeals, No. 17-512.

 

(Reporting by Jonathan Stempel in New York; editing by Bill Berkrot)

 

-- © Copyright Reuters 2018-06-28

[Srikcir]

7 hours ago, webfact said:

Picard has recovered $13.26 billion, or 76 percent, of the $17.5 billion he said Madoff's customers lost, including this month's $280 million settlement with New York hedge fund manager Ezra Merkin.

Wow.

[Chomper Higgot]

I wonder who else is online for this treatment?

 

[swanny321]

Makes winning the lottery seem like chump change, don't it!

[Jingthing]

This legal mumbo jumbo is over my head, but I sure hope the people that lost their life savings to the villain are getting a good share of the recovered funds. 

[Expatthailover]

Shocking state of affairs. 

Fully expect don the draft dodger to give a madoff a full presidential pardon.

They are fellow travellers truth be told but maybe don has filed for bankruptcy/administration more times.

Both share the amazing aability not to care about creditors who have lost everything investing with them.

[RuamRudy]

Robert de Niro played Madoff in a film called The Wizard of Lies, well worth watching. The film is not sympathetic to him in any way, but it portrays the enormous pressure he was under for what seems to have been years, as he decieved almost everyone around him, all the while trying to keep the plates constantly spinning.

[swanny321]

3 minutes ago, Jingthing said:

   ''I sure hope the people that lost their life savings to the villain are getting a good share of the recovered funds.''

 

  Quite, no one should be allowed to mess with Kevin Bacon and his lovely wife and get away with it!

[Jingthing]

6 minutes ago, Expatthailover said:

Shocking state of affairs. 

Fully expect don the draft dodger to give a madoff a full presidential pardon.

They are fellow travellers truth be told but maybe don has filed for bankruptcy/administration more times.

Both share the amazing aability not to care about creditors who have lost everything investing with them.

I'm not one to defend "trump" but I seriously doubt he will ever pardon Madoff. 

[Briggsy]

For those he don't follow this story, this is a good story.

 

The good guy, the administrator appointed by the court, Picard, has been suing all the guys who got rich with Madoff, one way or another, on behalf of those who lost billions to Madoff. Picard has been fairly successful, at least measured against initial expectations.