Lawsuit questions conduct of Madoff victims' lawyer
Send a link to a friend
[November 30, 2017]
By Jonathan Stempel
NEW YORK (Reuters) - A new lawsuit accuses
a lawyer representing hundreds of victims defrauded by Bernard Madoff of
cheating her own clients through overbilling, discouraging settlements
and having conflicts of interest.
The proposed class-action complaint was filed on Wednesday against
Becker & Poliakoff LLP and Chaitman LLP over the alleged conduct of
Helen Chaitman, who has been perhaps the most visible lawyer
representing victims of Madoff since his December 2008 arrest. Madoff,
79, is serving a 150-year prison term.
"We have no comment," Chaitman said in an email. Becker & Poliakoff, her
former employer, did not immediately respond to requests for comment.
The complaint was filed in the U.S. District Court in Manhattan by
trustees of the Florence Shulman Pourover Trust, a defendant in a 2010
lawsuit by Irving Picard, a court-appointed trustee liquidating Bernard
L. Madoff Investment Securities LLC.
Picard has recovered roughly $12.8 billion for former Madoff customers
by suing people and companies he believes enabled or benefited from the
fraud, including "net winners" that withdrew more money from Madoff's
firm than they put in.
He considers the Shulman trust a net winner, and sued it to recover
$1.62 million of "fictitious profits." Dylan Ruga, the Shulman trustees'
lawyer, said the trust lost a seven-figure sum with Madoff.
In Wednesday's complaint, the Shulman trustees said Chaitman's
"self-promotion as a savior for other Madoff victims paid off" with a
large base of clients.
[to top of second column]
Accused swindler Bernard Madoff exits the Manhattan federal court
house in New York, U.S. on January 14, 2009. REUTERS/Brendan
But they said this left her with an "irreconcilable" conflict by representing
three groups of plaintiffs with competing interests: net winners, "net losers"
who lost money, and "early investors" whose alleged profits predated the fraud.
The Shulman trustees also said Chaitman misled net winners by saying Picard
would never settle for less than all he sought, enabling her to bill for
"unnecessary" and "often unproductive" work, and did not specify on invoices
what work she did.
Both law firms "billed and were paid for needless and quixotic legal work,
ostensibly for the benefit of FSPT and members of the proposed class, but which
in reality only benefited defendants in the form of increased fees," the
"Net winners and net losers are inherently in conflict with each other because
the only money available to pay net losers comes from net winners," Ruga said in
an interview. "Lawyers who have conflicts like Ms. Chaitman must disgorge their
The lawsuit seeks unspecified damages for clients of both law firms.
The case is Shulman et al v. Becker & Poliakoff LLP et al, U.S. District Court,
Southern District of New York, No. 17-09330.
(Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz and Lisa
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.