|
 The decision by a three-judge panel of the 2nd U.S. Circuit Court of
Appeals in Manhattan is a victory for Irving Picard, the trustee
liquidating Madoff's firm, in a battle over his authority to reach
settlements on behalf of victims of Madoff's Ponzi scheme.
Picard reached a $7.2 billion settlement with the estate of Jeffry
Picower in 2010, the largest such settlement on behalf of victims of
Madoff's Ponzi scheme.
The trustee has said that Picower, who drowned in 2009, knew or
should have known that Madoff was operating a fraud.
About $5 billion was to go to the estate of Bernard L. Madoff
Investment Securities LLC and $2.2 billion was to be forfeited to
the U.S. government. Picower's widow at the time said she
"absolutely confident" her husband was not complicit.
Despite the settlement, Madoff victims Adele Fox and Susan Marshall
sought to press their own claims against Picower.
Picard had denied Fox's claims to recover money because she was a
"net winner," having withdrawn more money than she had in principal.
Marshall, whose account showed a final balance of $203,000, received
$30,000 from Picard in 2009.
U.S. Bankruptcy Judge Burton Lifland, who oversaw the Madoff firm's
bankruptcy prior to his death at age 84 on Sunday, issued an
injunction in 2011 blocking Madoff victims from pursuing individual
claims against Picower's estate.
That injunction was upheld in 2012 by U.S. District Judge John
Koeltl in Manhattan, and again on Monday by the 2nd Circuit, which
found the claims of Fox and Marshall were "derivative" of Picard's
claims.
"They are predicated upon mere secondary harms flowing from the
Picower defendants' fraudulent withdrawals and the resulting
depletion of (Madoff firm) funds," Judge Jose Cabranes wrote for a
three-judge 2nd Circuit panel.
He said Fox and Marshall were free to pursue claims against
Picower's estate that did not derive from Picard's claims.
[to top of second column] |
Lawyers for Fox and Marshall did not immediately respond to requests
for comment.
Picard has largely been successful in defeating challenges to his
authority to recover money for Madoff customers.
He has recovered about $9.51 billion for victims, excluding sums
from last week's settlements with Madoff's bank JPMorgan Chase & Co,
and distributed more than half this amount.
Separately on Monday, the U.S. Supreme Court asked the Obama
administration to weigh in on whether Picard can recover damages
from banks he accused of aiding in Madoff's fraud.
It was not immediately clear who would replace Lifland as the judge
overseeing the Madoff liquidation.
Madoff pleaded guilty in March 2009 and is serving a 150-year
sentence in federal prison.
The cases are Marshall et al v. Picard, 2nd U.S. Circuit Court of
Appeals, Nos. 12-1645, 12-1646, 12-1651, 12-1669, 12-1703.
(Reporting by Joseph Ax; editing by
Cynthia Osterman)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
