Lautenberg charity, other Madoff investors try to revive claims

Fri Jan 25, 2013 2:11pm EST
 

By Jonathan Stempel

NEW YORK (Reuters) - A federal appeals court signaled that victims of Bernard Madoff's fraud more than four years ago might be allowed to eventually sue the swindler's family members over their losses, if they're willing to wait longer.

The 2nd U.S. Circuit Court of Appeals in New York weighed whether investors, including a charitable foundation for Senator Frank Lautenberg, Democrat of New Jersey, and the town of Fairfield, Connecticut, could pursue claims against Madoff's brother Peter, his son Andrew, and the estate of his late son, Mark.

Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, has largely been successful in stopping lawsuits that he believes overlap his own and impair his ability to recover money for victims of the Ponzi scheme.

But Circuit Judge Pierre Leval suggested more than once during the hour-long argument that it might be permissible to let investors pursue claims against the family members, who were all senior employees of Madoff's firm, once Picard was done.

"What prejudice would there be to the trustee" if the claims were "allowed to sit in purgatory" until Picard collected all he could, Leval asked David Sheehan, a lawyer for the trustee.

When Sheehan answered that there was none, Leval responded, "In that case, there is no need to make this (lawsuit) void."

So far, Picard has recovered about $9.3 billion for Madoff victims, and distributed $2.95 billion. He has estimated that Madoff's Ponzi scheme caused $17.5 billion of losses, meaning that many investors remain far from being made whole.

Bernard Madoff, 74, is serving a 150-year sentence in a North Carolina federal prison.   Continued...

 
Bernard Madoff walks back to his apartment in New York, in this December 17, 2008 file photo. A federal appeals court signaled that victims of Bernard Madoff's fraud more than four years ago might be allowed to eventually sue the swindler's family members over their losses, if they're willing to wait longer. During oral argument on Friday, the 2nd U.S. Circuit Court of Appeals in New York weighed whether investors including a charitable foundation for Sen. Frank Lautenberg (D-N.J.) could pursue claims against Madoff's brother Peter, his son Andrew, and the estate of his late son Mark. REUTERS/Shannon Stapleton/Files