We all remember Bernard L. Madoff’s record-setting rip-off of billions of dollars from unwitting investors, who had enjoyed unusually high returns on their investments before his massive fraud collapsed spectacularly in 2008. When the dust cleared, Irving Picard, a partner in the law firm Baker Hostetler, was court-appointed as bankruptcy trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS) in “an unprecedented global recovery effort stemming from one of the largest financial frauds in U.S. history,” according to Picard’s bio.
Picard has recouped nearly $11.5 billion for Madoff customers, who had lost an estimated $17.5 billion. Madoff is serving a 150-year prison term. In 2010, Picard reached a $7.2 billion settlement, the largest such settlement, on behalf of Madoff’s victims with the estate of Jeffrey Picower, an American investor involved in the Madoff investment scandal who appeared to have been the largest beneficiary of Madoff’s Ponzi scheme.
In January, Reuters reported, a federal judge blocked litigation that Picard said could undermine the $7.2 billion settlement meant to benefit the Ponzi schemer’s former customers. More than six years after Jeffry Picower was found dead in the pool of his Palm Beach mansion, A&G Goldman Partnership and Pamela Goldman had filed a lawsuit in Florida to recover $11 billion from Picower’s estate. The lawsuit alleged he had helped perpetrate Madoff’s fraud, and had propped up Madoff’s scheme by providing $200 million in supposedly sham loans that allowed BLMIS to pay off redemptions. Investors lost $18 billion in the scheme, and the Goldman suit contended that Picower’s estate is responsible for the entire figure, not just the $7.2 billion he took out of BLMIS.
Picard, who had won a permanent injunction in 2011 barring competing claims against the estate, successfully argued in court papers that letting the plaintiffs sue Picower’s estate to recoup some $11 billion of customer losses, on top of the $7.2 billion, would create a “shadow” bankruptcy estate and undermine his authority to settle claims.
The Palm Beach Post reported that the attorney for Pamela Goldman and A&G Goldman Partnership planned to appeal the decision. He also filed a second lawsuit claiming that the millions Picower’s widow Barbara is using to run the charitable JPB Foundation rightfully belong to Madoff’s victims.
Craig Follis has extensive experience in litigation, negotiating and settling suits, and providing legal opinions on liability and insurance coverage. You can reach him at (888) 703-0109 or via email at email@example.com.