Madoff Victims Can Force Him Into Bankrutpcy: Judge
A Manhattan judge has given investors a green light to go after Bernard Madoff's personal property by forcing the disgraced financier into bankruptcy.
In a ruling in federal court on Friday, U.S. District Judge Louis L. Stanton lifted a temporary order barring involuntary bankruptcy for Madoff while the government continues its pursuit of his ill-gotten gains.
Victims of the massive fraud would benefit from a bankruptcy court's "orderly and equitable administration of his individual estate," the judge wrote.
Madoff, 70, pleaded guilty last month to federal charges that he cheated investors of billions of dollars over several decades with a gigantic Ponzi scheme that paid longtime investors with money from new investors.
He is jailed, awaiting a June sentencing for charges that carry a sentence of up to 150 years in prison.
The ruling on Friday came after a small group of investors had requested the court's permission last week to directly pursue Madoff's personal assets in bankruptcy court.
Their lawyers argued that without it, those assets might land in the U.S. Treasury rather than their pockets.
In court papers filed earlier this week, authorities sought to assure the judge that any proceeds recovered in the case would go to the victims.
The Securities and Exchange Commission argued bankruptcy would create unnecessary confusion and cause costly and potentially wasteful litigation.
Prosecutors also weighed in, claiming such a proceeding might delay recovery of funds.
The judge found that personal bankruptcy would be the best and only way to allow victims to go after "assets which are not the proceeds of his crime or forfeitable...property."
The SEC had assumed in its argument, "with no citation of proof, that Mr. Madoff has few, if any, assets that are not proceeds of his crimes," he added.
In a document prepared for the SEC late last year, Madoff claimed he and his wife had $823 million in assets at the end of last year, including $22 million in properties stretching from New York to the French Riviera, a $7 million yacht and a $2.2 million boat named "Bull."
But the bulk of Madoff's assets, according to the document, consisted of an estimated $700 million value put on his investment firm.
A court-appointed trustee already is in the process of liquidating his business assets.