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Madoff Lawsuits Are Headed for Court

Graham Bowley, Peter Lattman|The New York Times
Monday, 13 Dec 2010 | 5:31 AM ET

With the final deadline for litigation having passed at midnight on Saturday, at least 1,000 individual civil lawsuits will now go forward to try to recover more than $50 billion for the victims of the global Ponzi scheme orchestrated by Bernard L.Madoff.

CNBC.com

David J.Sheehan, the counsel for Irving H.Picard, the trustee charged with recovering the assets, said on Sunday that he expected that “hundreds” of those suits — many against individuals, some of them prominent — were likely to be settled in negotiations before or soon after they reach court in coming months.

But the remainder were likely to be contested and would proceed to trial, he said.

Mr.Sheehan said the death on Saturday of Mark Madoff, the older of Bernard Madoff’s two sons, would not affect the complaints against him, his brother, Andrew, and other relatives.

“We have to proceed with that and stay the course,” Mr.Sheehan said.

Mark Madoff, 46, was found dead Saturday morning in his Manhattan apartment, hanging from a dog leash while his 2-year-old son slept in an adjoining room.

The medical examiner’s office conducted an autopsy on Sunday and confirmed that the official cause of death was hanging, and labeled it a suicide.

As the shock of his death set in, people close to him continued to shed light on his emotional state, saying he had been increasingly upset in recent weeks by the extensive scrutiny the Ponzi scheme was receiving as the second anniversary of his father’s arrest approached.

He was particularly troubled by a series of lawsuits against him and his family as the bankruptcy trustee approached the Saturday deadline, and by the weight of media speculation about whether or not he played a role in his father’s fraud and whether he could be the subject of criminal charges, they said.

No immediate funeral arrangements were made public.

But relatives have expressed the view that excessive media attention will make a funeral difficult to hold, according to two people close to the family, who insisted on anonymity because the family had not authorized them to speak on its behalf.

Another person close to the family said that Mark Madoff’s wife, Stephanie, had returned to New York from Florida, where she and her mother had taken the couple’s 4-year-old son to Disney World, leaving Mr.Madoff and their 2-year-old son in New York.

According to two of the people close to Mr.Madoff, in the days running up to his suicide he had been particularly anxious about an article that was due to run in The Wall Street Journal.

One of these close friends, who said he had spoken with Mr.Madoff frequently over the last two years, talked to him on Friday on his cellphone for 10 minutes.

There was nothing particularly foreboding about the conversation, this person said.

He said Mr.Madoff told him that The Journal was running an article about him the next day, and even though he believed it would not contain new information, he expressed concern and frustration about the coverage.

This wasn’t unusual, the friend said.

Mr.Madoff had always been acutely sensitive to media coverage connecting him to his father’s fraud.

A spokeswoman for The Journal declined to comment.

“Andy was always tougher than Mark,” said the friend, referring to Mr.Madoff’s younger brother.

“Mark was much more sensitive and took all the press coverage very personally.” “He loved his wife and his kids so much,” this friend added.

“The only way to accept this is that he was in so much pain, and that pain outweighed the love he had for his wife and his kids. And I guess he thought this was the only way out,” he said.

Mr.Madoff was hoping to get a job, and had looked for work over the last two years as a professional securities trader, talking to people in the industry, two of the people close to him said.

But he had gradually become less and less optimistic about that possibility.

In recent months, Mr.Madoff had been doing work for a friend who ran a business, the close friend said.

“He seemed to be looking to the future and trying to get his life together,” said the friend. “He was looking for ways to support himself and his family.”

Mr.Madoff had also been working on the publication of an online newsletter on the real estate industry.

But he realized that whatever he distributed he would not be able to attach his name to it, the friend said.

The lawyer for Bernard Madoff, Ira Lee Sorkin, would not comment Sunday on whether Bernard Madoff, who is serving a 150-year sentence for his crimes at a North Carolina prison, had been told of his son’s suicide.

Mr.Madoff was found at his apartment at 158 Mercer Street, on the edge of the SoHo section of Manhattan.

A law enforcement official confirmed that Mr.Madoff had sent two e-mails to his wife in Florida after 4 a.m. Saturday.

He had asked her to get someone to check on their son, the police said earlier.

The police have seized Mr.Madoff’s computer and were searching it for further information, the official said.

On Sunday, Pedro Romero, 39, a parking garage attendant where Mr.Madoff parked his two cars — a late model Chevrolet Suburban and a Land Rover — said he last saw Mr.Madoff on Friday night while Mr.Madoff was walking his dog.

“I said thank-you for the gift,” Mr.Romero recalled, referring to $400 that Mr.Madoff had given the garage’s half-dozen workers for Christmas.

“He looked happy,” Mr.Romero said. “He didn’t look depressed.”

A friend at the building who said he knew Mr. Madoff fairly well said that recently Mr.Madoff had seemed to be coming out of his depression of the last two years and that he seemed fine as he was taking a walk Friday morning.

Mr.Picard issued a statement on Saturday extending sympathy to Mr.Madoff’s family, calling his death a “tragic development.”

Mr.Sheehan, counsel for Mr.Picard, said that most of the civil lawsuits had been filed in federal bankruptcy court in Manhattan in the last three weeks, and that he was now prepared for a barrage of legal challenges trying to stop the complaints over the coming six months.

Mr.Picard has recently sued more than a dozen major banks.

There may be yet more lawsuits filed by the trustee, he said.

Although the initial two-year deadline for litigation had passed, the trustee still has one more year to trace the money he is trying to recover from the current roster of defendants, and to file complaints against anyone else to whom those funds may have been transferred, he said.

The trustee has already reached deals with some major defendants, including a recent $500 million settlement with Union Bancaire Privée, and this month, Carl Shapiro, one of the early investors with the Madoff firm, agreed with Mr.

Picard and federal prosecutors to forfeit $625 million that will go toward returning money to victims of the fraud.

That agreement also settled claims against many members of Mr.Shapiro’s family, including his son-in-law Robert Jaffe, whom the trustee has sued separately as an executive of Cohmad Securities, the small brokerage firm that shared space with Bernard Madoff in the Lipstick Building.

On Friday, Mr.Picard announced that he had reached settlement with a “number of charities and nonprofit organizations,” including a $45 million settlement with the American Jewish volunteer women’s organization, Hadassah.

Mr.Picard is also negotiating with business entities connected to Fred Wilpon, the owner of the New York Mets baseball team, and the estate of Jeffry Picower, a longtime Madoff investor who died last year.

Ron Stein, president of the Network for Investor Action and Protection, a group set up to assist victims, said many of the legal actions were aimed at people unfairly, because many of the so-called clawbacks were at the expense of smaller investors who had already suffered.

“Why does he go after innocent victims,” Mr.Stein said.

Mr.Picard has said he will dismiss any cases filed against defendants who seek and qualify for “hardship” status because of their financial circumstances.