Madoff Trustee Demands Feeder Fund Return Earlier Payouts

Madoff Trustee Demands Feeder Fund Return Earlier Payouts - 4/24/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Madoff Trustee Demands Feeder Fund Return Earlier Payouts
Christopher Scinta, Linda Sandler and David Voreacos

Bloomberg. April 24, 2009
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EXCERPT: The trustee liquidating Bernard Madoff’s defunct money management firm told one of its so-called feeder funds along with other investors to return payouts it got from the scheme, a spokesman for the fund said. “We received correspondence from the trustee earlier this month,” said Thomas Mulligan, a spokesman for Fairfield Greenwich Group, one of the firms that funneled money to Madoff. He declined to comment further. Irving Picard, the trustee, has told 223 investors to return as much as $735 million or face legal action, a person familiar with the matter said. “The trustee demands that you immediately return such amounts to the trustee for the benefit of all defrauded creditors” of Bernard L. Madoff Investment Securities LLC, according to a copy of the letter obtained by Bloomberg News. Picard mailed the so-called clawback letters to customers who redeemed investments over the past six years, the maximum period for which he can seek recovery under New York law, demanding 100 percent of the money paid out over that time, said Helen Chaitman, a Madoff investor and a lawyer with Phillips Nizer LLP who is advising 350 victims. The letters went mostly to individuals, and constitute the bulk of expected clawback letters, said the person familiar with the mailing. So-called feeder funds, which gathered money in their own names and sent it to Madoff, got similar letters earlier, the person said. Andrew Levander, a lawyer for Ezra Merkin, managing partner of Gabriel Capital LP, which also put money with Madoff, didn’t return a call seeking comment. Picard’s right to demand cash back is being contested by some lawyers, who say state law isn’t applicable. Money that Madoff sent back to investors was a payment of debt, not a withdrawal, so the trustee can reverse only 90 days of such transactions, according to victims’ lawyer Jonathan Landers of Milberg LLP.

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