Madoff trustee sues ex-employees for $70 mln

Fri Nov 12, 2010 4:51pm EST

* Defendants' withdrawals alleged to further Ponzi scheme

* Lawsuits filed in U.S. bankruptcy court

By Jonathan Stempel

NEW YORK, Nov 12 (Reuters) - The trustee liquidating Bernard Madoff's investment management firm on Friday sued five of the imprisoned Ponzi schemer's former employees, seeking to recover $70 million he said they withdrew improperly.

Lawsuits were filed in the U.S. bankruptcy court in Manhattan against Daniel Bonventre, Madoff's former operations chief; Enrica Cotellessa-Pitz, Madoff's former controller, and three other former employees: Annette Bongiorno, Jo Ann Crupi and David Kugel.

Several of the employees' family members were also named as defendants.

Irving Picard, the court-appointed trustee overseeing the bankruptcy of Bernard L Madoff Investment Securities LLC, said the defendants collected millions of dollars to help Madoff further what prosecutors have called a $65 billion fraud.

The lawsuits are in addition to at least 19 that Picard has filed to recover more than $15.5 billion from "feeder" funds that steered client money to Madoff's firm, friends and family members of Madoff, and others, court papers show.

Eric Breslin, a lawyer for Crupi, said he had not been served with Picard's complaint, "but this is not unexpected. We will defend the lawsuit vigorously."

Andrew Frisch, a lawyer for Bonventre, said: "The allegation that Dan Bonventre knew about the Ponzi scheme is absolute fiction, and is unprovable."

A lawyer for Bongiorno did not immediately return a call seeking comment. Efforts to reach Cotellessa-Pitz and Kugel were unsuccessful.

Madoff, 72, is serving a 150-year sentence in a North Carolina federal prison after admitting last year to running a decades-long Ponzi scheme.

The cases were all filed in the U.S. Bankruptcy Court for the Southern District of New York. They are Picard v. Cotellessa-Pitz et al, No. 10-04213; Picard v. Bonventre et al, No. 10-04214; Picard v. Bongiorno et al, No. 10-04215; Picard v. Crupi et al, No. 10-04216; and Picard v. Kugel et al, No. 10-04217. (Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)

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