* Foundation, others claimed right to sue Madoff brother,
* 2nd Circuit says injunction helps preserve debtor estate
By Jonathan Stempel
Feb 20 A federal appeals court rejected a bid by
former Bernard Madoff investors, including a charitable
foundation for New Jersey Senator Frank Lautenberg, to pursue
claims against family members of the imprisoned swindler.
The Lautenberg Foundation, the town of Fairfield,
Connecticut, and other investors had sought to pursue claims
against Madoff's brother Peter, as well as Madoff's son Andrew
and the estate of his late son, Mark.
But a panel of the 2nd U.S. Circuit Court of Appeals in New
York upheld a February 2011 injunction issued by U.S. Bankruptcy
Judge Burton Lifland in Manhattan in favor of Irving Picard, the
trustee liquidating Bernard L. Madoff Investment Securities LLC
and recovering money for its former customers.
"The preliminary injunction serves the legitimate purpose of
preserving the debtor's estate for the creditors and funneling
claims to one proceeding in the bankruptcy court," the
three-judge panel said in an unsigned order.
"Were it not for the preliminary injunction, there would
ensue a chaotic rush to the courthouse - or rather, multiple
courthouses -- of those seeking assets that the trustee claims
are properly part of the BLMIS estate," it added.
Jennifer Hradil, a lawyer for the Lautenberg foundation, did
not immediately respond to a request for comment.
Amanda Remus, a spokeswoman for Picard, declined to comment.
In opposing the claims, Picard's lawyer David Sheehan told
the 2nd Circuit that Madoff family members "are the people that
ran the fraud ... They never made an honest nickel. And that is
the money that we're trying to bring back into the estate."
Picard has largely been successful in stopping lawsuits that
he believes impair his ability to recover money for Madoff
Last week, he asked Lifland for permission to distribute
another $505 million to customers, which would boost the amount
of money advanced or distributed to customers to $5.44 billion.
Peter Madoff had been chief compliance officer at his
brother's firm, and was sentenced in December to 10 years in
prison over his role in the fraud.
Andrew and Mark Madoff were co-directors of trading at the
firm. Mark Madoff committed suicide in December 2010.
Bernard Madoff, 74, is serving a 150-year prison sentence.
The Lautenberg case is The Lautenberg Foundation et al v.
Picard, 2nd U.S. Circuit Court of Appeals, No. 11-5421.