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8 years ago
Judge rules Madoff can be pushed into bankruptcy
April 11, 2009 / 3:27 AM / 8 years ago

Judge rules Madoff can be pushed into bankruptcy

<p>Booking mug shot of Bernard Madoff released to Reuters on March 17, 2009. SERVICE/FOIA/Handout</p>

NEW YORK (Reuters) - Victims of Bernard Madoff may be allowed to push the swindler behind a purported $65 billion Ponzi scheme into bankruptcy, a federal court judge ruled on Friday.

Despite objections from federal prosecutors, the U.S. Securities and Exchange Commission and the Trustee for the Liquidation of Bernard L Madoff Investment Securities LLC, U.S. District Court Judge Louis Stanton ruled that the alleged victims may go after Madoff's assets that were not proceeds from his crimes.

The judge, of the Southern District of New York in Manhattan, said the U.S. bankruptcy code is the best and most experienced system to deal with the claims against Madoff's assets, excluding those that prosecutors may force him to forfeit as proceeds from a crime.

"A Bankruptcy Trustee has direct rights to Mr. Madoff's individual property, with the ability to maximize the size of the estate available to Mr. Madoff's creditors through his statutory authority to locate assets, avoid fraudulent transfers and preserve or increase the value of the assets through investment or sale," Stanton wrote in his opinion.

Madoff has pleaded guilty to masterminding Wall Street's biggest ever investment swindle, involving as much as $65 billion in client funds. He could be ordered to prison for the rest of his life when sentenced in June.

Separately, firms that sent investors' money to Madoff took in $790 million in fees and investors and authorities are trying to recover the money, according to The Wall Street Journal.

Banco Santander SA, one of the biggest so-called "feeders" to Madoff, earned $52.7 million in investment manager's fees in 2007 and $43.3 million in 2006, the newspaper said in a story posted on Friday on its website.

Fairfield Greenwich Group, which was the biggest feeder fund, may have earned $400 million from 2005 to 2008 based on a lawsuit against the company filed by Massachusetts securities regulators, the newspaper said.

Reporting by Ilaina Jonas; Editing by Jan Paschal

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