June 27, 2018 / 4:47 PM / a year ago

Madoff trustee defeats U.S. appeals court challenge to his authority

NEW YORK (Reuters) - A federal appeals court on Wednesday blocked new litigation against the estate of a Florida investor accused of helping Bernard Madoff commit fraud, after the estate had reached a $7.2 billion settlement to benefit Madoff’s customers.

FILE PHOTO: Bernard Madoff exits the Manhattan federal court house in New York, NY, U.S., January 14, 2009. REUTERS/Brendan McDermid/File Photo

The decision by the 2nd U.S. Circuit Court of Appeals in Manhattan is a victory for Irving Picard, the court-appointed trustee liquidating Bernard L. Madoff Investment Securities LLC after its December 2008 implosion.

Picard has said allowing the $11 billion lawsuit by A&G Goldman Partnership and Pamela Goldman against Jeffry Picower’s estate would undermine his authority to obtain settlements, while assuring settling parties they would not be sued again.

Joseph Galardi, a lawyer for the Goldman plaintiffs, did not immediately respond to requests for comment. A lawyers for Picard had no immediate comment. Gary Stein, a lawyer for the Picower estate, also had no immediate comment.

Picard has recovered $13.26 billion, or 76 percent, of the $17.5 billion he said Madoff’s customers lost, including this month’s $280 million settlement with New York hedge fund manager Ezra Merkin.

Picower died in October 2009 by drowning in a swimming pool after a heart attack.

Picard’s settlement with the estate is his largest, and the trustee had won a permanent injunction barring competing claims.

But the Goldman plaintiffs said their claims were different, including that Picower’s ability to “control” Madoff’s firm gave him a direct role in the fraud, which he furthered by making loans and serving as a fake counterparty on options trades.

By a 3-0 vote, however, the appeals court found no evidence that Picower directed Madoff’s firm to lie in its financial disclosures, or had control over “the primary violator of the securities laws,” Madoff himself.

“The only harm alleged in the operative complaint that appellants have legally attributed to the Picower Parties is ... for fraudulent withdrawal of assets,” the court said. “That is a derivative claim, which is barred by the injunction.”

Madoff, 80, pleaded guilty to fraud and is serving a 150-year prison term.

Wednesday’s decision upheld a January 2017 ruling by U.S. District Judge Gregory Woods in Manhattan.

The case is A&G Goldman Partnership et al v Picard et al, 2nd U.S. Circuit Court of Appeals, No. 17-512.

Reporting by Jonathan Stempel in New York; editing by Bill Berkrot

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below