As More Madoff Assets are Seized, Some Investors Try to Force Bankruptcy on Admitted SwindlerApr 2, 2009 | Parker Waichman LLP
U.S. Marshalls have seized more assets belonging to admitted Ponzi schemer Bernard Madoff. According to the Associated Press, a beach front mansion and luxury yacht were among the property the U.S. government seized yesterday in an effort to recoup some funds for his defrauded investors.
Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.
Many of Madoff's investors lost their entire savings to his fraud. Since his arrest, a trustee appointed by the government has been trying to track down his assets so that they can be sold off, and the proceeds distributed to his victims. So far, the trustee has located about $1 billion worth of assets - a mere fraction of what investors have lost.
According to the Associated Press, the mansion seized yesterday could be worth as much as $9.3 million. The Palm Beach property - which was unoccupied - was padlocked, and its contents are being inventoried.
The seizure also included a 55-foot yacht named "Bull," a 1969 Rybovich valued at $2.2 million. A motor boat also was seized, the Associated Press said.
Meanwhile, The Wall Street Journal is reporting that three creditors petitioned U.S. District Judge Louis Stanton in Manhattan to lift a stay in a Securities and Exchange Commission (SEC) case against Madoff that prevents them from pursuing a bankruptcy action against him. The move is an attempt to make sure all of his assets are used to repay investors.
According to the Journal, federal prosecutors and the SEC have indicated they intend to seek forfeiture and disgorgement of Madoff's assets in both the criminal and civil cases. But according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff's customers and what rules would govern any such distribution.
"Under these circumstances, considerations of efficiency and fairness to victims dictate coordinated proceedings in the bankruptcy court," the lawyer wrote in the filing.