Bernard Madoff Surrenders AssetsMar 4, 2009 | Parker Waichman LLP
Bernard Madoff has agreed to give up ownership of his businesses, artwork that belongs to his investment firm, and entertainment tickets. According to a report on Reuters.com, the trustee liquidating the accused Ponzi schemer's assets has asked a judge that he be allowed to take over ownership of the property. Presumably, the assets would be sold and the proceeds divided up among Madoff's defrauded assets.
Madoff - once a chairman of the Nasdaq stock exchange - was the founder and primary owner of Bernard L. Madoff Investment Securities LLC., Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions. According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately millions of dollars.”
Following his arrest, a trustee was appointed to undertake the liquidation of Madoff’s assets in an effort to recover some of the his investors’ missing money. At a meeting last month, the trustee told investors that so far he had recovered about $950 million from Madoff’s assets - a fraction of what they have lost.
According to Reuters, the trustee has filed a motion in U.S. District Court in Manhattan seeking control of Bernard L. Madoff Investment Securities LLC and Primex Holdings LLC "and any membership or ownership interest therein." Primex was a digital trading firm that operated out of Madoff's New York headquarters, Reuters said.
The judge in the case is expected to approve the motion. When he does, the trustee will take possession of real estate belonging to the firms, including warehouses in Queens that reportedly hold 7,000 unmarked boxes of documents. The trustee would also get control of all the furniture, computer hardware, software, network equipment, facilities and paperwork from the firms, Reuters said. Finally, the trustee would also acquire any artwork and corporate entertainment tickets bought or used by the businesses.
While Madoff agreed to surrender those assets, he is still trying to hold on to his luxury penthouse apartment in Manhattan - where he currently lives under house arrest - as well as $45 million in municipal bonds and $17 million in cash. As we reported yesterday, Madoff's lawyers have asserted that those assets belong to his wife Ruth, who hasn't been accused of any wrongdoing.
Many investors are understandably angered by this move. A lawyer who represents about 100 investors told the Associated Press they won't stand for Madoff holding on to so much wealth.
"Bernie Madoff has no shortage of chutzpah to suggest as he does that his wife was not the beneficiary of his fraud. It is not only senseless, but offensive," the lawyer said. The attorney also pointed out that Ruth Madoff was her husband's bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.