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British Liquidators Target Bernard Madoff’s Brother, Peter

Apr 15, 2009 | Parker Waichman LLP Court appointed liquidators in the United Kingdom have sued Bernard Madoff’s brother Peter, for recovery of a vintage Aston Martin, reports the Wall Street Journal.  The car was purchased with monies derived from Madoff’s U.K. business, London-based Madoff Securities International Limited (MSIL).

According to lawsuit documents, the British arm of Madoff’s business wired £135,000—$201,353—to Aston Martin in 2008 for the purchase of a car for Peter Madoff and his wife, said the Journal.  The complaint states the transfers were “not legitimately reimbursed,” said the South Florida Business Journals (BizJournals).  The lawsuit was filed in the U.S. Bankruptcy Court in West Palm Beach, Florida, noted the Journal, which pointed out that Peter—who was a director, manager, and shareholder of the British operation—lives in Florida.  The lawsuit, in addition to seeking recovery of the Aston Martin, is also looking to recover other losses, which include punitive damages, said BizJournals.

The lawsuit, explained BizJournals, was filed for bankruptcy recognition and includes a lawsuit to recover the 1964 Aston Martin DB2/4 and also stated that Peter Madoff used accounts with MSIL to buy the high-end luxury car.  BizJournals added that the car is kept at Peter Madoff’s home, which is located at 200 Algoma Road, in Palm Beach, Florida.

The British petition is a Chapter 15 filing and, in effect, seeks recognition of bankruptcies in foreign jurisdictions, explained BizJournals.  The complaint also states that MSIL traded for the personal accounts of Bernard Madoff and members of his immediate family; Madoff used MSIL’s assets and bank accounts to buy items such as luxury yachts and automobiles, and furnishings for himself and Madoff family members, to name just a few, said BizJournals.

On March 12, Madoff pleaded guilty to 11 fraud counts in what is believed to be the largest Ponzi scheme in history.  Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount.  Since his guilty plea, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison.

Meanwhile, On Monday, a filing was made in New York for a personal involuntary bankruptcy for Bernard Madoff in an attempt to recover personal assets of Madoff and his relatives, said BizJournals.  According to The Wall Street Journal, the filing says investors’ claims are based on breach of contract, conversion, and fraud.  The filing also states that because of Madoff’s guilty plea in his criminal case, the claims are not disputed. The investors claim Madoff owes them a total of $64 million, which is based on the balances contained in the last statements they received from Bernard L. Madoff Investment Securities LLC, the Journal said.  If the claim is granted, Madoff’s assets will be subject to liquidation under Chapter 7 bankruptcy.

Earlier this month, the investors petitioned a federal judge to rescind an order that prevented a forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) 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.

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