Madoff's Legitimate Business to be SoldApr 8, 2009 | Parker Waichman LLP
The remains of white-collar criminal mastermind Bernard Madoff’s legitimate business is scheduled to be approved for sale on April 28. Newsday reported that a federal bankruptcy judge ordered the move, which was implemented to ensure that a competitor does not come forward against the $15.5-million deal made in March by Castor Pollux Securities Llc.
Judge Burton Lifland set an April 22 deadline for competitive bids, said Newsday, adding that the business is being sold by special bankruptcy trustee Irving Picard in order to raise money to pay investors who lost money to Madoff.
On March 12, Madoff pleaded guilty to 11 fraud counts. 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.
Madoff faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to a prior Los Angeles Times report, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began. Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.
To date, Picard and his staff have found a little over $1 billion in funds, said Newsday. Lifland approved Picard's hiring of attorneys in Gibraltar and “acting under the authority of the Securities Investor Protection Corp.,” Picard also requested attorneys in Luxembourg, said Newsday. About $75 million was recently found in Gibralter and it is believed that upwards of $2 billion may be in Luxembourg bank accounts; accounts in the Caribbean and in Ireland are also being looked at, Newsday reported.
Meanwhile, federal prosecutors are working to seize assets that Madoff and Ruth, his wife, have in their possession, said Newsday, all in the hopes of returning some of the lost funds back to investors.
In a related action, hedge fund manager Ezra Merkin is facing civil fraud charges based on a complaint filed by New York State Attorney General Andrew Cuomo. Investors, including several prominent charities and non-profits, entrusted millions to Merkin, who allegedly steered the money to Madoff without their permission in exchange for $470 million in management and incentive fees.
Newsday noted that French creditors owed money by Madoff took possession of his yacht “Bull” and other creditors might place liens on another yacht and apartment elsewhere in France, thus complicating similar U.S. attempts with the addition of international law and diplomatic protocols.
Earlier last month, Madoff’s attorneys claimed a Manhattan penthouse, $45 million in municipal bonds, and another $17 million held in a Wachovia account that belonged to Ruth, and had no connection to the fraud. Advocates for Madoff’s investors have decried this move, pointing out that Ruth was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud. Most recently, Ruth Madoff declared her $9.4 million Palm Beach, Florida mansion her primary residence in an effort to protect the property from seizure, but ultimately, the property, which was vacant—as well as a luxury yacht—was among some assets seized by U.S. Marshalls.