Is Madoff´s Trustee Scamming Madoff´s Victims?
Geoff Mousseau
August 17, 2009
Court-appointed Madoff Trustee, Irving Picard, filed suit against Madoff´s wife. The Trustee was appointed to recover money for the victims of Madoff´s fraud. So what could possibly be wrong with a lawsuit filed against Madoff´s wife?
The Trustee´s lawsuit against Madoff´s wife seeks to recover approximately $44 million. Sounds good so far. The lawsuit alleges that Madoff´s wife got that money from the proceeds of Madoff´s Ponzi scheme. Sounds good so far. And the lawsuit alleges that Madoff´s wife lived a life of luxury for years using money from Madoff´s Ponzi scheme. Sounds good so far.
So what´s the problem?
The United States Attorney´s office already recovered the money from Madoff´s wife and already agreed to pay it to Madoff´s victims. As for any remaining money that Madoff´s wife has, a federal judge has already permitted her to keep it because the US Attorney´s office could not link that money to the fraud.
So why would the court-appointed Trustee file a lawsuit in Bankruptcy Court to get money that has already been recovered? Simple. The Trustee and his lawyers make money by generating legal fees. The problem here is that the fees generated by the Trustee and his lawyers are paid from the money recovered for the victims of Madoff´s fraud.
Instead of actually collecting money to be paid to the victims, lawsuits like this permit court-appointed trustees and their lawyers to pay themselves. The lawsuit won´t collect any money because the money has already been collected. But because of this lawsuit, a portion of the money collected for the victims will be diverted to pay Picard and his legal team.
The money collected does not go to the victims; the money is used to pay for lawsuits like this.
Madoff´s Trustee, Irving Picard, surely knows that the United States Attorney´s office and the federal judge have already collected all they can from Madoff´s wife. Madoff´s Trustee surely knows that his lawsuit seeks money that has already been collected for the victims. And, most importantly for the lawyers, Madoff´s Trustee surely knows that his lawsuit will generate legal fees that will be paid from money that would otherwise go to the victims. The more fees generated, the less money for the victims.
Sounds like Madoff´s Trustee learned a thing or two from Madoff.
The Trustee´s lawsuit against Madoff´s wife seeks to recover approximately $44 million. Sounds good so far. The lawsuit alleges that Madoff´s wife got that money from the proceeds of Madoff´s Ponzi scheme. Sounds good so far. And the lawsuit alleges that Madoff´s wife lived a life of luxury for years using money from Madoff´s Ponzi scheme. Sounds good so far.
So what´s the problem?
The United States Attorney´s office already recovered the money from Madoff´s wife and already agreed to pay it to Madoff´s victims. As for any remaining money that Madoff´s wife has, a federal judge has already permitted her to keep it because the US Attorney´s office could not link that money to the fraud.
So why would the court-appointed Trustee file a lawsuit in Bankruptcy Court to get money that has already been recovered? Simple. The Trustee and his lawyers make money by generating legal fees. The problem here is that the fees generated by the Trustee and his lawyers are paid from the money recovered for the victims of Madoff´s fraud.
Instead of actually collecting money to be paid to the victims, lawsuits like this permit court-appointed trustees and their lawyers to pay themselves. The lawsuit won´t collect any money because the money has already been collected. But because of this lawsuit, a portion of the money collected for the victims will be diverted to pay Picard and his legal team.
The money collected does not go to the victims; the money is used to pay for lawsuits like this.
Madoff´s Trustee, Irving Picard, surely knows that the United States Attorney´s office and the federal judge have already collected all they can from Madoff´s wife. Madoff´s Trustee surely knows that his lawsuit seeks money that has already been collected for the victims. And, most importantly for the lawyers, Madoff´s Trustee surely knows that his lawsuit will generate legal fees that will be paid from money that would otherwise go to the victims. The more fees generated, the less money for the victims.
Sounds like Madoff´s Trustee learned a thing or two from Madoff.
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