Thursday, 18 September 2014
Last updated 5 hours ago
Mar 2 2010 | 4:36am ET
A federal bankruptcy judge has sided with the receiver in the Bernard Madoff case, approving Irving Picard’s methodology for determining who will get what’s left of Madoff’s once-$17 billion empire.
The ruling by U.S. Bankruptcy Judge Burton Lifland is a defeat for those Madoff investors who withdrew more from their Madoff accounts than they put in. Those clients—who in addition to being denied any share of the restitution pie may now also face the prospect of having to repay any phony profit they withdrew from their Madoff accounts—had argued that the receiver, Picard, was bound by law to use their final account statements, even if the figures contained therein were totally bogus.
But Lifland said “the plain meaning and legislative history” of the law allowed Picard to deduct withdrawals from cash deposits in determining who gets what.
“Because securities positions are in fact nonexistent, the trustee cannot discharge claims upon the false premise that customers’ securities positions are what the account statements purport them to be,” the judge ruled.
Picard’s methodology was backed by Madoff’s less fortunate victims, the so-called net losers, who stood to receive much less if the net-winners were included in the pool, as well as the Securities and Exchange Commission.
A lawyer for those net winners, Brian Neville, promised an appeal.
“We respectfully disagree with the judge, but as he noted during the oral arguments, this is a case that the Second Circuit [Court of Appeals] will ultimately rule on,” he told Bloomberg News.
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