Madoff Trustee Plans Wave Of Lawsuits Against Ponzi Scheme ‘Winners’

Jul 26 2010 | 12:27pm ET

The receiver in the Bernard Madoff Ponzi scheme may sue as many as 1,000 investors who withdrew more money than they invested with the fraudster.

Irving Picard told The Wall Street Journal that he could sue half of the so-called “net winners” from the scam—those who withdrew false profits generated by the Ponzi scheme. There are about 2,000 such “winners,” according to Picard, who has until December—the two-year-anniversary of Madoff’s arrest—to file the suits.

“We’re not going to wait until the last minute,” Picard told the Journal.

The receiver last year sent letters to hundreds of the “winners,” asking them to “resolve this matter amicably” by returning some of the money they withdrew. But he found few takers.

“What am I supposed to do?” Picard, who has already recovered $1.5 billion of the $65 billion Madoff stole. Picard also has lawsuits seeking another $15 billion pending, filed against Madoff’s family members, feeder funds and biggest investors.

“If I gave [the net winners] an options to come talk to me, why didn’t they?” Picard asked.

Some of those “winners” interviewed by the Journal said they would fight Picard’s efforts. Adele Fox, a retired school secretary who Picard wants to repay almost $700,000, said, “this is my money that I need now, and if he comes after me, I will be penniless.”

Picard said he has offered to exempt “winners” who can show a financial hardship. But fair’s fair, he said.

“The people who made money, who got  more, have made money at the expense of the people who didn’t,” he said.


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...