The trustee in the Bernard Madoff case urged a federal appeals court to throw out a settlement between one of the arch-fraudster's feeder funds and New York State.
The U.S. Second Circuit Court of Appeals is set to consider Irving Picard's battle with New York Attorney General Eric Schneiderman. Schneiderman last year struck a $410 million settlement agreement with J. Ezra Merkin, who ran a suite of Madoff feeder funds.
But Picard said Wednesday that the settlement gives "special treatment" to Merkin investors "to the detriment of all other customers." Picard is currently suing Merkin, who he alleges knew about Madoff's Ponzi scheme, to collect restitution for Madoff's victims.
Picard added that bankruptcy law forbids settlements like Schneiderman's until he has finished his own work.
A lower-court judge in April ruled against Picard, noting that he waited three years to seek an injunction against the lawsuit filed against Merkin by Schneiderman's predecessor, Andrew Cuomo, who is now New York's governor. Picard told the Second Circuit that he "diligently pursued less drastic measures" before seeking the injunction.
Picard has to date collected about $9 billion for Madoff victims.