Madoff Sons Stole Millions, Receiver Says

Jul 16 2014 | 3:14pm ET

The trustee in the Bernard Madoff case has mined the trial of five former deputies of the Ponzi scheme mastermind to bulk up his case against Madoff’s sons.

Irving Picard filed a third amended version of his lawsuit against Andrew Madoff and the estate of Mark Madoff, who committed suicide in 2010, two years after his father’s arrest. The new complaint is based in part on the testimony of former Madoff finance chief Frank DiPascali, whose testimony helped convict the former Madoff employees earlier this year.

It also seeks $16 million more from the Madoff brothers than the last amended complaint, bringing the total to $153.3 million.

Picard, in the new lawsuit, alleges that the brothers took a page from their father’s playbook, using sham transactions to inflate their personal account balances and phony loans to buy real-estate. All told, according to Picard, the brothers diverted tens of millions of dollars from their father’s firm. The two also allegedly helped delete, dummy or hide e-mails during a Securities and Exchange Commission audit in 2005.

“The Madoff brothers knew, saw, and were simply too intelligent to plausibly feign ignorance about the fraud that was occurring before, by and around them,” the suit alleges.

“The new allegations are unfounded,” Martin Flumenbaum, a lawyer for Andrew Madoff and Mark Madoff’s estate, said. “As we have stated, neither Andrew nor Mark knew of or knowingly participated in their father’s criminal conduct.”

Bernard Madoff claims to have acted alone, but 15 other people—including his brother, Peter Madoff—have pleaded guilty or been convicted in the case. Neither Andrew nor Mark has faced criminal charges, and both maintained that they ran a legitimate market-making and trading operation at their fathers firm.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.