Thursday, 29 January 2015
Last updated 24 min ago
May 13 2009 | 11:05am ET
The court-appointed liquidator for Bernard Madoff’s firm is keeping busy, filing a pair of lawsuits seeking the return of more than $7 billion from former Madoff clients.
Irving Picard filed the lawsuits against a Picower Foundation official and Harley International (Cayman) in an effort to recoup what he calls “fictitious profits” received by the two. According to Picard, some $6 billion of the $12 billion in total withdrawals from Bernard L. Madoff Investment Securities came in the three months before Madoff’s arrest in December. Madoff has since pleaded guilty to running a $65 billion Ponzi scheme.
“The trustee’s investigation to date has revealed that at least $5 billion of this amount was fictitious profit from the Ponzi scheme,” the complaint alleges.
The lawsuits target Jeffry Picower, both individually and as a trustee for the Picower Foundation, and hedge fund Harley International, which is managed by Euro-Dutch Management. Picower, a prominent educational charity, said it would close in December due to its losses in the Madoff scandal.
Despite those losses, Picard says Picower profited handsomely from the scheme before it collapsed, withdrawing about $6.5 billion from Madoff since 1995.
“In several cases, defendants’ purported annual rates of return were more than 100 percent, with some annual returns as high as 500 percent or even 950 percent per year,” Picard’s complaint alleges.
“Picower and the other defendants were among the primary beneficiaries of this scheme, reaping billions of dollars of other people’s money.”
For its part, Harley allegedly withdrew some $425 million “which it knew or should have known was non-existent principal and other investors’ money.”
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…