Madoff Trustee Sues Charity, Hedge Fund

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.”


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...