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Monday, April 13, 2009

Madoff faces lawsuit from Investors


Over the government's objections, some of Bernie Madoff's investors filed a court proceeding today to force the convicted swindler into bankruptcy -- an attempt to ensure that his remaining assets go toward paying his victims.


From Bloomberg News:

The petition, filed by five investors today in U.S. Bankruptcy Court in Manhattan, seeks to push Madoff into Chapter 7 bankruptcy. The investors said they hold $64 million in claims against Madoff, who pleaded guilty last month to directing the largest Ponzi scheme in U.S. history.

U.S. District Judge Louis Stanton in Manhattan on April 10 reversed his December ruling that prevented investors from filing the request. The Securities and Exchange Commission, the Justice Department and the Securities Investor Protection Corp. opposed the investors’ request.

The SEC said the petition will spawn wasteful litigation, while the office of Interim Manhattan U.S. Attorney Lev Dassin said federal forfeiture law would take precedence over bankruptcy law.

Judge Stanton, however, said the U.S. bankruptcy code was the best system to deal with the claims against Madoff's assets, other than those that prosecutors may force him to forfeit as proceeds from his crimes, Reuters noted.

"A Bankruptcy Trustee has direct rights to Mr. Madoff's individual property, with the ability to maximize the size of the estate available to Mr. Madoff's creditors through his statutory authority to locate assets, avoid fraudulent transfers and preserve or increase the value of the assets through investment or sale," Stanton wrote

Bankruptcy Court trustee Irving Picard has located nearly $1 billion in Madoff assets, the New York Daily News reported.

Also from the Daily News:

Also from the Daily News:

Meanwhile, the swindler's luxury tickets to the Mets home opener at Citi Field on Monday jumped to $2,297 on eBay last night. The $525 tickets are part of the liquidation process.

by the associated press

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