Litigation against the Madoff Family: Where Is It Today?

Litigation against the Madoff Family: Where Is It Today?

 Of all the lawsuits brought against people allegedly involved in the Madoff Ponzi scheme, perhaps none are of as much interest as the actions involving Madoff family members. The most recent request for fees filed by Baker & Hostetler (B&H) explains the status of these cases. Note that references to the “Compensation Period” mean from May 1, 2013 through and including July 31, 2013. Here are excerpts:

89. This matter categorizes time spent by B&H attorneys pursuing numerous avoidance actions against members of the Madoff family. On October 2, 2009, the Trustee filed a complaint against Peter Madoff, Andrew Madoff, the late Mark Madoff, and Shana Madoff (collectively, the “Family Defendants”) asserting claims for preferences, fraudulent transfers, fraudulent conveyances, and damages in connection with certain transfers of property by BLMIS [Bernard L. Madoff Investment Securities LLC] to or for the benefit of the Family Defendants. Picard v. Peter B. Madoff, Adv. No. 09-01503 (BRL) (Bankr. S.D.N.Y.), ECF No. 1. On March 15, 2010, each of the defendants separately moved this Court to dismiss the Trustee’s complaint. (ECF Nos. 13–19). On September 22, 2011, this Court denied in part and granted in part the motions to dismiss. (ECF No. 55). Defendant Andrew Madoff, individually, and as Executor of the Estate of Mark D. Madoff, filed a motion for leave to seek interlocutory review of this Court’s September 22, 2011 decision. (ECF No. 56). Following briefing and oral argument, the District Court denied that motion on December 22, 2011. (ECF No. 74).

90. In accordance with this Court’s September 22, 2011 decision, on November 7, 2011, the Trustee filed an amended complaint against the Family Defendants, identifying additional transfers and seeking the return of over $225 million under SIPA, the Bankruptcy Code, the New York Fraudulent Conveyance Act, and other applicable law for preferences, fraudulent transfers, fraudulent conveyances, and damages in connection with certain transfers of property by BLMIS to or for the benefit of the Family Defendants. Picard v. Peter B. Madoff, Adv. No. 09-01503 (BRL) (Bankr. S.D.N.Y.), ECF No. 64. Shana Madoff, Peter Madoff, and Andrew Madoff, both on his own behalf and as Executor of the Estate of Mark D. Madoff, each answered the amended complaint on January 17, 2012. (ECF Nos. 78, 79, 80).

91. On December 23, 2011, the Trustee filed a motion seeking leave to file a second amended complaint, adding additional claims and defendants to the action against the Family Defendants. (ECF No. 71). On April 4, 2012, following briefing and oral argument, this Court issued a written opinion denying in part and granting in part the Trustee’s motion. (ECF No. 106). On May 4, 2012, the Trustee filed a second amended complaint against the Family Defendants and named as additional defendants Mark Madoff’s widow, Stephanie Mack, and Andrew Madoff’s wife, Deborah Madoff. (ECF No. 113). The Trustee also named Mark Madoff’s ex-wife, Susan Elkin, as a subsequent transferee defendant. Defendants Andrew Madoff, the Estate of Mark D. Madoff, Shana Madoff, and Ms. Elkin answered the second amended complaint on July 2, 2012. (ECF Nos. 124–126). On April 2, 2012, Stephanie Mack and Deborah Madoff moved to withdraw the reference from this Court, and their motions are pending before the District Court. (ECF Nos. 101, 104). The Trustee has adjourned the time for Stephanie Mack and Deborah Madoff to respond to the second amended complaint. (ECF Nos. 128, 134, 139, 141, 149, 152, 154, 157, 159, 165).

92. On June 29, 2012, Peter Madoff pleaded guilty to a two-count indictment and consented to the entry of a forfeiture order for $143.1 billion. Under the Preliminary Forfeiture Order, Peter Madoff and his wife, Marion Madoff, forfeited substantially all of their assets to the United States of America. Subsequently, on February 6, 2013, Peter Madoff was dismissed from this action in connection with the entry of a Consent Judgment in the amount of $90,390,500.00. (ECF No. 145). On February 7, 2013, the Trustee dismissed a separate adversary proceeding against Marion Madoff through a Notice of Voluntary Dismissal with Prejudice. Picard v. Marion Madoff, Adv. No. 10-04310 (BRL) (Bankr. S.D.N.Y.), ECF No. 17.

93. In connection with Peter Madoff’s plea agreement, his daughter, defendant Shana Madoff, also forfeited to the United States of America substantially all of her assets that were the subject of the Trustee’s claims against her. Subsequently, on March 18, 2013, the Trustee dismissed the case against Shana Madoff with prejudice. (ECF No. 148).

94. The Trustee commenced two adversary proceedings against members of Andrew Madoff and the late Mark Madoff’s families to recover fraudulent conveyances made by Bernard and Ruth Madoff. Picard v. Stephanie S. Mack, Adv. No. 10-05328 (BRL) (Bankr. S.D.N.Y.); Picard v. Deborah Madoff, Adv. No. 10-05332 (BRL) (Bankr. S.D.N.Y.). Amended complaints were filed in these actions on February 7, 2012. Picard v. Mack, Adv. No. 10-05328, ECF No. 23; Picard v. Deborah Madoff, Adv. No. 10-05332, ECF No. 13. All defendants in both actions answered on March 23, 2012. Picard v. Mack, Adv. No. 10-05328, ECF No. 30; Picard v. Deborah Madoff, Adv. No. 10-05332, ECF No. 20. Deborah Madoff also moved to withdraw the reference from this Court on April 2, 2012. Picard v. Deborah Madoff, Adv. No. 10-05332, ECF No. 22. That motion is currently pending before the District Court. The pre-trial conference for these actions in this Court is currently scheduled for December 18, 2013. Picard v. Mack, Adv. No. 10-05328, ECF No. 48; Picard v. Deborah Madoff, Adv. No. 10-05332, ECF No. 43.

95. The Trustee commenced two adversary proceedings against foundations created by and named for Andrew and the late Mark Madoff and their spouses: Picard v. Mark & Stephanie Madoff Found., Adv. No. 10-05325 (BRL) (Bankr. S.D.N.Y.) and Picard v. Deborah & Andrew Madoff Found., Adv. No. 10-05330 (BRL) (Bankr. S.D.N.Y.). The defendants in these cases have answered, and the pre-trial conferences are currently scheduled for December 18, 2013. Picard v. Mark & Stephanie Madoff Found., Adv. No. 10-05325, ECF No. 30; Picard v. Deborah & Andrew Madoff Found., Adv. No. 10-05330, ECF No. 35.

96. The Trustee commenced various adversary proceedings against Madoff’s relatives beyond his immediate family to recover preferences and fraudulent conveyances. Currently, the Trustee’s cases styled Picard v. Wiener Family Ltd. P’ship, Adv. No. 10-04323 (Bankr. S.D.N.Y.), Picard v. NTC & Co. LLP, Adv. No. 10-04293 (Bankr. S.D.N.Y.), and Picard v. Schaum & Wiener Profit Sharing Plan & Trust FBO Martin Schaum, Adv. No. 10-04329 (Bankr. S.D.N.Y.) remain pending.

More discussion of Madoff developments will appear in upcoming posts on the Financial Fraud Law Blog.

Contact the author at smeyerow@optonline.net

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