It is nearly two years since the Bernie Madoff Ponzi scheme empire imploded and investors lost an estimated US$65 Billion in funds and anticipated earnings. As the wheels of justice turn slowly, a significant milestone is fast approaching – the two year statute of limitations for civil actions will expire on 11 December.
The Madoff trustee, attorney Irving Picard, is expected to unleash a tsunami of civil litigation in New York and London within the next two weeks. Some observers have estimated as many as 1,000 separate civil actions in New York and London alone.
Picard is expected to pursue those investors who are known as `net winners’ – those people who ended up receiving more in funds than they had deposited before the Ponzi scheme collapsed under the weight of the payment of `dividends’. It has been estimated that there are around 2,000 of these net winners and are therefore ripe for reclaiming the excess funds they have obtained. Some of these net winners are thought to be those who helped direct investments into the Ponzi scheme or else assisted Madoff by advising on the structured repayments.
Those under particular scrutiny are the `feeder funds’ – those who soaked up funds from a myriad of investors and then passed them onto Madoff with a guaranteed return plus a handsome commission for their troubles. In this way, some of these feeder funds earned tens of millions of dollars for the simple act of transferring investor’s funds over to Madoff.
As an example, in July 2010, the trustee took action against the Fairfield Greenwich hedge fund with over forty named defendants in relation to the US$3.6 Billion channeled to Madoff and his Ponzi scheme. The defendants protest their innocence and claim they had no idea as to what Madoff was really up to.
One of the most anticipated fall outs from these civil actions are the results of any disclosure orders made against the defendants. This will require the parties to open their books, accounts, emails and notes to the trustee and reveal what they knew and when they knew it. The net result could be a cascade of further civil actions against other defendants including banks, accountants, auditors and lawyers. There has long been suspicion over the circumstances of why funds were paid out to parties in the months leading up to Madoff pulling the plug on his Ponzi scheme.
Picard currently has over fifteen actions claiming around US$15 Billion from the likes of Madoff’s wife, brother and children plus other feeder funds operators. Picard has taken action against the late billionaire Jeffrey Picower for US$7.2 Billion.
Many people in New York and London will not be feeling vey festive this December as they wait to see how the cards fall and where the legal actions strike. One thing is for sure, this matter will run and run.
Do you need to know more about our services and how Regents can assist you with preventing fraud and money laundering? Simply go to our Contact Us page for our phone numbers or else send an email to email@example.com with your contact details and we will respond at once.