That month, recovery trustee Irving Picard received funds from the Bank of New York account where Bernard Madoff held new investments into his Ponzi scheme.
Investors are entitled to receive no more than the nominal cash amounts that they paid in and did not subsequently withdraw, without regard to inflation, interest, opportunity cost or the false statements that Madoff provided them.
As of March 2024, the trustee had recovered $14.7 billion toward these claims through legal action against Madoff associates, feeder funds and beneficiaries of the scheme, and had made fifteen distributions to investors.
[12][13] On March 2, 2009, Judge Louis L. Stanton modified an existing freeze order to surrender assets Madoff owns: his securities firm, real estate, artwork, and entertainment tickets, and granted a request by prosecutors that the existing freeze remain in place for the Manhattan apartment, and vacation homes in Montauk, New York, and Palm Beach, Florida.
He has also agreed to surrender his interest in Primex Holdings LLC, a joint venture between Madoff Securities and several large brokerages, designed to replicate the auction process on the New York Stock Exchange.
[18][19] In Jan 2010, Madoff's Manhattan Penthouse at 133 East 64th Street was sold to Alfred R. Kahn, marketer of the Cabbage Patch Kids dolls, for approx.
[21] U.S. District Judge Lawrence McKenna gave Picard power to seize assets and records, demand documents, summon witnesses, and enter Madoff's residences around the world, including his Manhattan penthouse.
[22] On February 20, 2009, Picard, at a meeting with Madoff creditors, who include individual investors, banks, charities and others, indicated that his investigation has to date not found any evidence that any securities were purchased on behalf of customers in at least 13 years.
[26] Known as the legal doctrine of fraudulent conveyance in bankruptcy proceedings means that investors who withdrew their money before the fraud was revealed may be compelled to return their profits or even part of their initial investments.
[30][31] On April 9, 2009, Irving Picard sued Gibraltar-based Banque Jacob Safra in Manhattan Federal Bankruptcy Court seeking $150 million[32] Madoff wired as a "preferential payment"[33] to the bank, invested on behalf of Vizcaya Partners, a British Virgin Islands company.
The lawsuit claimed that up to 90 percent of Cohmad's income came from referring clients and that the firm had a "symbiotic" relationship with Madoff, having earned hundreds of millions of dollars from the fraud.
[53][54][55][56] On April 1, 2009, the United States Marshals Service seized Madoff's several boats from marinas on Florida's east coast; these included a restored, custom-made 1969 Rybovich wooden antique fishing yacht, Bull, valued at $2.2 million, featuring a hydraulic elevator and teak woodwork, as well as several other boats [57]'[58] as well as personal property within the family home in Palm Beach, Florida.
[63][64] In an interview in July 2010, Picard said that he could potentially end up suing about half of the estimated 2,000 individual investors who withdrew more from Madoff's funds than they had invested.
[66] On November 17, 2010, Picard filed a clawback lawsuit seeking recover of $20.4 million in false profits from Melvyn I. Weiss and David J. Bershad, who had both previously pleaded guilty to racketeering charges in an earlier securities fraud case involving kickbacks to clients.
It also claimed Chais was a primary beneficiary of the scheme for at least 30 years, allowing his family to withdraw more than $1 billion from their accounts since 1995 – money that belonged to Madoff victims.
[71] On November 19, 2016, the United States Bankruptcy Court for the Southern District of New York approved a global settlement – made in cooperation with the California Attorney General - with the defendants in Picard v. the Estate of Stanley Chais, et al.
The complaint alleged the Picowers, friends of Madoff for decades, "knew or should have known they were benefiting from fraudulent activity or, at a minimum, failed to exercise reasonable due diligence."
He urged the Court that the lawsuit was a "paradigm of excess" that reflected a "frenzied effort" to recover large sums from one of Madoff's wealthiest investors.
[91] A May 5, 2009, court motion to consolidate business and personal assets,[92] discloses that Madoff used $2.7 million of his firm's cash to pay for a home in New Jersey for a longtime employee, JoAnn Crupi.
In January 2009, Madoff and his wife, Ruth, spent more than $100,000 on the firm's American Express Corporate Card:[93] $1,564 at Bistro Chez Jean-Pierre in Palm Beach, Fla.; $2,000 at Georgio Armani in Paris; and $2,813 at the Apple computer store in New York.
[97] At an April 27, 2009, Castor Pollux Securities LLC won the bidding for the acquisition of the assets related to the market making business of BLMIS.
[62] On April 10, 2009, U.S. District Judge Louis Stanton reversed his December 18, 2008, ruling and ordered that investors can force Madoff into personal bankruptcy proceedings, against the wishes of federal prosecutors and the Securities and Exchange Commission who claim it unnecessary and costly.
[107] On June 12, 2009, a lawsuit was filed against SIPC's Bankruptcy Trustee, Irving Picard by Maureen Ebel, Roger and Diane Peskin claiming his breach of fiduciary duty for failing to follow rules to make payments to Madoff victims.
[108] The Hardship Program is designed to give eligible people up to $500,000, the insurance limit of the Securities Investor Protection Corp. who are unable to pay living and medical expenses, filing for personal bankruptcy, and ages 65+ who have been forced to leave retirement and return to work.
On April 23, 2009, JPMorgan Chase was served with a complaint from MLSMK [117] Investment Company, a Palm Beach, Florida partnership that directly deposited $12.8 million into Madoff's account between October and early December 2008.
[118] On October 20, 2009, an amended complaint to an investor lawsuit in New York State Supreme Court added accounting firm KPMG, JPMorgan Chase and Bank of New York Mellon Also named was Oppenheimer Acquisition Corp, Massachusetts Mutual Life Insurance (MMLIC.UL), Tremont Group funds founder Sandra Manzke and former Tremont Chief Executive, Robert Schulman.
However, Chase didn't report its concerns to regulators or law enforcement until October 2008, when it told the UK Serious Organised Crime Agency that the performance of Madoff's investments was "too good to be true."
Almost as seriously, Picard charged that Chemical/Chase's retail bankers failed to perform even basic oversight of Madoff's banking activities, despite several transactions dating as far back as the 1990s that raised the appearance of money laundering or check kiting.
On January 7, 2014, JPMorgan agreed to pay a total of $2.05 billion in fines and penalties to settle civil and criminal charges related to its role in the Madoff scandal.
In the agreement, JPMorgan admitted that it and its predecessors failed to report illegal activities on Madoff's part as required by the Bank Secrecy Act as early as 1994.