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Lawsuit Filed Against Madoff Client Who Saw 950% Returns
By
Jen Chung
Published May 13, 2009
Modified May 13, 2009
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By
Jen Chung
Published May 13, 2009
Modified May 13, 2009
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The trustee overseeing bankruptcy proceedings for disgraced financier Bernard Madoff has sued one Madoff client for $6.7 billion. Why? Because Jeffrey Picower, his wife, Barbara, and the Picower Foundation "knew or should have known they were benefiting from fraudulent activity or, at a minimum, failed to exercise reasonable due diligence"—they received 950% in returns one year and for a few years, returns ranged from 120% to 550%.
Picard's suit contended, "At least $5 billion of [the $6.7 billion] was fictitious profit from the Ponzi scheme. In other words, defendants have received, at a minimum, more than five billion dollars of other people’s money...The high returns reported on defendants’ accounts were a form of compensation by Madoff to Picower for perpetuating the Ponzi scheme by investing and maintaining millions of dollars." The Picowers' lawyer said, “Mr. and Mrs. Picower considered themselves friends of the Madoffs for over 35 years. They were totally shocked by his fraud and were in no way complicit in it... They lost billions in personal assets, and most dear to them, all of the assets of their esteemed foundation."
Still, Picard's suit claims, per the NY Times, "In other [Picower] accounts, backdated transactions generated billions of dollars of fictional year-end losses and one account grew by 30 percent in just two weeks in 2006 — thanks to trades that purportedly occurred months before the account was even opened." Picard's lawyer also says that $12 billion was withdrawn from Madoff's fake investment fund in 2008—and half that amount in the three months leading up to Madoff's December arrest.
Tagged
Bernard Madoff
billions
fraud
irving picard
lawsuit
ponzi scheme
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
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