Going After the Deep Pockets in the Madoff Case

If you are looking for a break from today's coverage of the Supreme Court's ruling on ObamaCare, the NYTimes has an interesting article on the legal doctrine that is making it hard for Irving Picard to recover money from the banks that helped enable Madoff's historic Ponzi scheme.

Madoff and Merkin: A $410,000,000 Resolution

Photo from NY Times

We've written before about Ezra Merkin's hedge funds that fed Madoff billions of investor dollars. Merkin collected his fee and then apparently went to the beach to rest from his hard work. Occasionally he took a break from the beach and the golf course to write to his investors and tell them how he actively managed the funds.

Merkin has now settled part of the lawsuits against him for claiming to actively manage his funds and then giving Madoff the money. Here are some details from the NY Times...

Mets Owners Settle Willful Blindness Case

Just as jury selection was about to begin, the New York Mets owners have opted to settle the $303 million lawsuit against them.  While the article is a bit unclear, I believe the settlement amount of $162 million is in addition to the $83 million in fictitious profits that the Mets owners already had to return per a ruling by Judge Rakoff.  

Another Link Dump

Here are a few more links to keep you up to date on the latest fraud-related news:

Madoff and Watergate

No, Bernie Madoff didn't play a role in the Watergate scandal (at least as far as we know) but it turns out that his Ponzi scheme may have been going way back then. If so, it will go down in history as not only the largest Ponzi scheme we know of but also the longest running scheme too (by far!). This new revelation is according to the guilty plea of 66 year old David L. Kugel who was apparently associated with Madoff even back when Richard Nixon was in the Whitehouse. Here are a few quotes:

The Latest on Bernie Madoff's Victims

An excellent NYT editorial discusses the latest in the Bernie Madoff saga.  For those of you who may not be following the story very closely, last Thursday the judge overseeing the civil suits brought against alleged beneficiaries and enablers of the Madoff fraud threw out a suit against HSBC, dealing a pretty substantial blow to the efforts to recover funds for Madoff's victims.  The entire editorial is worth reading, but here are a few tidbits that stood out to me:

Madoff's Dealings with the Mets: Lookin' Shady to Me

The New York Mets have made the news recently but, unfortunately for them, it's not because their spring season is boding well for the rest of the season. Instead, the Mets are finding serious opposition is coming from the trustee in the Madoff case, Irving Picard, who is suing the Mets' owners, the Wilpon and Katz families, for $1 billion.

As it turns out, the Mets may have thought their biggest rivals were  the Yankees or the Phillies, but this year, they may start wondering if Picard is working for one of their rivals. Picard's amended case is 381 pages long and is likely to be a bigger challenge to the organization than any of those teams can muster. From what I can tell, the most potentially damning allegation in the case is Picard's contention that the Mets' owners knew Madoff was accustomed to doing shady business and that he transacted some such business with the owners. Here are some details that may pose a challenge to the owners as stated in a recent NY Times article on the matter:

Winners and Losers in the Madoff Case

Irving Picard

Irving Picard, the trustee in the Madoff case, was in court last week as a panel of three judges heard arguments on whether net winners in the Madoff case ought to be able to collect money from the government. Net winners are those who took more cash out of Madoff's funds than they put in. Apparently, there are several of these guys who think they should get more money. Hmmmm.....

The WSJ had this to say about the case: "The judges' decision is likely to determine which Madoff customers may collect up to $500,000 apiece from the Securities Investor Protection Corp., an industry association created under federal law to insure investors in failed brokerages. It is also expected to affect how to divide billions of dollars Mr. Picard is recovering through legal settlements with people who withdrew money from the Ponzi scheme."

Now, it seems just a bit greedy to me that investors who got more money from Madoff than they put in would also be trying to collect from the taxpayers simply because Madoff sent them a statement showing they had more fictitious profits than they had already withdrawn! Apparently, the judges showed signs of wonder too as the WSJ reported the following:

Bernie Madoff News: NY Mets and JP Morgan Chase

The past week has led to two new stories related to Bernie Madoff's massive Ponzi scheme. I'm going to provide a short blurb and a link to an article in case you want to read more.