A New York businessman's claim to recover $10 million he invested with Bernard Madoff's firm, days before the financier's arrest will not be treated differently than other customer claims, a judge ruled on Tuesday.
In January, New York fuel service company president Martin Rosenman sued court-appointed trustee Irving Picard for the return of $10 million wired to the Madoff firm and put into a bank account days before his arrest.
The money was sent on behalf of Rosenman Family LLC, which said in the lawsuit that Madoff made a phony transaction using the money.
His lawyer argued that Rosenman's money should not be collected like other customers' claims, but U.S. Bankruptcy Court Judge Burton Lifland granted a motion by the trustee to dismiss the complaint.
It does appear the money was for the purchase of securities and the timing is not that relevant, Lifland said. The timing issue is the sad part of this, but you know what ... there are a lot of sad people out there. I have sympathy for all of those victimized.
Madoff's firm is being liquidated under the trustee, Picard, a New York lawyer.
In a separate decision, Lifland denied a motion on behalf of investors in Bernard L. Madoff Investment Securities who do not have claims now, but could in the future if the trustee tried to recover their profits.
The Securities Investor Protection Corp (SIPC), a nonprofit group established in 1970 by Congress to keep a reserve of funds for investors in failed brokerages, has established a customer claim deadline of July 2 as it seeks to recover as many of Madoff's assets as possible.
You have time to file a protective proof of claim. The filing or a nonfiling of a claim is up to individual investors, Lifland told lawyers in court who brought a motion on behalf of Lucerne Foundation, Collingwood Enterprises and others to modify deadlines for claims.
Madoff, a once-respected Wall Street trader and investment manager, was arrested on December 11 last year and charged with securities fraud after authorities said he admitted to running a giant Ponzi scheme with losses of up to $50 billion over many years. A Ponzi scheme is one in which early investors are paid with the money of new clients.
Picard told the court on February 4 that he has recovered $946.4 million from the Madoff firm's assets for customers. Picard told the first meeting of Madoff creditors last Friday that 2,350 customer claims had been filed.
The cases: Rosenman Family LLC v Irving Picard, as Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC and JP Morgan Chase Bank 09-01000 U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Securities Investor Protection Corp v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York.
(Editing by Jeffrey Benkoe)