Here Comes the Madoff Charity Claw Back
Madoff Liquidator May ‘Claw Back’ Charities’ Profits (Bloomberg):
Irving Picard, the liquidator for Bernard Madoff’s investment business, said he might sue charities that took out more money than they invested with the imprisoned con man to force them to return the difference.
As trustee, Picard by law must file so-called clawback suits against investors that profited from the fraud at Bernard L. Madoff Investment Securities LLC, even if they weren’t aware of his $65 billion Ponzi scheme. Charities aren’t exempt from such “avoidance actions,” Picard said today in an e-mail.
“Picard has an obligation to the bankruptcy estate to collect all the assets he can find and in theory he has to treat everyone the same way,” said William Josephson of Fried Frank Harris Shriver & Jacobson LLP, who previously helped to run the New York State Law Department’s Charities Bureau. “The bankruptcy code doesn’t differentiate” between charities and other institutions, he said.
Picard until now hasn’t spelled out his policy for dealing with charities that unknowingly profited from the fraud by investing with Madoff or his so-called feeder funds.
“He has been cagey,” Josephson said.
Picard, a lawyer with Baker & Hostetler LLP, declined to discuss specific nonprofit institutions. “We will look at charities on a case-by-case basis before determining what action may be appropriate,” he said.
Picard so far has only pursued charities that he claims should have known about the fraud. He sued longtime Madoff investor Jeffry Picower, a philanthropist and lawyer, and his charity in May for allegedly taking fake profit of $6.7 billion for himself and his affiliates over a 20-year period. His charity is now closed.
Unraveling Madoff is almost as good as busting open the Hollywood Madam's little black book at this point!