Madoff clients told to return money they'd withdrawn

— -- Some of Bernard Madoff's former investment clients have received legal requests to give back money they withdrew before his financial scam collapsed, a move that has ignited angry investor opposition.

An estimated 200-plus letters seeking return of the funds were issued by Irving Picard, the court trustee appointed to recover Madoff's assets on behalf of the victimized investors, Ronnie Sue Ambrosino, coordinator of a website for Madoff victims, said Wednesday.

The requests had been expected following Madoff's guilty plea last month to operating a long-running financial scam that involved nearly $65 billion in clients' account records.

Under New York state law, court trustees can seek recovery of withdrawals for up to six years, an effort known as a clawback procedure. The legal theory behind the effort is that the withdrawals were paid from a financial scam, so should be returned and proportionately redistributed to all victimized investors.

But Ambrosino said on Wednesday that the requests raise the prospect of inflicting new financial damage on investors — including some who lost substantial sums to Madoff despite their withdrawals.

"It's absolutely horrendous that they're going after people like this," said Ambrosino, who estimates that she and her husband, Dominic, lost more than $1.6 million to Madoff. "Where do they think the victims are going to get the money from? It's crazy."

Picard's office did not immediately respond to a message seeking comment on the requests.

However, similar clawback procedures in other financial scams have proved successful.

In a 2005 case involving Bayou Management, a hedge fund that collapsed from a multiyear fraud, a trustee recovered millions of dollars by waging dozens of clawback lawsuits.

Victor Stewart, a Lovell Stewart Halebian partner whose law firm represents clients suing a feeder fund that channeled their money to Madoff, said investors could argue it's inequitable to force repayments by those who withdrew money in good faith with no knowledge that it came from a scam.