Madoff Trustee Sues Madoff Family Companies
Picard demands $30 million from firms linked to Madoff sons, brother and niece.
July 30, 2010 — -- In a trio of lawsuits filed late Thursday, the trustee appointed to recover the money stolen by Ponzi schemer Bernie Madoff has sued three businesses controlled by Madoff's sons and other family members where he says more than $30 million may be stashed.
Trustee Irving Picard said in papers filed in federal bankruptcy court in Manhattan that Madoff family members had used almost $200 million in investor cash to pay for "lavish lifestyles."
"Foremost among the recipients of Madoff's gifts of customerfunds," said Picard in the filings, "were his closest family members, including his wife Ruth Madoff, his brother Peter, his two sons Andrew and Mark and his niece Shana."
The lawsuits were filed against an oil and gas company, a family fund and a trading company, alleging that they received funds from Bernie Madoff's investment firm, Bernard L. Madoff Investment Securities. The suit against the family fund claims that Peter, Andrew, Mark and Shana acted "in complete dereliction of their management duties."
Picard declined further comment to ABC News, saying, "The complaints speak for themselves."
Martin Flumenbaum, a lawyer for Mark and Andrew Madoff, told ABC News, "With respect to Mark and Andrew, the lawsuits are without merit both factually and legally."
In a lawsuit filed against the Madoff family last fall, Picard said the Ponzi scheme was "a family piggy bank" that funneled at least $198,743,299 of stolen customers' money to Peter, Andrew, Mark and Shana.
The 2009 suit provided details of the alleged role of the family members, including an allegation that the money was funneled to them through fabricated purchases of stock, which they supposedly then sold for the cash proceeds.
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Peter Madoff served as the firm's chief compliance officer. His daughter Shana "held herself out" as compliance counsel, according to the lawsuit.
Madoff's sons Mark and Andrew shared the title of co-director of trading at Madoff's firm, the suit said.
Picard did not allege that any of the family members knew of the Ponzi scheme but said in their "senior management positions" they were supposed to "insure that suspicious and irregular activity would be caught, reported and stopped."
Peter Madoff "clearly did not carry out this responsibility with any degree of diligence or integrity," the suit alleged.
Shana Madoff "ignored every red flag of the massive fraud taking place right in front of her," according to the document.
Of the sons, the suit said, "had they made even the slightest attempt to fulfill their supervisory responsibilities, they would have been aware that no actual securities transactions were taking place."
Picard said earlier this year that he had recovered $1.5 billion in assets for Madoff investors to date.
Madoff is serving 150 years in a federal prison in North Carolina after admitting to bilking investors in a $65 billion pyramid scheme that stretched back decades.