Ruth Madoff Sued for $44.8 Million by Trustee
Court-appointed trustee says Bernie's wife lived "life of splendor."
July 29, 2009— -- A court-appointed trustee says Ruth Madoff received over $44 million dollars from various Madoff-related companies over the past six years to which she was not entitled and used primarily to "enrich herself."
"For decades, Mrs. Madoff lived a life of splendor" on payouts from her husband's investment securities firm and, subsequently, his investors-turned-victims, according to a new filing by court appointed attorney Irving H. Picard, who is tasked with liquidating Madoff's assets to compensate his victims.
"While Madoff's crimes have left many investors impoverished and some charities decimated, Mrs. Madoff remains a person of substantial means" wrote Picard, describing Mrs Madoff's conduct as "willful, wanton and malicious."
While her husband received a 150-year sentence for fraud, Ruth Madoff has not been charged with any crimes and, under a deal with federal authorities last month, Ruth received a payout of $2.5 million and had her passport returned.
The $44.8 million she is being sued for is comprised of funds that Picard says Ruth received, directly or indirectly, for the six years before the firm, Bernard L. Madoff Investment Securities LLC (BLMIS), filed bankruptcy in December. The six year period is what is legally allowed under federal bankruptcy law.
During this time, Picard said, Ruth "received tens of millions of dollars from BLMIS for which BLMIS received no corresponding benefit or value and to which Mrs. Madoff had no good faith basis to believe she was entitled."
Picard says these payments were both given directly to her - for example, millions of dollars "to pay for a yacht for her personal enjoyment" and for "personal expenses to Mrs. Madoff's American Express card" - and in indirect payments to entities she owned or invested in. Madoff's fraudulent Ponzi scheme, Picard said, "massively enriched Mrs. Madoff."
Ruth's attorney, Peter Chavkin, in statement called the complaint "particularly perplexing" and "totally unjustified," saying it is "wrong as a matter of law and fairness."
Ruth Madoff's Attorney Responds
"Ruth already forfeited to the United States Attorney's Office almost all of the assets names in this complaint – assets that the U.S. Attorney's Office has publicly committed to distributing to the victims of Bernard Madoff's Ponzi scheme," Ruth's lawyer Peter Chavkin said. "At the same time, after a thorough and comprehensive investigation, the U.S. Attorney's Office determined that Ruth Madoff was entitled to keep property of $2.5 million because that property could not be linked to the fraud."
Ruth has not been charged wife any crime, and the return of her passport in early July was "a clear sign" that she will not be prosecuted as an accomplice to her husband's crime, people involved in the case said.
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"Ruth already forfeited to the United States Attorney's Office almost all of the assets names in this complaint – assets that the U.S. Attorney's Office has publicly committed to distributing to the victims of Bernard Madoff's Ponzi scheme," Ruth's lawyer Peter Chavkin said. "At the same time, after a thorough and comprehensive investigation, the U.S. Attorney's Office determined that Ruth Madoff was entitled to keep property of $2.5 million because that property could not be linked to the fraud."
Ruth has not been charged wife any crime, and the return of her passport in early July was "a clear sign" that she will not be prosecuted as an accomplice to her husband's crime, people involved in the case said.