Bloomberg Law
Sept. 24, 2020, 6:30 PMUpdated: Sept. 25, 2020, 2:35 PM

Madoff Investors Must Return Profits in Clawback: 2d Cir. (1)

Alex Wolf
Alex Wolf

Investors who profited in good faith from Bernie Madoff’s Ponzi scheme must return millions they received in excess of their principal, the Second Circuit ruled, affirming judgments allowing the firm’s liquidating trustee to claw back the funds.

Net winners of Madoff’s infamous Ponzi scheme don’t have property or contract rights to profits earned over and above what they invested, even though they were unaware of Madoff’s fraud, the U.S. Court of Appeals for the Second Circuit ruled Thursday.

Upholding lower court judgments in four consolidated cases brought by trustee Irving Picard, the appeals court found that the fictitious proceeds can’t ...

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