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Madoff Trustee’s $3 Billion Clawback Suit Survives Dismissal Bid

Aug. 19, 2022, 7:15 PM

The independent trustee tasked with cleaning up multi-billion dollar losses from Bernie Madoff’s now-defunct investment firm can continue to pursue a Taiwanese company to recover $3 billion it received from history’s largest Ponzi scheme.

Judge Cecilia G. Morris of the US Bankruptcy Court for the Southern District of New York on Thursday denied Union Securities Investment Trust Co.'s motion to dismiss Picard’s 2012 complaint.

Trustee Irving Picard previously sued and then settled with Fairfield Sentry Limited, a “feeder fund” that funneled investment returns to individual investors, for a judgment for $3.05 billion. But Fairfield only paid back $70 million to the Madoff estate, the court said.

Picard then sued Union Securities, which received the $3 billion from Fairfield.

Morris rejected Union Securities’ argument that the court lacked jurisdiction over the the foreign defendants. The company’s additional argument, that the transfers are protected by a bankruptcy law “safe harbor” provision, doesn’t apply in the case, Morris said.

Attorneys for Union Securities Investment Trust didn’t immediately reply to a request for comment.

The case is In re Bernard L. Madoff Investment Securities LLC, Bankr. S.D.N.Y., Adv. Proc. No. 12-01211, 8/18/22.

To contact the reporter on this story: Daniel Gill in Washington at dgill@bloomberglaw.com

To contact the editor responsible for this story: Maria Chutchian at mchutchian@bloombergindustry.com