[Mail and Globe] In a move to ensure that all of jailed swindler Bernard Madoff's personal wealth is used to pay his defrauded customers, some investors filed court papers on Monday to force him into bankruptcy. Their lawyers have argued that making Madoff bankrupt would make it easier for victims to recover any Madoff-linked assets that have been transferred to family members or third parties.
The next step will be another petition to the court for the appointment of a trustee to oversee the personal assets of Madoff, who pleaded guilty on March 12 to running a $65-billion fraud over 20 years, bilking thousands of customers from big banks to charities to small investors.
A trustee is already working to oversee the winding down and recovery of assets from Madoff's firm to distribute the proceeds to former customers.
Madoff and his outside accountant are the only people charged in the case, but US prosecutors are investigating who else might have been involved in the biggest fraud in Wall Street history.
Madoff is in jail pending sentencing in June.
Monday's filing in US Bankruptcy Court in New York was made on behalf of five investors claiming $64-million, according to court papers. A federal judge last week opened the door for the petition by reversing his December ruling preventing any such legal action.
The US Securities and Exchange Commission, US prosecutors and the court-appointed trustee winding down the brokerage firm objected to the efforts of these investors. They argued that it would lead to unnecessarily high administrative costs and confusion. The SEC said authorities already are working to ensure that proceeds of any Madoff assets they recover will be distributed to bilked customers. |