Monday, February 25, 2019

Court Green-Lights Madoff Recovery Lawsuits

The trustee in the Bernie Madoff case isn't playing around in his recovery for Madoff's victims.  CNBC reported:

A federal appeals court said the trustee liquidating Bernard Madoff’s firm may pursue dozens of lawsuits to recoup funds from Koch Industries Inc, controlled by billionaire brothers Charles and David Koch, and other defendants, including major banks....

It gives the trustee Irving Picard a chance to add hundreds of millions of dollars to the $13.36 billion he has recouped for former customers of Bernard L. Madoff Investment Securities LLC.

The trustee has estimated that the customers lost $17.5 billion in Madoff’s fraud, which was uncovered in December 2008.... Rest of article.

7 comments:

Hermit King said...

Crazy thing is that a lot of "investments" are on a razor thin border of becoming cons. Just a few words on paper decides what is and isn't illegal.

I've got a great real estate investment plan that will make you rich on other people's money if you come to my free seminar at the Ramada.

Anonymous said...

The shady late night RE promotions aren't anything like the Ponzi schemes that Adams was running. Ponzi schemes have a unique signature that separates them from other types of fraud.

Anonymous said...

Lamar Adams was FAR more destructive than Bernie Madoff ever was, at least to the residents of the great state of MS.

Anonymous said...

If this was meant to show a parallel with the Lamar Adams Ponzi scheme, is there any information indicating that any of Adams' "investors" or other beneficiaries transferred anything they received from Adams' scheme out of the country? If there were no transfers out of the country, this doesn't seem to have any relevance to the Adams case. Even if there were transfers out of the country, this ruling wouldn't be binding on courts in the 5th or the 5th itself, but if there is no existing 5th circuit case law that conflicts with this ruling, it would likely be at least considered persuasive by those judges.

In any event, based on what little case law I've bothered to read, those who received anything from Adams and which remained in the US, be it "profit," commission, a gift, etc., are fighting a long, hard uphill battle they are likely to lose if they try to hang on to it.

Anonymous said...

It is pretty obvious that Ms Mills will have great latitude in her pursuit of assets to make victims whole. That includes brokers, feeders, lawyers, accountants, banks. Anyone who recommended or touched these transactions in any way will be in her sights. And rightfully so. Especially professionals firms with E&O and Malpractice insurance.

I was told that several banks quietly asked Adams to take his business elsewhere when they didn't like the pattern of deposits and withdrawals. When all the money coming in and out is to and from investors, and none of the transactions involve actual purchases or trade of goods or securities, then a 2nd year junior branch vice president could tell it was a Ponzi scheme.

So why didn't these banks alert the authorities? It reminds me of the Catholic church scandal. When the priests are caught diddling the alter boys, the powers that be just moved them to a new diocese. More fresh meat for the predators. The banks did the same thing to Adams. Figured out what he was up to, and then sent him to the bank down the street.

All those guys ought to have sleepless nights for the next several years as this thing plays out.

Anonymous said...

The receiver's recovery as a percentage of the loss in Madoff (about 75%) is nothing short of extraordinary. If Adams' receiver does half as well, I'll be surprised. I think she's currently at less than 10%, although she has time and an incentive to churn forward.

I disagree with the above post who says Adams' fraud was more destructive than Madoff's. That just isn't true. In Madoff's fraud, many lost all they had.

Anonymous said...

It is much too early to compare the Madoff recovery to the Adams recovery. Mills has had months, Picard has had years, and I suspect but do not know that the information Picard had to work with with was and is much more complete and in-depth than what Mills has now or will ever receive. On top of which, for numerous Madoff "investors," this was a small part of a large investment portfolio, so they quickly negotiated a "give back" early on and with little or no resistance. Two teams of "big law" partners/firms fighting it out in this type of litigation can burn through huge piles of client cash, and neither Picard nor many from whom he sought recovery could have economically justified such a fight. I cannot vouch for the truth of this, but I was told that one prominent person was quoted a _retainer_ of twice the amount sought by Picard to fight over it. A settlement was quickly negotiated and a check written (with appropriate tax write-offs, etc.) with no real damage done to that person's finances. Likely as not, that is the stage at which the Adams recovery litigation currently stands.

One problem I do foresee with recovery in the Adams case is that a lot of the funds are long gone, in and out of the hands of innumerable and innocent third-, fourth-, fifth-hand, etc., parties, i.e., Adams sent a "profit" check to John Smith, who used the money to buy a primary residence from a totally innocent seller, and then, that seller used it to buy another home in some other state, etc., etc. The "avenue of potential recovery" generally dead-ends at John Smith. Now, if John has a similar sum sitting in a bank or other readily-reachable assets, that is one thing, but if he does not have anything remotely close to that amount in reachable assets, it becomes that much more difficult to cost-effectively (and permissibly) recover.

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