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November 06, 2020Statement Regarding Thirty-Fourth Fee Application
Statement from the office of Irving H. Picard, SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS)
Attributable to Heather Wlodek, spokeswoman for Irving H. Picard, SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS) and his counsel:
On Friday, November 6, 2020, the SIPA Trustee and his Counsel at BakerHostetler filed their 34th Interim Fee Application with the United States Bankruptcy Court for the Southern District of New York for their work on the global liquidation of BLMIS from April 1, 2020 through July 31, 2020.
• The Application seeks approval of fees, representing approximately 71,060.40 hours of professional and paraprofessional services, which were billed at an average, public interest discounted rate of approximately $486.43 per hour.
• The public interest discount applied represents a reduction of 10 percent from standard rates and it resulted in a total voluntary reduction during the four-month Compensation Period of approximately $3,840,632.15. Additionally, the SIPA Trustee and BakerHostetler voluntarily adjusted their fees by writing off $1,389,603.70 (not including the 10% public interest discount), and wrote off expenses customarily charged to other clients in the amount of $9,462.20.
• The fees requested are reasonable based on the customary compensation charged by comparably skilled practitioners in Chapter 11 matters as well as comparable bankruptcy and non-bankruptcy cases in the competitive national legal market.
• After applying the public interest discount, the total fees requested for the period were $34,565,689.35 (of which $31,109,120.42 is to be paid currently and $3,456,568.93 is to be held back through the conclusion of the liquidation period or until further order by the Court). In addition, $159,987.74 was requested as reimbursement of the actual necessary costs and expenses incurred by the SIPA Trustee and BakerHostetler in connection with the recovery effort.
As noted in the Fee Application:
• During the Compensation Period of April 1, 2020 through July 31, 2020, without the need for protracted litigation, the SIPA Trustee settled 7 cases for $15,935,749.56. The SIPA Trustee entered into settlements subsequent to the Compensation Period that will bring additional funds into the Customer Fund.
• As of the end of the Compensation Period (July 31, 2020), the SIPA Trustee dismissed 284 Hardship Program applicant-defendants from avoidance actions after reviewing the facts and circumstances presented in each application and through additional information requested and verified by the SIPA Trustee.
The SIPA Trustee has recovered or entered into agreements to recover approximately $14.364 billion through September 30, 2020. This recovery far exceeds any prior restitution effort related to Ponzi schemes both in terms of dollar value and percentage of stolen funds recovered.
The costs associated with the SIPA Trustee’s recovery and settlement efforts are paid by SIPC, which administers a fund drawn upon assessments on the securities industry. No fees or other costs of administration are paid from recoveries obtained by the SIPA Trustee for the benefit of BLMIS customers with allowed claims. One hundred percent of the SIPA Trustee's recoveries will be allocated to the Customer Fund for distribution to BLMIS customers with allowed claims.
The SIPA Trustee has distributed over $13.931 billion to BLMIS customers with allowed claims through September 30, 2020, which includes $849.34 million in funds committed to be advanced by SIPC.
The first pro rata interim distribution commenced on October 5, 2011 and to date equals approximately $884.6 million. A second pro rata interim distribution commenced on September 19, 2012 and to date equals approximately $6.431 billion. The third pro rata interim distribution commenced on March 29, 2013 and to date equals approximately $900.7 million. The fourth pro rata interim distribution commenced on May 5, 2014, and the SIPA Trustee has distributed approximately $605.9 million. In the fifth pro rata interim distribution, which commenced on February 6, 2015, he has distributed approximately $522.2 million. In the sixth pro rata interim distribution, which commenced on December 4, 2015, the SIPA Trustee distributed approximately $1.567 billion. The seventh pro rata interim distribution commenced on June 30, 2016 and to date equals approximately $246.7 million. The eighth pro rata interim distribution commenced on February 2, 2017 and to date equals approximately $326.4 million. The ninth pro rata interim distribution commenced on February 22, 2018, and the SIPA Trustee has distributed approximately $716.3 million. The tenth pro rata interim distribution commenced on February 22, 2019, and the SIPA Trustee has distributed approximately $512.1 million. The eleventh pro rata interim distribution commenced on February 28, 2020, and the SIPA Trustee has distributed approximately $369.3 million.
In addition, SIPC has made advances available to the court-appointed SIPA Trustee to distribute to accounts with allowed claims (up to $500,000 maximum), as a way to expedite financial relief to those account holders. To date, SIPC has committed $849.34 million to the BLMIS liquidation for this purpose. SIPC-committed advances will continue to increase as claims that are currently in litigation are allowed as a result of settlements or the conclusion of litigation. Under SIPA, SIPC must be reimbursed for its advances to customers. To date, SIPC has received approximately $237.5 million in reimbursement.
The Bankruptcy Court hearing for approval of the 34th Fee Application has been scheduled for December 16, 2020 at 10 a.m.
The BakerHostetler attorneys who worked on behalf of the SIPA Trustee filing this Fee Application include David J. Sheehan, Seanna R. Brown and Heather R. Wlodek.
The filing is available on the Bankruptcy Court’s website: www.nysb.uscourts.gov; Case No. 08-01789. The Fee Application as well as additional information on recoveries, settlements and court filings can be found on the SIPA Trustee’s website: www.madofftrustee.com.
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October 02, 2009Press Release: SIPA Trustee Filing Complaint Against Four Madoff Family Members Seeking to Recapture at Least $198,743,299
Sipc Trustee Irving Picard Sues Four Madoff Family Members
Seeks Recapture Of At Least $198,743,299 From Madoff’s Brother, Sons, and Niece
NEW YORK, NY, October 2, 2009 - Irving H. Picard, the Trustee appointed to liquidate the business of Bernard L. Madoff Investment Securities LLC ("BLMIS"), filed suit today against four Madoff family members who held senior positions at BLMIS. Named in the suit are Madoff’s brother, Peter Madoff, who was BLMIS’s Chief Compliance Officer, Madoff’s two sons, Andrew and Mark, who served as Co-Directors of Trading at BLMIS, and Madoff’s niece, Shana Madoff, who was BLMIS’s Compliance Director.
Through the lawsuit filed in Bankruptcy Court in Manhattan by Mr. Picard’s law firm, Baker & Hostetler LLP, the Trustee seeks to recapture for the benefit of Madoff’s investors at least $198,743,299 in customer funds which the Trustee alleges were diverted from BLMIS’s investment advisory business and transferred directly to the family members or spent on their behalf.
In the Complaint, Mr. Picard explains that the family members’ "management responsibilities extended through trading operations, customer relationships, and legal and regulatory compliance, yet they were completely derelict in these duties and responsibilities. As a result, they either failed to detect or failed to stop the fraud, thereby enabling and facilitating the Ponzi scheme at BLMIS. Simply put, if the Family Members had been doing their jobs—honestly and faithfully—the Madoff Ponzi scheme might never have succeeded, or continued for so long."
Mr. Picard alleges that "BLMIS was operated as if it were the family piggy bank. Each of the Family Defendants took huge sums of money out of BLMIS to fund personal business ventures and personal expenses such as homes, cars, and boats. The Family Defendants’ misappropriations of BLMIS customer funds ranged from the extraordinary (the use of BLMIS customer funds to pay for multi-million dollar vacation homes) to the routine (the use of BLMIS customer funds to pay their monthly credit card charges for restaurants, vacations, and clothing). The means of diverting those customer funds ranged from the simple (merely transferring money to the Family Defendants’ own personal bank accounts) to the complex (fabricating the purchases of securities on the Family Defendants’ personal BLMIS investment advisory account statements and then cashing out of those positions)."
In the Complaint, Mr. Picard details over 380 separate transactions which were fraudulent transfers or conveyances of BLMIS customer funds to the family members, or to entities on their behalf, and which are recoverable under the Securities Investor Protection Act, the Bankruptcy Code and due to the family members’ breaches of fiduciary duty and other tortious conduct.
The Trustee alleges that Peter Madoff, BLMIS’s Chief Compliance Officer, improperly received over $60 million paid to himself, his family members, and to entities on his behalf. As Chief Compliance Officer, Peter Madoff was responsible for overseeing BLMIS’s compliance policies and procedures, yet the Trustee alleges that he ignored these responsibilities to the detriment of BLMIS and its customers. For example, although Peter invested only $14 into his own investment accounts at BLMIS after 1995, he withdrew $16,252,004 from those same accounts, at times through the fabrication of backdated trades which, in reality, never took place. The Complaint also details the use of customer funds to purchase homes for Peter on Park Avenue in Manhattan and in Palm Beach, Florida.
Mark Madoff, who was paid $29,320,830 between 2001 and 2008 to serve as BLMIS’s Co-Director of Trading, is alleged to have improperly received $66,859,311 paid directly to him, his family, and entities on his behalf. In his personal investment accounts at BLMIS, the Trustee alleges that although Mark invested only $745,482, he redeemed $18,105,456 prior to December 2008 as a result of among other things falsified transactions in his account. Mr. Picard also alleges that since 2000, Mark borrowed, but did not repay, over $17,000,000 from BLMIS to buy homes for himself in Greenwich, Connecticut, Manhattan, and Nantucket, Massachusetts.
Andrew Madoff who, like his brother, served as BLMIS’s Co-Director of Trading and received $31,105,505 in compensation between 2001 and 2008, is alleged to have improperly received $60,644,821 paid directly to him, his family, and entities on his behalf. Mr. Picard alleges that Andrew redeemed $17,117,566 as a result of among other things, falsified securities transactions from investment accounts into which he invested only $912,062. Andrew also received over $11 million from BLMIS to pay for luxury apartments in Manhattan.
While both Mark and Andrew Madoff have filed personal claims in the Bankruptcy Court for approximately $40 million each in deferred compensation from BLMIS, the Trustee alleges in the complaint that Andrew Madoff claimed in his divorce proceeding that the company owes him only $52,173 in deferred compensation. In addition, the Trustee alleges that the trading business in which the Madoff sons worked actually lost money in 2007 and 2008 but that its financial results were propped up by the fraudulent investment advisory business.
The Trustee alleges that Shana Madoff, BLMIS’s Compliance Director and In-House Counsel, improperly received over $10.6 million in customer funds paid to herself or to entities on her behalf. This amount includes nearly $3,000,000 of BLMIS’s customer funds which were sent to Shana to purchase a home in East Hampton, New York less than one year before Madoff’s arrest.
March 18, 2011Press Release: SIPA Trustee Filing of Amended Complaint Against Sterling Equities, its Partners - Including Saul Katz and Fred Wilpon - and Related Entities
Press release from the office of Irving H. Picard, SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS)
Trustee for Liquidation of Bernard L. Madoff Investment Securities Announces Filing of Amended Complaint Against Sterling Equities, It's Partners – Including Saul Katz and Fred Wilpon – and Related Entities
Recoveries sought now total more than $1 billion
NEW YORK, NEW YORK – March 18, 2011 – Irving H. Picard, the Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”) today announced the filing of an amended complaint, in the United States Bankruptcy Court for the Southern District of New York, against Sterling Equities (“Sterling”), its partners, their family members, and certain related trusts and entities (collectively, the “Sterling Defendants”).
The amended complaint provides additional specific detail and quantification of the alleged fraudulent transfers from BLMIS received by the Sterling Defendants. In addition to the approximately $300 million in fictitious profits received by the Sterling Defendants cited in the original complaint, the amended complaint states that the Trustee seeks more than $700 million in alleged fraudulent transfers of principal received by the Sterling Defendants, bringing the total recoveries sought by the Trustee from the Sterling Defendants to more than $1 billion. The additional alleged fraudulent transfers of principal occurred during the six years prior to the December 2008 commencement of the BLMIS liquidation proceeding and include preferential transfers received by the Sterling Defendants within the 90-day period prior to the filing date.
“The amended complaint sheds more light on the deep dependency of the Sterling business organization on the continuation of the Madoff fraud and certain knowledge of indicia of fraud by the Sterling partners,” said David J. Sheehan, counsel to the Trustee and a partner at Baker & Hostetler LLP, the court-appointed counsel for the Trustee.
“Perhaps the most telling evidence of Sterling’s dependency on Madoff is the fact that postrevelation of Madoff’s fraud, the Sterling partners were forced to negotiate with at least seven lender banks, including Bank of America, JPMorgan Chase, Citibank, HSBC, M&T, Wachovia, and Bank of New York (the “Lender Banks”), to restructure more than a half-billion dollars in collective debt – not just the millions of dollars of debt secured by the Leveraged KW BLMIS Accounts,” said Fernando A. Bohorquez, Jr., counsel to the Trustee and a partner at Baker & Hostetler LLP. As described in the amended complaint, in the aftermath of the discovery of the Madoff fraud, with full notice of the potential liability to the Trustee faced by the Sterling Defendants, Sterling and the Lender Banks entered into various restructuring credit facilities containing certain provisions that attempted to circumvent any potential recovery action initiated by the Trustee.
“The restructuring demonstrates both Sterling’s and the Lender Banks’ serious concerns regarding potential recoveries by the Trustee, and supports the Trustee’s contention that the Sterling Defendants were inextricably bound to the Madoff fraud,” said Mr. Bohorquez.
The amended complaint also provides additional substantiation of the inter-dependent relationship between Sterling and BLMIS as well as certain Sterling partners’ knowledge of Madoff’s dishonesty in his investment advisory business. For instance, the amended complaint details a multi-milliondollar interest- and cost-free bridge loan from Madoff to Sterling in connection with its purchase of the broadcast rights for the New York Mets from Cablevision. This transaction was documented by a single letter agreement that falsely described the loan as an “investment” by Ruth Madoff in the company that would later become the SNY network.
The Sterling complaint was initially filed under seal on December 7, 2010 in the United States Bankruptcy Court for the Southern District of New York. The original complaint was unsealed on February 4, 2011.
In addition to Mr. Sheehan and Mr. Bohorquez, the Trustee acknowledges the contributions of the Baker & Hostetler attorneys who worked on this filing: Lauren Resnick, Kathryn Zunno, Steven Goldberg, Amanda Fein, Keith Murphy, Marc Skapof, George Klidonas, and Henry Bodenheimer.
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January 05, 2009Press Release: SIPA Trustee Mailing More than 8,000 Customer Claim Forms and Publishing Notice in Major Newspapers
Madoff Trustee Mails More than 8,000 Customer Claim Forms; Publishes Notice in Major Newspapers
March 4th and July 2nd Deadlines Set for Claim Filings
WASHINGTON, D.C. – January 5, 2009 – Stephen Harbeck, president of the SecuritiesInvestor Protection Corporation (SIPC), which maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms, and Irving H. Picard, the court-appointed trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS) of New York, NY, issued the following joint statement today: “Pursuant to the order of the United States Bankruptcy Court for the Southern District of New York, Trustee Irving H. Picard mailed on Friday (January 2, 2009) the following: over 8,000 customer claim forms, with detailed instructions for the completion and filing of the forms with the trustee; claim forms and related information to general creditors of BLMIS; and claims filing information to brokers and dealers.
In addition, the trustee published a detailed notice to customers and creditors of the placement of BLMIS in liquidation under the Securities Investor Protection Act (SIPA) in the New York Times, Wall Street Journal, Financial Times, International Herald Tribune, USA Today and two Israeli newspapers (Jerusalem Post and Ye’diot Achronot). The published notice provides information regarding the claims process, including instructions on how, where and by when to file a claim.
Although SIPA requires the trustee to provide notice of a liquidation proceeding to persons who appear to have been customers of the debtor with open accounts within the past 12 months, any person may file a claim. The published liquidation notice contains an address from which a claim form may be requested. In addition, the notice, claim forms and related claims information are available for downloading on the trustee's Web site (http://www.madofftrustee.com) and onthe SIPC Web site (http://www.sipc.org).The notice contains deadlines for the filing of claims with the trustee: March 4, 2009 and July 2, 2009. Close attention should be paid to the deadlines as they are set by court order and by law.
A failure to file a claim by the final deadline, even if by one day, will result in a denial of the claim. The trustee and his staff will review and determine all claims seeking customer protection in accordance with SIPA. Claimants are requested to provide complete information and documentation relating to their claim, including proof of payments made to BLMIS and received from BLMIS, as this may help to expedite the processing of the claim.
The trustee is proceeding as expeditiously as possible to address the claims of all of the customers of BLMIS in a timely manner.”
ABOUT SIPC
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.
The statute that created SIPC provides that customers of a failed brokerage firm receive all nonnegotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. From the time Congress created it in 1970 through December 2007, SIPC has advanced $507 million in order to make possible the recovery of $15.7 billion in assets for an estimated 626,000 investors.
For more information about SIPC, see "The Investor's Guide to Brokerage Firm Liquidations" at
http://www.sipc.org/pdf/SIPC_brochure_Investors_Guide_To_BD_Liquidations.pdf.
MEDIA CONTACTS:
Ailis Aaron Wolf, for SIPC, (703) 276-3265, oraaaron@hastingsgroup.com; and Kevin McCue, for Trustee Picard, (216) 861-7576, or kmccue@bakerlaw.com. All investor inquiries of SIPC should be directed to asksipc@sipc.org or (202) 371-8300.
March 09, 2010Press Release: SIPC Warning of Phony "Look-Alike" Web Site Targeting Madoff Victims
Sipc Exposes Phony "Look-alike" Web Site Targeting Madoff Victims
Victims, Other Investors Cautioned Against Providing Information Via Web Site; Bogus Claims Made About Recovering "$1.3 Billion Discovered in Madoff Hideout"
WASHINGTON, D.C. – March 9, 2010 - The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, said today that it is alerting international regulators about a "look-alike" Web site for a fictitious organization that is mimicking the SIPC Web site in an apparent attempt to target Madoff victims. The so-called "International Securities Investor Protection Corporation (I-SIPC.com)" copies several aspects of the SIPC Web site artwork and structural design. It is soliciting Madoff victims to submit claims, which SIPC is warning could result in "phishing" or other identify theft problems. The phony group claims to be based in Geneva and also maintains that it has ties to the United Nations and the International Monetary Fund, among others.
In one section of the Web site, the group includes a supposed testimonial from a Madoff victim who is reported as having received funds from the organization. In a link from the homepage of the site that leads to a photo of a huge stack of U.S. currency, the group falsely claims to have collaborated with Interpol to recover $1.3 billion in Madoff money from a hideout in Malaysia.
SIPC President Stephen Harbeck said:
"We know from information provided to us by individuals that this bogus group is already attempting to obtain funds and confidential financial information from investors in the U.S. SIPC wants to be as clear as possible that Madoff victims and other investors should not share any personal financial information via this Web site or rely upon it as an information source. We intend to use every available means to shut down this illicit operation."
Harbeck said that SIPC recently became an ancillary member of the International Organization of Securities Commissions (IOSCO) and will publish a related Investor Alert through that organization.
SIPC is looking into trademark issues and will seek to have the violator prosecuted to the extent the law allows.
SIPC has moved aggressively in the past to protect its trademark and Web site against similar intrusions that could be used to mislead or even swindle investors. In 2004, SIPC got law enforcement involved when it identified a "look-alike" Web site seeking to defraud investors. In 2007, SIPC prevailed in arbitration proceedings after an organization sought to register and use the www.sipc.com Web domain.
ABOUT SIPC
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.
The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. From the time Congress created it in 1970 through December 2008, SIPC has advanced $520 million in order to make possible the recovery of $160 billion in assets for an estimated 761,000 investors.
MEDIA CONTACT:
Ailis Aaron Wolf, (703) 276-3265 or aawolf@hastingsgroup.com. All investor inquiries of SIPC should be directed to asksipc@sipc.org or (202) 371-8300.
December 08, 2010Press Release: SIPA Trustee Seeking $1 Billion from Seven Global Financial Institutions in Madoff Ponzi Scheme, including $425 Million in Claims Against Citi and $400 Million in Claims Against Natixis
PRESS RELEASE OF IRVING H. PICARD
Trustee For Liquidation Of Bernard L. Madoff Investment Securities Seeks $1 Billion From Seven Global Financial Institutions In Madoff Ponzi Scheme
Includes $425 Million In Claims Against Citi And $400 Million In Claims Against Natixis
NEW YORK, NEW YORK – December 8, 2010 – Irving H. Picard, the Trustee for theliquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”) today announced the filing of complaints under seal in the United States Bankruptcy Court for the Southern District of New York against seven global banking institutions – Citibank, Natixis, Fortis, ABN AMRO, Banco Bilbao Vizcaya Argentaria, Merrill Lynch, and Nomura.
Through these suits, the Trustee seeks to recover more than $1 billion in total for equitable distribution to BLMIS customers with valid claims. According to the seven complaints, these banks received transfers of money from BLMIS through numerous Madoff feeder funds at times when they either knew or should have known of Madoff’s fraud.
The complaints allege that the banks enabled the Madoff Ponzi scheme by opening a spigot of new money into the Madoff feeder fund network, by creating and offering derivative investment products linked to various Madoff feeder funds, including the Fairfield Greenwich, Kingate and Tremont families of funds. Often, the derivative products were developed in conjunction with the Madoff feeder funds. With the derivative products promising returns based on the performance of the feeder funds, the financial institutions hedged their exposure to the derivative investors by purchasing shares of the feeder funds.
The Citi filing names Citibank, N.A., Citibank North America, Inc. and Citigroup Global Markets Limited (collectively “Citi”). Of the $425 million sought in the Citi action, $300 million is connected with a credit facility Citibank made available to a large Madoff feeder fund, Rye Select Broad Market Prime Fund, L.P. (“Prime Fund”); the remaining $125 million is sought in connection with a swap transaction linked to the performance of another large Madoff feeder fund, Fairfield Sentry Limited.
“Armed with considerable non-public information about Madoff, Citi either knew or should have known that Madoff’s investment advisory business was a fake, and that the funds Citi received from these two Madoff feeder funds came from Madoff’s fraudulent activities,” said Mr. Picard. Warning signs to Citi included an email from and a meeting with early Madoff whistleblower, Harry Markopoulos, alerting a Citi managing director to the fact that the Madoff operation was a Ponzi scheme.
“Evidence of awareness of the fraud is clear. As Citi became concerned about Madoff’s legitimacy, it took steps to back away from Madoff, including refusing to increase the amount of the existing Prime Fund loan and ultimately cancelling the Citibank-Prime Fund lending relationship,” said David J. Sheehan, counsel for the Trustee and a partner at Baker & Hostetler LLP, the appointed counsel for Mr. Picard. “However, even as suspicion grew about Madoff, Citi still took monies from Madoff that rightfully belong to BLMIS customers, and the bank must return those funds.” “Just months before the Madoff fraud was revealed, CGML redeemed Sentry shares, with specific knowledge and profound concerns about Madoff’s very legitimacy,” said Thomas Long, a partner at Baker & Hostetler and a member of the team which prepared today’s filings. “CGML submitted its Sentry redemptions and received millions of dollars when, in fact, it had been advised specifically that Madoff was likely running a massive Ponzi scheme. Prior to submitting the redemptions, CGML had also earned many hundreds of thousands, if not millions, of dollars in fees and charges from the Swiss hedge fund swap.”
In the action against global investment bank Natixis and related entities, the Trustee seeks to recover at least $400 million received by the bank in connection with numerous structured products, including several different Natixis swaps and notes hedged using shares of various Madoff feeder funds, which Natixis subsequently redeemed. These alternative investment financial instruments promised an opportunity for lucrative future returns for investors based upon the performance of a Madoff feeder fund, which in structured products like swaps and notes is often referred to as a “reference fund.” By investing in these leveraged structured products, investors, most often institutions, could multiply their returns. “Armed with knowledge of many badges of fraud, Natixis and its related entities nevertheless provided substantial momentum furthering Madoff’s Ponzi scheme, especially in Europe,” said Mark Kornfeld, a partner at Baker & Hostetler and a member of the team which prepared today’s filings. “Over time, this international collaboration became critical to sustaining the fraud.”
Other banks included in today’s filing are:
Fortis Prime Fund Solutions Bank (Ireland) Ltd. (“Fortis”)
and related entities: The Trusteeseeks to recover in excess of $230 million transferred to Fortis in connection with swap transactions.
ABN AMRO BANK N.V. (“ABN”)
and related entities: With this complaint, the Trustee seeks torecover in excess of $270 million, from this bank’s investments in Madoff feeder funds to hedge risk exposure arising from two swap agreements.
Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”):
This action seeks the return ofapproximately $45 million from BBVA, in connection with structured notes issued by BBVA using Madoff feeder funds as underlying assets.
Nomura Bank International plc (“Nomura”):
This action seeks the return of at least $35 millionfrom Nomura, in connection with structured notes issued by Nomura using Madoff feeder funds as underlying assets.
Merrill Lynch International & Co. C.V. (“MLI”):
The action filed today seeks the return of atleast $16 million, in connection with structured note and warrant offerings made by MLI, and its affiliates, using two Madoff feeder funds as underlying assets.
“Although many of these banks questioned Madoff’s trading strategy and returns, they continued to structure transactions seeking to exploit Madoff’s consistent returns,” said Ryan Farley, an attorney at Baker & Hostetler and a member of the team which prepared today’s filings. “For instance, MLI’s parent company, Merrill Lynch, raised serious concerns and suspicions about the Madoff organization all of which were deliberately ignored by the MLI unit which went ahead with its trading involving Madoff feeder funds.”
In addition to Mr. Sheehan, Mr. Long, Mr. Kornfeld and Mr. Farley, the Trustee acknowledges the contributions of several Baker & Hostetler attorneys in the preparation of these filings: Catherine Woltering, Keith Murphy, Geraldine Ponto, Marc Skapof and George Klidonas.
July 01, 2014Master Service List #32
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December 21, 2011Statement Regarding SIPA Trustee’s Settlement with IRS Approved by U.S. Bankruptcy Court for the Southern District of New York
Statement from the office of the SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC
Attributable to Amanda Remus, spokeswoman for the SIPA Trustee & his Counsel at BakerHostetler:
On December 21, 2011, the SIPA Trustee filed a motion – with the United States Bankruptcy Court for the Southern District of New York – for approval of an approximately $326 million settlement with the United States of America, on behalf of the Internal Revenue Service. The settlement was approved by the Honorable Judge Burton R. Lifland of the United States Bankruptcy Court for the Southern District of New York on December 21, 2011. The funds will be added to the BLMIS Customer Fund.
The SIPA Trustee had determined that BLMIS falsely debited the accounts of 145 foreign accountholders for alleged income tax withholding and paid to the IRS such withheld amounts related to alleged dividends. However, because no securities were purchased on which the alleged dividends were paid, no taxes should have been withheld.
The SIPA Trustee will credit each foreign account holder’s BLMIS account, where appropriate, for the debited amounts of the withholding payments made to the IRS. Credits to the accounts will not be made until the Trustee receives the settlement payment.
Upon entry of a final and unappealable order, which will include a channeling injunction, all claims against the IRS with respect to such withholdings will have to be pursued in the Bankruptcy Court.
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December 06, 2011Master Service List #1
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December 06, 2011Notice Procedures Order for Master Service List
Notice of Order establishing Notice Procedures and Master Service List
Note: This order and the forms contained herein do not pertain to or affect the ability of claimants to receive distributions from the BLMIS Estate, nor do they change or impact the method by which distributions will be sent or who will receive such distributions.