Madoff trustee sues foundation for 'false profits'

13 May 2009

The court-appointed trustee overseeing the liquidation of Bernard Madoff's investment firm has filed a lawsuit against one of America's largest philanthropic foundations, its founders and a number of other defendants seeking the recovery of $5 billion allegedly passed to them as false profits.

Newsday reports that the claim against the Picower Foundation is the largest recovery attempt yet by trustee Irving Picard.

The suit also names the foundation's founders, Barbara and Jeffry Picower, as well as a number of other defendants.

Mr Picard contests that Mr Picower benefited from Mr Madoff's Ponzi scheme for over 20 years.

Since December 1995, Mr Picower and other defendants are alleged to have collectively withdrawn over $6.7 billion from Mr Madoff's investment operations.

The trustee's claim argues that the Picowers should have known they were profiting from fraud due to the "implausibly high returns" they received. Mr Picard added that Mr Picower had a close relationship with Mr Madoff that granted him access to information other investors were not aware of.

William Zabel, the Picowers' attorney said the couple had known Mr Madoff for over 35 years but were shocked at his fraud and had no involvement in it.

Mr Madoff pleaded guilty in March to orchestrating a $65 billion Ponzi fraud.

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