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Bankruptcy Law

Trustee Sues Madoff’s Wife for $45M, Cites ‘Life of Spendor’

Posted Jul 29, 2009 5:04 PM CDT
By Martha Neil

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A court-appointed trustee charged with recovering money for investors in the Ponzi scheme operated by Bernard Madoff under the guise of a hedge fund has sued the jailed swindler's wife for almost $45 million.

Ruth Madoff knew or should have known her "life of splendor" was funded with ill-gotten gains from his investment firm, trustee Irving Picard contends in the suit, which was filed today in U.S. Bankruptcy Court in Manhattan. However, a lawyer for Ruth Madoff called the suit unfair and unreasonable, saying that his client has already forfeited her claim to some $80 million in assets, reports the Wall Street Journal (sub. req.).

Picard, on his side, says that Ruth Madoff still has substantial assets, while a number of once-wealthy investors in Bernard L. Madoff Investment Securities LLC, or BLMIS, were impoverished by her husband's $65 billion scheme.

"For decades, Mrs. Madoff lived a life of splendor using the money of BLMIS's customers," he says in the suit. "Regardless of whether or not Mrs. Madoff knew of the fraud her husband perpetrated at BLMIS ... she received tens of millions of dollars from BLMIS for which BLMIS received no corresponding benefit or value and to which Mrs. Madoff had no good-faith basis to believe she was entitled."

Under federal law, Picard can sue to recoup company assets paid out for up to six years prior to a bankruptcy filing, reports the Dealbook blog of the New York Times.

A copy of the complaint is provided by the Scribd website.

Although Bernard Madoff is now serving a 150-year federal prison sentence for his role in the scheme, Ruth Madoff has never been accused of any criminal wrongdoing.

Related earlier coverage:

ABAJournal.com: "Madoff Reveals ‘Extraordinary Details’ of Scam to Plaintiffs Lawyers"

Raleigh News & Observer: "Behind bars in Butner, Madoff shares secrets of scam"

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