Bankruptcy Law

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

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: “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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