Madoff family to be sued over missing
billions
NEW YORK (AFP) - – Bernard Madoff claims he ran his
multi-billion dollar Ponzi scheme alone, but close family members
face lawsuits this week in a widening probe, the
government-appointed trustee told CBS television.
Trustee Irving Picard and his chief lawyer David Sheehan told
CBS's 60 Minutes program that Madoff relatives and many so-called
victims profited massively.
For example, Madoff's immediate family used the fraudulent
investment firm "like a personal piggy bank," Sheehan said, while
major investors earned billions of dollars -- possibly in full
knowledge that this was a scam.
"We've found that there have been quite a few people who have
gotten out more than they put in," Picard said.
Lawsuits are expected to be filed by the trustee this week
against Madoff's sons Mark and Andrew, his brother Peter and niece
Shana, CBS reported.
The suits are part of a legal onslaught stretching far beyond
Madoff, who is serving the first months of a 150-year prison
sentence.
Picard is charged with finding where Madoff's billions vanished
so that genuine victims -- some left penniless after entrusting
everything to the fraudster -- can be compensated.
Just before his arrest and the collapse of his pyramid scheme in
December last year, Madoff sent clients a statement claiming his
fund was worth about 64.8 billion dollars.
Picard and Sheehan, who rarely talk directly to the media,
estimate the scheme in reality contained 36 billion dollars. They
say half of this was disbursed before the collapse, while the other
18 billion dollars disappeared.
So far, Picard has snared just 1.5 billion dollars, including
revenues from such easy targets as luxury residences in Manhattan,
Long Island and Florida kept by Madoff and his wife Ruth.
But now the focus is tightening on Madoff's inner circle.
CBS reported that Picard's team found Madoff's sons and brother
took out 80 million dollars in salaries over the last seven years,
while Ruth spent millions of dollars from company funds for
shopping and other extravagances.
Family members were also investors in Madoff's fake company,
raking in fantastic returns, CBS reported. Mark and Andrew, for
example, withdrew more than 35 million dollars from accounts opened
with almost no original investment.
"Whether or not they have a criminal problem we will pursue them
as far as we can pursue them," Picard warned. "If that leads to
bankrupting them -- then that's what will happen."
Madoff's family deny complicity, as do the thousands of people
who put money into the fund, then received steady returns from what
they were told were legitimate investments, but in fact was money
stolen from fellow investors.
Sheehan said the family was too close to Madoff's daily work not
to have known about the scam.
"My belief is, yes, they knew, and the reason I believe that is
they were officers of this -- of these companies, and directors in
certain instances as well, and also compliance officers in a very
highly regulated environment."
"Clearly they would have to have known what was going on given
their own personal transactions, the longevity of what was
happening, and the responsibilities as officers," Sheehan said.
Also in the cross-hairs are many of those investors who say they
lost money with Madoff.
Some, the officials say, will not only fail to be reimbursed,
but may have to pay back profit made during the decades that
Madoff's fraudulent business went undetected.
Picard said about half of Madoff's clients received more in
returns than they invested originally, making them beneficiaries,
not victims.
"At the end of the day, they were in a Ponzi scheme,
unfortunately for them. So, all they get (in compensation), at
best, is what they put in," Sheehan said.
The trustee's main targets, though, are the heavy hitters who,
Sheehan says, "knew exactly what was going on -- and participated
in it."
One of those being sued is billionaire investor and
philanthropist Jeffry Picower, whose statements from Madoff
indicated an astonishing 950 percent return on his investment,
amounting to billions of dollars in profits.
"This is a very, very sophisticated guy. He gets a statement
like that -- that's off the charts. He doesn't know anything about
that?" Sheehan asked.
Another big investor facing a lawsuit, Stanley Chais, withdrew
more than a billion dollars in profits from his Madoff account.
Both he and Picower deny wrongdoing.
Madoff's high rolling wife Ruth has already been brought to
heel.
CBS said she has to report to the trustee any time she spends
more than 100 dollars. "She's living very modestly," Picard
said.
Sheehan said ultimately the blame should be spread wide.
"I think, as everyone, you know, was participating in this, and
just feeding at this trough of greed," Sheehan said.
"What they were looking for was it to continue. They were hoping
it was never going to end."