Madoff Update: Mere Suspicion of Fraud Not Enough to Extend Trustee “Claw-Back” to Six Years
By Michael L. Moskowitz
We have previously reported on Bernard Madoff’s massive Ponzi scheme and the resultant “clawback” lawsuits pending in the bankruptcy and district courts for the Southern District of New York.
In a decision dated March 14, 2016, Bankruptcy Judge Stuart Bernstein granted partial relief to an investment fund seeking to dismiss a “clawback” lawsuit filed by Irving Picard, the trustee for Bernard L. Madoff Investment Securities, LLC (“BLMIS”). Judge Bernstein found that Trustee Picard could not recover fictitious profits and principal recoveries in the six years before bankruptcy because there was no showing the investment firm had “actual” knowledge of Madoff’s fraud.
