Supreme Court Extends Hunt for $3 Billion in Offshore Madoff Cash
June 01 2020 - 11:05AM
Dow Jones News
By Andrew Scurria
The U.S. Supreme Court extended the global hunt for tainted cash
from Bernard Madoff's Ponzi scheme, refusing to shield European
banks and other foreign investors from having to return roughly $3
billion they collected before his 2008 arrest.
The justices declined to stop lawsuits against foreign
institutions including HSBC Holdings PLC, Crédit Agricole SA and
Société Générale SA over money stolen from Mr. Madoff's victims
that was transferred overseas.
The court order paves the way for years of additional litigation
against these foreign firms, some of the last -- and largest --
targets in an international legal campaign to dig up money for Mr.
Madoff's victims.
Irving Picard, the liquidating trustee who has spent more than a
decade recovering the loot, has been trying to reclaim money that
was distributed from offshore investment funds in the British
Virgin Islands, Cayman Islands and Bermuda.
These feeder funds pooled investors' cash, parked most or all of
it with Mr. Madoff and collected proceeds from the Ponzi scheme
before its collapse. Mr. Picard has long insisted that he can
follow the cash trail to the feeder funds' overseas investors and
redistribute the money among those who lost money in the Ponzi
scheme.
Under Monday's order, Mr. Picard can go ahead with these
lawsuits, which have been largely put on hold during the appeals
process.
In a statement, the trustee said that while the feeder funds are
largely insolvent, he will continue his claims against their
underlying investors, with all proceeds going to customers of Mr.
Madoff's phantom investment firm.
A New York appeals court last year brought the foreign transfers
within Mr. Picard's grasp, ruling that to declare them off-limits
would disadvantage legitimate creditors and encourage fraudsters to
stash stolen assets overseas. The Justice Department backed up that
ruling in April, arguing that even funds that passed between
foreign institutions can be unwound under U.S. bankruptcy law.
Mr. Madoff is serving a 150-year prison sentence in North
Carolina after pleading guilty to running the largest Ponzi scheme
in history.
Write to Andrew Scurria at Andrew.Scurria@wsj.com
(END) Dow Jones Newswires
June 01, 2020 11:50 ET (15:50 GMT)
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