Madoff relatives sued for $199 million

Madoff relatives sued for $199 million

Court-appointed trustee files suit against Madoff's sons, brother and niece, all of whom worked at the firm.


NEW YORK (CNNMoney.com) -- The court-appointed trustee liquidating Bernard Madoff's business filed a $199 million lawsuit against four of his family members on Friday.

The trustee, Irving Picard, is suing: Madoff's brother, Peter, who was the investment securities firm's chief compliance officer; two sons, Andrew and Mark, who served as co-directors of trading; and niece, Shana, who was the compliance director.

The family's management responsibilities included trading operations, customer relationships, and legal and regulatory compliance. "Yet they were completely derelict in these duties and responsibilities," Picard said in the complaint. "As a result, they either failed to detect or failed to stop the fraud, thereby enabling and facilitating the Ponzi scheme at [the firm]."

The firm "operated as if it were the family piggy bank," Picard alleged in the suit. "Each of the family defendants took huge sums of money out of [the company] to fund personal business ventures and personal expenses such as homes, cars, and boats."

Picard announced his intention to sue on CBS' "60 Minutes" on Sunday.

In response to the broadcast, John R. Wing, a lawyer representing Peter Madoff, denied allegations that his client was in on the scam.

"I can advise you that Peter Madoff's wife and daughter are among the many victims of Bernard Madoff's alleged Ponzi scheme, having lost millions of dollars that were invested with Peter's brother," said Wing in a written statement. "Any suggestion that Peter Madoff knew that his brother was engaged in this Ponzi scheme is absurd."

Martin Flumenbaum, a lawyer representing Mark and Andrew Madoff, said in a statement following the show that he and his clients "strongly disagree with the trustee's baseless claims."

"Mark and Andrew Madoff had no prior knowledge of Bernard Madoff's crimes and contacted the U.S. Department of Justice and the SEC immediately after their father told them he had defrauded his investment advisory clients," said Flumenbaum. "By immediately turning him in, the brothers saved the victims of the fraud more than $170 million that their father was about to distribute."

He also said the Mark and Andrew Madoff "suffered substantial economic losses as a result of their father's crimes" and that they "continue to cooperate fully with the authorities in their ongoing investigations."

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The suit is in addition to Picard's $44.8 million lawsuit filed against Madoff's wife, Ruth, in July, based on the amount of money she transferred from the firm over a six-year period.

Madoff admitted to running the massive scheme back in March, when he pleaded guilty to 11 federal counts. He is serving a 150-year sentence at the Federal Correctional Institution Butner in North Carolina. None of his family members have been charged, though investigators believe that some of them benefited from the ill-gotten gains.

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