March 17th, 2010
03:05 AM ET

Madoff relatives seek to dismiss $199 million lawsuit

Family members of Ponzi schemer Bernard Madoff have filed motions to dismiss a $199 million lawsuit leveled against them last fall.

The three dismissal motions came Monday from four Madoffs: one from Madoff's brother, Peter Madoff; one from his sons Andrew and Mark Madoff; and one from his niece, Shana Madoff.  All four held senior positions at Bernard L. Madoff Investment Securities.

In the court documents, lawyers for the Madoffs say their clients have received undue blame simply because they share a last name with the perpetrator of the largest fraud in Wall Street history.  "Allegations are painted with the broadest of strokes in an effort to sweep anyone with the Madoff name - regardless of fault or actual involvement - within the fraudulent investment advisory business of BLMIS," Shana Madoff's  attorneys wrote.

Similarly, Peter Madoff's lawyers try to distance him from his notorious sibling. "Peter Madoff is not Bernard Madoff," their motion opens.  And Andrew and Mark Madoff's lawyers deny the two were any more aware of their father's long-running fraud than the many other clients he duped.

"They rank among [Bernard's] numerous victims," the lawyers wrote. The sons' lawyers further say that the two were heroes of sorts, promptly blowing the whistle on their father, thus thwarting the loss of even more Madoff client money.  " ... they reported his crimes to the authorities, and thereby prevented
the dissipation of $170 million more in customer funds," the sons' attorneys wrote.

In October 2009, Irving Picard, the court-appointed trustee tasked with liquidating Bernard Madoff's business, sued Peter, Andrew, Mark and Shana Madoff for $199 million.

In the suit, Picard says that the Madoff firm "operated as if it were the family piggy bank."

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Filed under: Justice • U.S.
soundoff (31 Responses)
  1. Dave

    Why not make it an even $200 million. The family profited by illegal means weather they knew it or not, give the money back. they should have never have given Madoff's wife $4 million.

    March 17, 2010 at 3:25 am | Report abuse |
  2. Average Person

    LOL, as if they wouldnt know what was going on with what went on. These executives that claim that they had nothing but the best interest in what they were doing when in reality the only interest in there mind is nothing but there own. They were involved with the company in very high positions... you telling me that they had nothing to do with it or didnt know anything that was going on... LOL let be real we are not talking about people that grow up working in the fields or manual labor, we are talking about educated individuals who know what they are doing and can better grasp all really think they didnt see or even sense the whole picture of the scam...LOL THEY KNEW WHAT HAPPENING BUT ROAD THE TRAIN TILL THE TRACKS ENDED AND NOW THEY WANT TO DITCH THE TRAIN AND GET ON A BOAT...LOL

    March 17, 2010 at 3:33 am | Report abuse |
  3. Michael

    As long as they agree to yearly audits for the rest of their life then yes, the lawsuit should be lifted. If they do have the money they should never be allowed to spend one unaccounted for dollar of it.

    March 17, 2010 at 3:40 am | Report abuse |
  4. michael sewera

    it is unnecessary for the trustees to charge any of these family members until they are prooven guilty of the crimes for which they are accused. Even though i believe that family did benefit to some extent from the ponzi shceme earnings, directly or indirectly, i do not share the notion, under any circumstances that it was to the tune of 199million dollars.

    March 17, 2010 at 3:50 am | Report abuse |
  5. John

    I'm no lawyer, nor am I a financial expert, but logic tells me that if any of these defendants have any money made from Bernie Madoff's ill-gotten gains, then ALL of that money should be owed the plaintiffs, Madoff's victims. And because all of these defendants held senior positions in Madoff's "investment" company, it seems to me most of what they do have came from that thievery. Case closed, no?

    March 17, 2010 at 4:04 am | Report abuse |
  6. Ash

    Tou enjoyed it while you could, told the Feds once your dad you to. You are no heroes. You deserve only your pay, court shoudl sieze all other money and illgained assets. For parity, throw them ibehind bars for a deacde. The world is better off without Madoffs.

    March 17, 2010 at 5:44 am | Report abuse |
  7. Kevin

    You know, if a drug cartel or other big crime ring sank their ill gotten gains into "front" companies, when they finally got busted, all those front companies would be seized too- even if they happened to be "legit" ( Here in Houston we had a drug dealer who had used his profits to buy up a bunch of nightclubs etc- when he was caught they sold off all the nightclubs, bars and restaurants- perfectly law abiding managers, bartenders, DJs, waitresses and cooks were all suddenly out of a job)

    Why should this guy be any different?
    If it hadn't been for his criminal activities, he wouldn't have had a dime to his name. Why should his relatives be allowed to keep the profits from front companies Madoff set up with illegal funds? (let alone the front companies themselves)

    The only reason they are in the position they are now is because Bernie Madoff broke the law- repeatedly.
    His family should not be allowed to benefit from his crimes.

    March 17, 2010 at 6:22 am | Report abuse |
  8. Tom Niemiller

    If I steal money and give it to my brother – can you recover it from the brother?

    All these people were in on the Madoff scam anyway. Madoff turned himself in because jail was the only place that he could safely hide from all the people he ripped off. The story about his family "alerting authorities" is complete crap. That was a ruse to try to protect their ill gotten gains. This was a 'family' operation. Heck, one of the SEC investigators assigned to Madoff married into the family.

    March 17, 2010 at 6:27 am | Report abuse |
  9. chris

    So let me get this straight. These people profited from a scheme that stole money from honest people. And yet these people want to try and keep the money from the scheme because they "didn't know about the fraud". Yeah right, and I have some swamp land in Florida dirt cheap. Madoff stole money and these people think they are due the money from the theft

    March 17, 2010 at 6:37 am | Report abuse |
  10. Jake 05

    While I can understand the Madoff clans concern by attachment in sharing such a notorious last name and their desire to distance from it at this stage . History, tells me that I'm not fully convinced they are as innocent as they portray . We are forgetting Bernard Madoff was trying to get rid of large quantities of expensive jewels and other assets to these very members shortly after this story broke. Until the court appointed trustee can verify that these people don't have any assets from that ponzi scheme in hiding , etc , etc . Then, let the court set aside these motions til proven they were'nt involved . Apples tend not to fall far from the tree .

    March 17, 2010 at 6:38 am | Report abuse |
  11. Jack

    They worked for the company. They obviously did no work since the company was phony. They deserve to lose every last dime they made from that company. Even if it means they end up as bums on the street. That is exactly what they deserve!

    March 17, 2010 at 7:06 am | Report abuse |
  12. Rich

    Promptly blowing the whistle?? You can't seriously be making the argument that 15 years is prompt!

    March 17, 2010 at 7:08 am | Report abuse |
  13. Joseph

    I say let the courts decide whether the suits should go forward or not. If these people are in any way a part of the scam, then they should pay.

    March 17, 2010 at 7:29 am | Report abuse |
  14. Morning

    If they were top people in the company and received the big bonus then they should pay up to. ofcourse they knew what was going on. Shame on them. Don't they still live in Million dollar homes and drive 100k cars. something is not right. they should be living in low income and driving hondas

    March 17, 2010 at 7:29 am | Report abuse |

    Now that's the cat's meow....and I want all the Madoff victims to be made whole.

    March 17, 2010 at 7:33 am | Report abuse |
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