Banks Sued By Madoff Trustee Triumphs In Court

by San Antonio Attorney

Banks charged of neglecting the signs of Madoff’s fraud have triumphed in a U.S. federal court, as a bankruptcy judge ruled that the trustee cannot pursue the majority of his claims seeking money for investors of the massive fraud.

New York federal Judge Jed Rakoff’s decision can potentially impede trustee Irving Picard in trying to recover funds for investors of the Madoff fraud. The claims filed were at least $103 billion. Many other victims of Madoff are seeking separate claims.

Rakoff dismissed the trustee’s common law claims against Pioneer Alternative Investment Management, and UniCredit Spa. Picard had sought to recoup money on the argument that the accused banks neglected an obligation to Madoff’s clients by ignoring signs of fraud.

But Rakoff pointed out a federal law relating to liquidation of brokers says that it does not provide authority on a bankruptcy trustee to make such claims. Among these claims are aiding and abetting fraud and violation of legal or ethical relationship of confidence, and unfair enrichment.

A spokeswoman of the bankruptcy trustee said Picard and his attorneys are going over the judge’s decision.

A lawyer for Unicredit said they are pleased about the court’s decision.

Picard had claimed that common sense, consumer protection, and case law allow him to take legal action against banks that he thinks aided or abetted Bernard Madoff in his Ponzi scheme, as opposed to merely make an effort to recover funds from the banks that allegedly benefit from it.

The defendants disagreed saying that even though the law permits the trustee to file a lawsuit to recover victims’ money, he had no legal right to pursue his claims against them. Only the investors of a fraud are allowed to make such claims.

UniCredit is also involved in Picard’s $58.8 billion suit against Bank Medici and majority stakeholder Sonja Kohn among others, which accuses racketeering or RICO violations.

A San Antonio Chapter 7 bankruptcy can wipe out debts for individuals or businesses that meet the requirements.

 

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