Madoff trustee’s win Could target US$2B

NEW YORK • A federal appeals court revived almost 100 lawsuits seeking what may be as much as US$2 billion lost from Bernard Madoff ’s Ponzi scheme when the cash was transferred overseas.

The decision Monday by the U.S. Court of Appeals in Manhattan reverses a 2016 ruling that benefited foreign customers of offshore “feeder funds,” which invested mostly with Madoff ’s advisory firm. Those investors allegedly withdrew more money than they put in before the scheme collapsed in 2008.

The lower court had ruled that U.S. law didn’t apply to the overseas transfers. The appeals court said otherwise, noting that offshore investors, which included a company owned by the billionaire brothers Charles and David Koch, shouldn’t be “surprised” that the dis- puted transfers are subject to American rules.

“When these investors chose to buy into feeder funds that placed all or substantially all of their assets with Madoff Securities, they knew where their money was going,” a three-judge panel said.

The litigation involves the biggest remaining pot of cash sought by the trustee, Irving Picard, who has been seeking to make whole customers who lost US$19 billion in principal after Madoff ’s 2008 arrest. So far he’s recovered more than US$13 billion through settlements and distributed more than US$12 billion to victims — significantly more than some predicted a decade ago.

Picard isn’t accusing Koch and the other defendants of wrongdoing. As in his many prior suits to recover cash, he contends the returns aren’t legitimate because Madoff used money from new investors to cover the fake profits of older ones.

Madoff is serving a 150-year sentence in a federal prison in North Carolina.