Some Madoff Clients Pulled Out Billions Before Arrest
Some clients withdrew billions from their accounts the year prior to the financier's arrest on fraud charges – about $6 billion of which was pulled out just three months before Madoff revealed his elaborate Ponzi scheme, according to a New York Times report Wednesday.
Under federal law, Irving Picard, the trustee handling Madoff's bankruptcy, can sue to recover those funds. Picard's doing just that, filing two suits to retrieve $6.1 billion withdrawn from accounts over the last decade.
The lawsuits claim two clients – Jeffry Picower, whose charitable foundation was thought to be a fraud victim, and Harley International, an offshore hedge fund – should have known their returns were impossibly high.
Picower is further accused of taking part in fraudulent transactions as payment for "perpetuating the Ponzi scheme" at the expense of other investors, the Times says.
The suit points to 1999, when one of Picower's accounts enjoyed a 950 percent annual return, as an example.
Picower and his wife, Barbara, who's also named in the suit, deny the charges, a lawyer for the couple said.
Most of the $12 billion withdrawn in the last year went to "feeder funds," which pooled investor cash together before investing it with Madoff, people familiar with Madoff's transactions told the Times.