Mrs. Madoff: Give Back That $44 Million!
How much did Ruth Madoff know? That's the question people, especially women, bring up at every gathering I've attended since husband Bernard was sentenced to 150 years for stealing $13.5 billion or so from thousands of investors.
Even Irving Picard, the bankruptcy trustee for Madoff's defunct investment advisory firm (BLMIS), is unwilling to say for sure. But no matter. Today, he filed suit against Mrs. M. to "recapture and return the investment funds of customers." As you recall, federal prosecutors declined to charge Mrs. Madoff and left her with a paltry $2.5 million. (Boohoo --she was claiming $80 million.) Picard is demanding that the poor-little-rich lady cough up $44 million of ill-gotten gains.
For decades [declares the complaint], Mrs. Madoff lived a life of splendor using the money of BLMIS's customers. Regardless of whether or not Mrs. Madoff knew of the fraud her husband perpetrated at BLMIS, during the past two- and six-year statutory periods, she received tens of millions of dollars from BLMIS for which BLMIS received no corresponding benefit or value and to which Mrs. Madoff had no good faith basis to believe she was entitled. The purpose of this action is to recover that money to the extent possible for the benefit of BLMIS and its defrauded customers.I myself always thought she knew everything. It is impossible for a doting wife of 49 years to sit in an office down the hall from her husband not to know that his investment profits were smoke. Like most wives of long duration and experience, I can sense, even before he does, when my husband is going to do something bad.
Even I was shocked, however, by details laid out in the lawsuit. They showed that she couldn't not know unless she was a complete dunderhead. For example, on December 11, 2008, only a few days before her husband admitted to running one of the largest Ponzi schemes in history, she had $11 million transferred from BLMIS to a project of Blumenfeld Development Company, which builds retail and office complexes. The investment was not made for Madoff's customers; it was in her name. Only a few weeks earlier, as Madoff investors were happily celebrating Thanksgiving unaware of the catastrophe to befall them, she transferred $2.1 million from a company account to her own personal bank account. A year earlier, she did exactly the same thing, only with $2.7 million. She never even left an I.O.U. BLMIS lent millions to an overseas account it kept, but when repayments were made, she pocketed them. And if you think Sarah Palin buys too many clothes, reconsider. Mrs. M. had Madoff Investment Services pay her $1.1 million American Express bill.
Those outright thefts account for just some of the $21 million she took for herself in the two years before the bankruptcy. There's another $23 million she stole in the four years previous. (The trustee under statute has special rights to recover funds fraudulently expended two years and six years before the bankruptcy.)
According to Ruth's attorney, she has already forfeited all her property andd has nothing more than the $2.5 million. If so, I wouldn't be averse to having the court strip her of that too. As the trustee put it, "The inequity between Mrs. Madoff's continuing financial advantages and the economic distress of Madoff's customers compels this action."