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Madoff family to be sued over billions

HANDS IN THE COOKIE JAR Investigators say that the family of Bernard Madoff knew the fake company he founded was a ponzi scheme and profited from stolen assets

AFP , NEW YORK

Bernard Madoff claims he ran his multi-billion dollar Ponzi scheme alone, but close family members face lawsuits this week in a widening probe, the US ­government-appointed trustee told CBS television on Sunday.

Trustee Irving Picard and his chief lawyer David Sheehan told CBS’s 60 Minutes program that Madoff relatives and many so-called victims profited massively.

For example, Madoff’s immediate family used the fraudulent investment firm “like a personal piggy bank,” Sheehan said, while major investors earned billions of dollars — possibly in full knowledge that this was a scam.

“We’ve found that there have been quite a few people who have gotten out more than they put in,” Picard said.

Lawsuits are expected to be filed by the trustee this week against Madoff’s sons Mark and Andrew, his brother Peter and niece Shana, CBS reported.

The suits are part of a legal onslaught stretching far beyond Madoff, who is serving the first months of a 150-year prison sentence.

Picard is charged with finding where Madoff’s billions vanished so that genuine victims — some left penniless after entrusting everything to the fraudster — can be compensated.

Just before his arrest and the collapse of his pyramid scheme last December, Madoff sent clients a statement claiming his fund was worth about US$64.8 billion.

Picard and Sheehan, who rarely talk directly to the media, estimate the scheme in reality contained US$36 billion. They say half of this was disbursed before the collapse, while the other US$18 billion disappeared.

So far, Picard has snared just US$1.5 billion, including revenues from such easy targets as luxury residences in Manhattan, Long Island and Florida kept by Madoff and his wife Ruth.

But now the focus is tightening on Madoff’s inner circle.

CBS reported that Picard’s team found Madoff’s sons and brother took out US$80 million in salaries over the last seven years, while Ruth spent millions of dollars from company funds for shopping and other extravagances.

Family members were also investors in Madoff’s fake company, raking in fantastic returns, CBS reported. Mark and Andrew, for example, withdrew more than US$35 million from accounts opened with almost no original investment.

“Whether or not they have a criminal problem, we will pursue them as far as we can pursue them,” Picard said. “If that leads to bankrupting them — then that’s what will happen.”

Madoff’s family deny complicity, as do the thousands of people who put money into the fund, then received steady returns from what they were told were legitimate investments, but in fact was money stolen from fellow investors.

Sheehan said the family was too close to Madoff’s daily work not to have known about the scam.

“My belief is, yes, they knew, and the reason I believe that is they were officers of this — of these companies, and directors in certain instances as well, and also compliance officers in a very highly regulated environment,” Sheehan said. “Clearly they would have to have known what was going on given their own personal transactions, the longevity of what was happening, and the responsibilities as officers.”

Also in the cross-hairs are many of those investors who say they lost money with Madoff.

Some, the officials say, will not only fail to be reimbursed, but may have to pay back profit made during the decades that Madoff’s fraudulent business went undetected.

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