A trustee recovering Bernard Madoff's assets for jilted investors has labeled a Florida philanthropist as the biggest beneficiary of Madoff's multibillion-dollar fraud and demanded he return more than $7 billion in bogus profits, his lawyers say.
Trustee Irving Picard rejected Jeffry M. Picower's claims that he was a victim of the fraud and suffered "devastating" and "immeasurable" loss.
"Nothing could be further from the truth," lawyers for Picard wrote in papers filed Wednesday in U.S. Bankruptcy Court in Manhattan.
Many investors were damaged by the massive fraud Madoff acknowledged last December to his two sons and then the FBI, "but Picower was not one of them," the lawyers wrote. "Based upon the trustee's investigation to date, Picower was instead the biggest beneficiary of Madoff's scheme, having withdrawn either directly or through the entities he controlled more than $7.2 billion of other investors' money."
The lawyers said Picower's claims that he was a victim "ring hollow" since Picower withdrew more of other investors' money than anyone else during three decades of investing with Madoff and should have noticed signs of fraud.
"The sums received by Picower are staggering by any measure," the lawyers said.
According to the lawyers, Picower's accounts were "riddled with blatant and obvious fraud," and he should have recognized that since he was a sophisticated investor.
The lawyers wrote that Picower's accounts reported profitable trading before they were opened or funded, execution of trading instructions that hadn't yet been given, inexplicable changes in account positions and outlandish returns.
They said the trading patterns were so "inconsistent with normal trading activity as to compel the conclusion that Picower had to have known that improper trading activity was occurring."
Picower has asked that the lawsuit be dismissed, saying it is unsupported by the facts. A lawyer for Picower did not immediately return a phone message seeking comment.
In papers filed with the bankruptcy court in August, lawyers for Picower said their client had invested "huge sums of money" with Madoff for more than 30 years on behalf of himself, his businesses, his family and charitable entities.
The lawyers wrote that Picower invested with Madoff because he trusted him as a man "he — and the world — believed to be a brilliant trader, a successful businessman, an industry leader, and a pillar of the financial community."
He said he "learned the ugly truth" about Madoff when Madoff was arrested in December.
The lawyers wrote that the disclosure forced the closure of the Picower Foundation.
"Rather than recognizing Mr. Picower and the other defendants as victims of Madoff's fraud, the trustee instead casts them as villains in history's largest Ponzi scheme," they wrote.
Madoff is serving a 150-year prison sentence after he admitted losing billions of dollars for thousands of clients over a half-century career that saw him rise to be a Nasdaq chairman.