MADOFF CLAWBACK DEFENSE LAWYERS

As with all the Ponzi schemes that are surfacing recently (e.g. Arthur G. Nadel's Scoop Management, Inc. and Scoop Capital, LLC; Michael Riolo's LaSalle International Clearing Corp. and Sterling Wentworth Currency Group Inc.), Bernard Madoff's arrest for orchestrating the largest Ponzi scheme in history will have an extensive ripple effect for years to come. From both sides of the fraud, individuals and entities should expect to hear from federal investigators, attorneys, and the media, as the all the truth comes out.

From one side, you have the victims of the scandal, that lost all or part of the money that they "invested" in Madoff Investment Securities, LLC. Naturally, these individuals and entities, many of which shared "investment advice" in Madoff's stomping ground of Palm Beach County, will be looking to any avenue to recover their losses. In order to achieve this objective, in addition to relying on the SEC's enforcement action in New York, many investors will be hiring attorneys to investigate and possibly sue any professionals, such as investment brokers, attorneys, and accountants, that either knew of on-goings of Madoff's company or should have known. These targets are often the most lucrative sources of recovery because they carry insurance for this exact type of negligence. Essentially, anyone that stood by idle while this scheme took place is at risk.

On the other side of this equation are those investors that were lucky enough to exit with their initial investment and a profit. These investors are characterized as "Profiteers" or "Early Rememptions" and are targets of claw back litigation, wherein the bankruptcy trustee will seek the recovery of the "False Profits" that were paid to Profiteers, that in order to redistribute these funds to investors that lost the principal on their investment.

The Trustee or Receiver is also likely to try to recover donations and contributions to charities and foundations. By their nature, these types of transfers bolstered Madoff's standing in the community as a wealthy benefactor and only further imbued investors with confidence to invest in his hedge funds. The problem for the recipients of these transfers is that if they were made with Madoff's intent to defraud creditors (like the investors that have now lost money) and, like the False Profits, they may be recoverable by the Receiver as fraudulent transfers.

Attorneys of Assouline & Berlowe have litigated both sides of clawback litigation, both from the standpoint of bringing these types of actions, and defending the recovery of these False Profits. For more information click here.