US judge okays transfer of Madoff’s $28.1 million to cover liquidation cost
31 Dec 2008
US bankruptcy judge Burton Lifland has agreed to allow atransfer of $28.1 million from Ponzi scheme operator Bernard Madoff's investment arm to pay for cost arising out of liquidation
The requst was made by the trstee of Securities Investor Protection Corporation (SIPC) in charge of liquidating Madoff''s investment arm.
Legendary trader and former NASDAQ stock market chairman, Madoff was charged with running a multibillion-dollar Ponzi scheme - perhaps the largest in Wall Street's history, where he duped unsuspecting investors to a tune of nearly $50 billion. (See: Madoff's Ponzi scam hits Wall Street)
Irving Picard, the trustee in charge of administrating the liquidation of Madoff's investment securities firm, told the US bankruptcy court in Manhattan that he was iurgently needed funds to cover employee salaries, healthcare and other cost involved in the liquidation of the company.
The SIPC was formed in 1970 by the US Congress to protect investors if a brokerage firm goes bankrupt and investors could get a maximum of $500,000 and $100,000 on cash claims.
Investors who had invested with Madoff through third parties are likely to get relief as a judge overlooking the civil claims said he may offer relief if the claims are routed through SIPC and said he needed to be briefed by the SIPC, the Securities and Exchange Commission and representatives from investors in Madoff.
The US district court judge has also ordered Madoff to make available in writing all his assets, liabilities, bank accounts, investments and provide accounts of his firms by today and the Ponzi scheme operator has acceded to this order.
The bankruptcy court also gave its approval to the trustee in sharing certain confidential information with potential buyers of Madoff's businesses.
Madoff's firm is known as securities broker dealer, but he also runs a separate investment advisory business which had more than $17 billion in assets under management, federal authorities said, citing two unidentified employees and a SEC filing.
Investors, ranging from hedge funds that depend on outside managers to wealthy individuals, entrusted their money with Madoff, who told employees before his arrest yesterday that his firm was ''one big lie'' and may have cost clients as much as $50 billion. His confession comes with hedge- fund assets poised to fall as low as $1.1 trillion by 1 January from $1.9 trillion in June, reflecting market losses and customer redemptions, analysts at Morgan Stanley estimate.
Madoff is now confined to his $7-million swanky apartment in Manhattan, his ankles fitted with electronic cuffs and he will be allowed to go out of his house only with prior approvals of the authorities.
Madoff and his wife also had to sign an agreement forfeiting their apartment in Manhattan and assets in Montauk, New York and Palm Beach, Florida.
