Irving Picard, trustee for liquidation of the Madoff estate, responds to Jan. 7 Jewish World story
By MORDECAI SPECKTOR
The American Jewish World continues to research the aftermath of the Bernard Madoff investment fraud, and has found more so-called clawback complaints against local Jews — the funds sought in the lawsuits total more than $60 million.
As reported previously, Irving H. Picard, the court-appointed trustee for the Madoff estate is trying to recover “fictitious profits” from Madoff’s Ponzi scheme and distribute the proceeds to victims of the scam.
Picard has filed around 1,000 lawsuits against those who transferred more out of their accounts with Bernard L. Madoff Investment Securities (BLMIS) than they put in. The lawsuits filed by Picard and his team of lawyers are trying to claw back funds from the “net winners” in the Ponzi scheme. The clawback period extends back six years from Dec. 11, 2008, the day Madoff, who is now serving a 150-year federal prison sentence, was arrested.
In a letter sent to the AJW last week, Picard decried the newspaper’s Jan. 7 article “Kicking back against clawback,” and defended his litigation to recover money from Madoff investors.
“It is a sad but frequently overlooked fact that amounts withdrawn in excess of actual deposits in BLMIS were, in reality, funds unknowingly stolen from other BLMIS customers,” Picard wrote. “This is the essence of a Ponzi scheme.”
The following clawback lawsuits against Jews in the Twin Cities have not been previously reported in the Jewish World:
• Dorado Investment Co., which has a Minneapolis address, and Marshall D. Miller, David J. Miller and Susan Miller, all as general partners in Dorado, were sued Nov. 12, 2010, for around $30.2 million. Picard alleges that the defendants deposited more than $378 million in their BLMIS account, and withdrew about $404 million, so they ostensibly netted money from their Dorado account, which was opened in 1993.
(This lawsuit was reported in a Star Tribune story on Jan. 13, which credited the American Jewish World with first reporting on the local Madoff clawback litigation. Also, as the AJW reported Jan. 7, Picard has sued David Miller and Marshall Miller, as trustees of Minnetonka Moccasin Co., Inc. Profit Sharing Trust, for $4.4 million “in fictitious profits from the [Madoff] Ponzi scheme.”)
• Richard A. Broms, of Minnetonka, individually and as a trustee for the trust bearing his name, is being sued for more than $7.5 million. A BLMIS statement attached to the complaint shows that more than $1.5 million was transferred from the Richard A. Broms Revocable Trust account with the Madoff firm in 2008. The AJW reported early in 2009 that the Broms Family Foundation was one of the local Jewish philanthropies that suffered significant losses in the Madoff scam. The foundation’s assets plunged from $1.7 million to $330,037, according to its 2008 990-PF IRS tax filing.
• Theresa Berman and Lyle Berman, both of Minnetonka, are defendants in a lawsuit seeking more than $3.7 million. The complaint filed Nov. 12, 2010, in the U.S. Bankruptcy Court for the Southern District of New York, names the Bermans individually and as trustees for Theresa Berman Revocable Trust. Another trustee, Sharon Berman Snyder, is also a defendant.
Also, a separate complaint seeking more than $5.2 million names the Lyle Berman Family Partnership. Other defendants are trustees Neil I. Sell and Stanley Taube, and several Bermans, who are beneficiaries of the trust formed in Minnesota.
• The Madoff trustee is suing Alan and Diane Miller, of Wayzata, individually and as trustees of the trust that bears their names, for exactly $4 million. The BLMIS statement for the Alan Miller Diane Miller Revocable Trust shows a $4 million transfer from the account on Oct. 7, 2008, which is within what the lawsuit calls the “preference period,” the 90-day timeframe prior to Madoff’s arrest and the seizure of his investment advisory firm. The second count of the complaint asks the bankruptcy court to disallow the Millers’ claim for reimbursement under SIPA, the Securities Investor Protection Act.
• Attorneys for Picard are seeking $2.7 million from the Estate of Arnold M. Soskin, the Arnold M. Soskin Revocable Trust, Richard N. Soskin, Nancy S. Lurie, Debra Becker, Robert S. Soskin, Samuel S. Soskin and Renee R. Soskin. The defendants live in the Twin Cities, except for Renee Soskin, who has an address in Key Biscayne, Fla., according to the complaint.
• Candice and Charles Nadler, of Excelsior, are being sued for $860,000. The complaint names them individually and as trustees for the Candice Nadler Revocable Trust DTD 10/18/01, which had a Madoff account. The Madoff trustee also denied their claim for losses in the Ponzi scheme on June 22, 2010. Also, the Nadlers’ charitable foundation was wiped out by the Madoff scam. The assets of the Charles and Candice Nadler Family Foundation went from $572,383 to $13,354, according to the organization’s 2008 990-PF tax filing.
• A lawsuit seeks $744,375 from the Stanford M. Baratz Children’s Irrevocable Trust U/A Dated 11/90. Victor S. Greenstein, of Minnetonka, a trustee, is also named as a defendant. The Baratz trust has an address on Ferndale Road in Wayzata. The complaint alleges that the $744,375 in transfers from the trust’s BLMIS account falls within the 90-day preference period. One transfer, according to the BLMIS statement appended to the complaint, was made on Nov. 26, 2008, about two weeks before Madoff’s arrest. The complaint also asks the court to disallow customer claims for relief under the SIPA.
• The AJW previously reported on the $11.4 million lawsuit against Steven and Susan Fiterman; another clawback claim for $4.5 million names as defendants the Miles and Shirley Fiterman Charitable Foundation, and Steven Fiterman and Valerie Herschman as trustees for the foundation. Picard also denied the foundation’s SIPA claim, stating that $24.5 million was withdrawn from its BLMIS account, and $20 million was deposited, and that the Madoff firm never purchased any securities for the account.
The Jewish World also reported in its Dec. 24, 2010, edition that the Miles and Shirley Fiterman Endowment Fund for Digestive Diseases, which benefited the Mayo Clinic’s gastroenterology department, lost $18.8 million in its Madoff investments. The foundation, which was destroyed, is now defending itself from a clawback lawsuit that seeks $716,294, in preference period transfers from its BLMIS account.
In a related lawsuit, Marja Lee Engler, who was married to the late Mendel (Michael) Engler, is being sued for $1.7 million. The BLMIS account for the Mendel Engler Revocable Trust shows cash withdrawals totaling around $8.8 million, from 1986 to 2008.
Michael Engler was named in press accounts as an “investment counselor” for Madoff, and recruited investors from fellow members of the Oak Ridge Country Club in Hopkins. This is how the Minneapolis area joined New York City and Palm Beach, Fla., as a center of the notorious Ponzi scheme.
Of course, Jews are not the only ones defrauded by Madoff; and the AJW will continue to report on the contentious issues in the aftermath of the massive Ponzi scheme.
(This article updates a story posted on the Web site last week, and appears in American Jewish World, 1.21.11)