Bernard Madoff may have been emptying his investor-funded piggy bank just months before his arrest for operating an extensive Ponzi scheme, according to a published report.
About $12 billion was pulled out of accounts at Madoff's firm before he was arrested for running a Ponzi scheme last year, according to a report in The New York Times.
Madoff, 70, pleaded guilty in March to charges that his secretive investment advisory operation was a multibillion-dollar scam. The former Nasdaq chairman faces up to 150 years in prison.
Around $6 billion was taken out three months before Madoff was arrested in December for defrauding investors out of billions, sources told The Times.
Most of that sum was withdrawn by various “feeder funds,” the paper said, including funds which have already been the targets of lawsuits.
Under federal law, the court-appointed trustee overseeing the Madoff bankruptcy can sue to retrieve that money from the investors who withdrew it.
The trustee, Irving Picard, has filed several complaints against big money managers in recent weeks in an aggressive bid to return funds to thousands of clients burned by Madoff. Defendants include the Picower Foundation, J. Ezra Merkin in New York and Stanley Chais in Los Angeles, longtime Madoff associates who have denied deny any wrongdoing.
An attorney for Picower founders Jeffrey and Barbara Picower said his clients were never aware anything was amiss.
“They were totally shocked by his fraud and were in no way complicit in it,” attorney William Zabel said. “They lost billions of personal assets and most dear to them, all the assets of their esteemed foundation.”
In another new complaint filed Tuesday, Picard similarly claimed an overseas hedge fund, Harley International Ltd., knew or should have known that its $1 billion in returns were fraudulent.
Harley International withdrew $425 million from Madoff-linked accounts three months before the Ponzi scheme became public, The Times reported.
The complaint says the fund was organized in the Cayman Islands, but has an Isle of Man address.