Madoff Trustee Files Suit Against Big Banks

By Robert Davis
Dec 9 2010

Irving Picard, the trustee assigned to the Bernie Madoff case, announced this week that he has filed suit against dozens of the largest banks in the US.

Picard has been charged with finding a way to pull the funds out of the Madoff estate to repay millions that Madoff bilked from investors. For years Madoff lived in high style while taking money from one investor to pay off returns on another. He was eventually shut down when the financial crisis hit and his investments were called in.

The suits filed by Picard allege that the banks in question had knowledge of Madoff’s illegal activities but continued to work with him despite the fact that they were breaking the law. Picard says that the banks profited from the fraud that was being carried out by Madoff and should pay back the money that they earned from the scam.

Among the banks is Citigroup, who Picard is demanding $400 million from. Picard said that the scam pulled off by Madoff was so elaborate that he was able to convince these banks to build feeder funds that would funnel in money from other investor accounts.

The investments were paid out of new investors funds and the profits were being funneled to the banks and to Madoff.

Madoff was sentenced earlier this year to 155 years in federal prison. Picard continues to work with the estate attempting to find more funds that can be distributed to the victims of Madoff’s crimes.