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Friday October 2, 01:10 PM
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Madoff trustee ups claim against investor Picower
By Grant McCool
NEW YORK (Reuters) - Investor Jeffry Picower, described as the biggest beneficiary of Bernard Madoff's fraud, is now being sued for $7.2 billion, $2 billion more than the trustee in the case demanded in May.
Picower, newly listed as one of the 400 wealthiest Americans by Forbes magazine, was complicit in the fraud, trustee Irving Picard said in court documents on Wednesday responding to the investor's motion to dismiss his lawsuit.
"Picower makes the paradoxical argument that he could not have been complicit in the Ponzi scheme because he made too much money from it," Picard wrote in the filing in U.S. Bankruptcy Court in New York.
"The unusual, if not unlawful activity in his accounts, including one negative net cash balance of approximately $6 billion at the time of Madoff's arrest, was clear evidence that something was seriously amiss."
Picower, 67, of Palm Beach, Florida, was listed 371st and worth $1 billion on the Forbes list published this week.
He started out as an accountant and lawyer and then made money investing in the medical sector. He and his wife Barbara were friends of Madoff and his wife Ruth.
They headed a philanthropy, the Picower Foundation. The foundation closed when the Madoff fraud unraveled last December.
A spokeswoman for the Picowers attorney, William Zabel, said Picard "continues to make false and outrageous claims ... based on a misreading of the purported 'facts'."
She said the Picowers initiated discussions to reach a settlement with the trustee, who is winding down Bernard L. Madoff Investment Securities LLC.
In a motion to dismiss the lawsuit, Picower's lawyers repeatedly said the investor was a "victim" of the fraud.
Madoff, 71, is serving a 150-year prison sentence after pleading guilty in March to the fraud. Prosecutors have said Madoff bilked investors around the world out of as much as $64.8 billion.
Part of Picard's filing said: "Based upon the trustee's investigation to date, Picower was the biggest beneficiary of Madoff's scheme, having withdrawn either directly or through the entities he controlled more than $7.2 billion of other investors' money."
He originally sued in May for $5 billion, charging the Picowers "knew or should have known" Madoff was a fraud.
Picard, who is leading a global search under the Securities Investor Protection Act to recover money for thousands of defrauded investors, has collected about $1.5 billion, but has sued for some $15 billion.
The case is Irving H. Picard, trustee for the liquidation of Bernard L. Madoff Investment Securities LLC v. Jeffry M. Picower 09-01197 in U.S. Bankruptcy Court for the Southern District of New York (Manhattan)
(Reporting by Grant McCool; editing by Andre Grenon)
