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Madoff Trustee Sues Harley International, Picower

Date: Thursday, May 14, 2009
Author: Dawn McCarty, Bloomberg

Irving Picard, the trustee liquidating Bernard Madoff’s defunct New York money-management firm, sued Harley International (Cayman) Ltd. seeking the return of $1.07 billion invested with the convicted confidence man.

The trustee filed court papers demanding the money for 14 transfers in the six years before the bankruptcy of Bernard L. Madoff Investment Securities LLC. Six of the transfers were made within 90 days of the bankruptcy filing date and total $425 million, Picard said.

Harley International withdrew the $425 million from “which it knew or should have known was non-existent principal and other investors’ money,” according to the filing today in U.S. Bankruptcy Court in Manhattan. Harley should have known “that Madoff was engaged in fraud,” according to the complaint.

At least 148 “purported trades” were listed on Harley International account statements from 1998 to 2008, according to the complaint.

Picard today also sued Jeffry M. Picower, individually and as trustee for the Picower Foundation, and several other defendants seeking the return of $6.7 billion.

“The Trustee’s investigation to date has revealed that at least five billion dollars of this amount was fictitious profit from the Ponzi scheme,” according to the complaint.

Madoff, 71, pleaded guilty March 12 to running the biggest Ponzi scheme in history, using money from new investors to pay old ones. He faces a prison term of as much as 150 years when he is sentenced next month.

The case is Picard v. Harley International (Cayman) Ltd., 09-01187, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net.