Madoff Sons Adopt Asset Freeze in Pact With Trustee (Update2)
February 05, 2010, 2:58 PM EST(Adds Madoffs’ denial of allegations in fourth paragraph.)
By Linda Sandler
Feb. 5 (Bloomberg) -- Andrew and Mark Madoff, whose father Bernard is serving 150 years in prison for the largest-ever Ponzi scheme, agreed to restrict movement of their own personal assets, not incur debt beyond $1,000 and give a monthly accounting of their expenses.
Peter and Shana Madoff Swanson, Bernard’s brother and niece, signed similar agreements with the trustee liquidating the con man’s estate, Irving Picard, according to documents filed today in U.S. Bankruptcy Court in Manhattan.
Picard, who is unwinding Madoff’s defunct investment firm and gathering assets to help pay customers, sued Andrew, Mark, Peter and Shana in October, claiming they spent almost $199 million of victims’ money and treated the investment firm as their personal bank.
The Madoffs said in court papers that they deny Picard’s allegations and dispute his right to restrict their assets. They are consenting to the asset freeze to avoid “the potential costs and expenses of the instant dispute,” which could prove “substantial,” according to the filings.
The asset restrictions prevent the Madoffs and their representatives from selling, leveraging, wasting or moving all their property that is worth more than $1,000, “except for wearing personal clothing and jewelry in the normal course.” The must also take “reasonable” steps to preserve the value of their possessions, according to the filings.
30 Days
In addition, they agreed to disclose their finances to Picard within 30 days. Their monthly accounting of expenses requires them to document all items costing more than $500.
Peter Madoff was chief compliance officer at Bernard L. Madoff Investment Securities LLC. Andrew and Mark were co- directors of trading and Shana was compliance director, according to Picard.
Neither Picard, his spokesman, Kevin McCue, nor Martin Flumenbaum, a lawyer for Madoff’s sons, immediately returned voice messages left on their phones.
John Wing, a lawyer for Peter Madoff, didn’t immediately return a call and Mark Smith, Shana Swanson’s lawyer, said he couldn’t immediately comment.
--With assistance from Erik Larson in New York. Editors: John Pickering, Peter Blumberg
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
