Bloomberg News

Wives of Madoff Sons Can Be Sued for ‘Enrichment,’ Judge Says

April 05, 2012

A judge ruled that Mark Madoff’s widow, Stephanie, and Andrew Madoff’s ex-wife, Deborah, can be sued for “unjust enrichment” in a lawsuit against Bernard Madoff’s family by the liquidator of his brokerage.

Madoff trustee Irving Picard in 2009 sued the Madoff family for $198 million, alleging they used the firm as a “family piggy bank.” U.S. Bankruptcy Judge Burton Lifland gave him permission to add the Madoff sons’ former wives as defendants, saying they could be sued for unjust enrichment though not for some earlier transfers, according to a court order filed in Manhattan bankruptcy court yesterday.

Stephanie Mack, Deborah Madoff and Susan Elkin, Mark Madoff’s first wife, received $115 million from the Madoff firm, Picard has alleged. He can’t make bankruptcy claims against the wives because his time to do so has run out, though he can try to recover smaller amounts received later of about $5.5 million, Lifland said in his order.

Daniel Tabak, a lawyer for Deborah Madoff, and Michael Klein, a lawyer for Stephanie Mack, didn’t immediately respond to calls seeking comment on the judge’s order.

The Madoff sons’ wives asked Lifland in February to bar Picard from adding them to the lawsuit. He omitted them from the original lawsuit and now was seeking money that in some cases was time-barred as it was received beyond the six years allowed by New York law for clawbacks, they said.

Mark Madoff committed suicide in December 2010. His father Bernard is serving a 150-year sentence in a federal prison in North Carolina.

The case is Picard v. Estate of Mark Madoff, 09-01503, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: Stephen Farr at sfarr@bloomberg.net.


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