Madoff trustee Irving Picard seeks review of decision aiding Merkin


(JTA) — The trustee charged with recovering funds for victims of Bernie Madoff’s fraud scheme said he will appeal a ruling that would decimate a lawsuit against financier J. Ezra Merkin.

Irving Picard asked a New York bankruptcy court on Sept. 5 to finalize a decision severely curtailing his $565 million lawsuit against Merkin, the hedge funder who helped fuel Madoff’s business, so that Picard could appeal to the 2nd Circuit Court of Appeals, according to a report by the legal news website Law360.

The bankruptcy court decision, which was issued by Judge Stuart Bernstein on Aug. 12, dismissed nine of the 13 charges filed by Picard against Merkin on the grounds that Picard could not prove that Merkin knew of Madoff’s Ponzi scheme. Merkin’s hedge funds were heavily invested with Madoff. Both men are Jewish.

Bernstein allowed the remaining charges, totaling $315 million, to proceed against Merkin, according to Reuters.

Picard’s move is the latest in a flurry of legal decisions and counter moves that have taken place over the last few weeks regarding the fallout from the Madoff financial fraud.

On Aug. 9, the 2nd Circuit Court of Appeals ruled against Picard’s effort to overturn Merkin’s $410 million settlement, as well as the Fairfield Greenwich Group’s $80 million settlement with the New York State Attorney General’s office. Picard had argued that the settlements inhibited his ability to recover funds for Madoff’s victims.

Meanwhile, on Aug. 28, Picard asked in a separate case for the right to replead in a suit against several banks, arguing that a pair of district court rulings earlier in the year had altered the legal standard for such cases.

In addition, on Aug. 22, Bernstein ruled that investors whose employers had invested retirement funds with Madoff could not recover their money, a ruling that Picard supported.

Picard has recovered a reported $9.8 billion out of an estimated $17.3 billion of principal lost in Madoff’s investment scheme, according to The Wall Street Journal.

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