Trustee sues Madoff's wife for $45 million

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NEW YORK --- The trustee overseeing the liquidation of Bernard Madoff's assets sued the disgraced money manager's wife on Wednesday, asking for nearly $45 million that he says was spent on "a life of splendor."

Ruth Madoff: Woman used money that belonged to customers of her husband's investment firm, trustee says.  Associated Press
Associated Press
Ruth Madoff: Woman used money that belonged to customers of her husband's investment firm, trustee says.

Trustee Irving H. Picard spelled out his claims in a lawsuit against Ruth Madoff in U.S. Bankruptcy Court in Manhattan. Ruth Madoff several weeks ago moved out of a $7 million Manhattan penthouse where she and her husband had lived during their 49-year marriage.

Mrs. Madoff's lawyer, Peter Chavkin, said in a statement that Mr. Picard's action was "wrong as a matter of law and fairness."

He said the lawsuit was "particularly perplexing and totally unjustified" because his client has already forfeited to the federal prosecutor's office nearly all of the assets described in the lawsuit.

"At the same time, after a thorough and comprehensive investigation, the U.S. Attorney's office determined that Mrs. Madoff was entitled to keep property of $2.5 million because that property could not be linked to the fraud," Mr. Chavkin said.

Although the U.S. government agreed not to contest Mrs. Madoff's claim to $2.5 million, the agreement did not protect her from lawsuits to recover additional money by Mr. Picard or investors.

Mr. Picard said Mrs. Madoff for decades lived "a life of splendor" using money that belonged to customers of her husband's investment firm.

He said she had received tens of millions of dollars from Mr. Madoff's business in the past six years while the business received no corresponding benefit or value in return.

He said she had pocketed $23.7 million from the business in the past two years, including $1.1 million to pay personal expenses charged to Mrs. Madoff's American Express card and $2.7 million in 2007 to pay for her yacht. He said some or all of the money was subsequently transferred to family members or affiliated entities.

Mr. Picard said the court should award to the trustee for distribution to victims no less than $44.8 million that Mrs. Madoff knew or should have known belonged to the business and its customers in addition to other unspecified compensatory and punitive damages.

He said she had no good-faith basis to believe she was entitled to the money, whether she knew of the fraud or not. He noted that she was a controller at Madoff Securities International Limited, a related British company, and she had business responsibilities for account reconciliation within the company's Investment Advisory Business.

"While Madoff's crimes have left many investors impoverished and some charities decimated, Mrs. Madoff remains a person of substantial means," Mr. Picard said.

The 71-year-old Mr. Madoff is serving a 150-year sentence after admitting he squandered tens of billions of dollars in investors' money. His wife has not been charged with any crime.

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