Since December 2008, when investment broker Bernard (Bernie) Madoff revealed his ponzi scheme to the FBI, investors and a court-appointed trustee have been trying to recover lost money through various legal proceedings. In the latest legal action in the Madoff saga, the trustee sued two of Madoff's former accountants to recover an alleged $900 million.
Madoff Accountant Lawsuit
The court-appointed trustee, Irving Picard, filed a lawsuit against accountants Michael Bienes and Frank Avellino as well as their wives and other family members in December 2010. The lawsuit alleges that they improperly received $900 million and accuses them of assisting Madoff in his $20 billion investment scam.
Picard claims that Bienes and Avellino were active participants in investment fraud who helped bring money into Madoff's investment funds. In addition, Picard claims that "obvious red flags" would have alerted any accountant that Madoff was defrauding investors. However, Madoff has insisted that he acted alone, reported ABC News.
Role of Trustee
The lawsuit against the accountants is just one of several legal actions that Picard has initiated in his role as the court-appointed trustee for Bernard L. Madoff Investment Securities, LLC. He was designated by the court under the Securities Investor Protection Act (SIPA).
Generally, when a brokerage firm fails due to bankruptcy, fraud or other financial difficulties, the Securities Investor Protection Corporation (SIPC) arranges the transfer of the failed brokerage's accounts to a different brokerage firm through a trustee. The SIPC's mission is to step in as quickly as possible to help return cash, stock, securities and other property to the failed brokerage's clients.
Unlike regular bankruptcy proceedings, the trustee does not liquidate the assets of the failed brokerage. Instead, the SIPC trustee distributes the securities to their respective owners and may purchase securities to satisfy the claims of particular investors.
Additionally, the SIPC trustee is responsible for investigating the conduct of the failed brokerage and the people potentially involved in its operation. That is why Picard has the ability to file lawsuits against the accountants and others allegedly involved in the Madoff scheme.Print this Page