Burned retirees sue Madoff trustee over claims

Lawyer Blogs

Some elderly investors have sued the trustee overseeing the liquidation of Bernard Madoff's assets, saying the system being used to pay claims against the disgraced financier is unfair.


The lawsuit filed in bankruptcy court Friday in Manhattan said six longtime investors wiped out by the scandal together lost life savings of $9 million — the amount on fictitious statements issued by Madoff's defunct firm in 2008.

It challenges rules that could disqualify the plaintiffs from collecting up to $500,000 in government-backed compensation because over the years they withdrew more money — believing it was profit — than they originally invested.

By law, trustee Irving Picard has an obligation "to protect a customer's legitimate expectations of what the broker held in his account — even if the broker never purchased any securities in the first place," the suit argues.

Among the plaintiffs named in the suit filed last week: a 73-year-old New Jersey widow who's been forced to take a part-time job at Macy's to cover basic living expenses; a 76-year-old California man who had to sell his home and move in with his daughter; and an 88-year-old Manhattan woman who lives with her ailing husband of 69 years and has stopped paying medical bills because they need the money for food.

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