The family of Donald Trump’s new nominee for Secretary of the Treasury was among the lucky few that walked away from Bernard Madoff’s Ponzi scheme with millions in alleged profits.
Stephen Mnuchin and his brother inherited their mother’s account in Madoff’s investment fund in 2005, three years before the scheme imploded, Bloomberg reported in May. The brothers emptied the account shortly after.
In a lawsuit filed after Madoff’s scheme imploded, Irving Picard, the trustee for the Madoff bankruptcy, tried to take back $3.2 million of what the Mnuchins had withdrawn, saying that the funds were not really investment gains, but actually other people’s money that Madoff had shuffled into their account to further his scheme.
No member of the Mnuchin family was accused of having known that Madoff was running a Ponzi scheme.
The lawsuit, one of hundreds of similar actions brought by Picard, was dropped after an appeals court ruled that funds withdrawn more than two years before the bankruptcy could not be clawed back. The Mnuchin family was allowed to keep the $3.2 million.
“This was one of hundreds of cases that there was a decision on,” Mnuchin told Bloomberg in May. “There is nothing special about this case.”
Josh Nathan-Kazis is a staff writer for the Forward. He covers charities and politics, and writes investigations and longform.