Supreme Court Refuses to Hear Appeal From Madoff Victims
Victims of the Ponzi schemes of Bernard Madoff and Allen Stanford, two of the largest in U.S. history, suffered setbacks on Monday as the U.S. Supreme Court refused to hear appeals in two cases seeking to recoup more money for them.
In the Madoff case, the court rejected a request by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, to review the dismissal of his claims against banks he accused of enabling Madoff’s fraud.
Separately, the court rejected a request by Ralph Janvey, a receiver unwinding Stanford’s businesses, to review a ruling that blocked him from pursuing claims against Stanford employees on behalf of the receivership’s creditors, not the businesses themselves.
In both cases, lower courts concluded that Picard and Janvey lacked standing to bring their respective claims.
The Supreme Court did not give reasons for its decisions, which leave intact a June 2013 ruling in the Madoff case by the federal appeals court in New York, and an August 2013 ruling in the Stanford case by the federal appeals court in New Orleans.
Amanda Remus, a spokeswoman for Picard, said the trustee respected the decision in the Madoff case, and will still pursue $3.5 billion of bankruptcy claims against international banks such as Switzerland’s UBS AG and Britain’s HSBC Holdings Plc.
Kevin Sadler, a lawyer for Janvey, said the receiver is disappointed with the decision in the Stanford case, and will continue to press claims on behalf of more than 18,000 victims against those who profited from or aided Stanford’s fraud.
A Ponzi scheme is where early investors are usually paid with money from later investors.
Picard has recovered about $9.82 billion for former Madoff customers, who he has estimated lost $17.5 billion of principal in a decades-long fraud uncovered in December 2008.
The trustee has also sued banks including JPMorgan Chase & Co, which was Madoff’s main bank, and Italy’s UniCredit SpA over their dealings with the swindler.
JPMorgan was dropped from the case after reaching a $325 million settlement with Picard in January, part of a $2.6 billion global resolution of federal and private claims.
Stanford’s estimated $7.2 billion fraud was based on the sale of bogus certificates of deposit issued by Antigua-based Stanford International Bank to customers who thought the CDs were safe. The Ponzi scheme was uncovered in February 2009.
Janvey won court approval for an initial $55 million distribution to CD investors in April 2013.
Madoff, 76, is serving a 150-year prison term after pleading guilty in March 2009. Stanford, 64, is serving a 110-year term following his jury conviction in March 2012.
The cases are Picard v. JPMorgan Chase & Co et al, U.S. Supreme Court, No. 13-448; and Janvey v. Alguire et al, U.S. Supreme Court, No. 13-913.