Trustee Sues Profitable Madoff Investors for $150 Million

By Evan Mix

Published on April 22, 2009

Irving Picard, the trustee appointed to recover funds for investors who lost money in Bernard Madoff's multibillion-dollar Ponzi scheme, has filed a lawsuit to recover $150 million from Madoff investors who successfully withdrew funds before the scheme collapsed. According to the lawsuit, these profits are fictional assets, and should therefore be returned according to US bankruptcy code.

For years, Madoff's Ponzi scheme allegedly lured investors by promising unusually high rates of returns. Funds from new investors were used to pay supposed investment dividends to existing investors, keeping the scheme afloat while Madoff and members of his family allegedly made off with huge amounts of investor money. American bankruptcy law allows Picard to recover the false dividends paid with other investors' money.

The lawsuit was filed against Virgin Islands-based investment company Vizcaya Partners Ltd. and affiliated bank Jacob Safra Ltd. Vizcaya Partners allegedly withdrew $150 million from Madoff's fund about six weeks before the scheme was exposed. It is one of many such lawsuits that could be filed as Picard works to recover the lost funds of Madoff investors.

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