The Real Deal New York

Madoff sons fashioned fake loans for NYC real estate buys: suit

Suit says father's firm operated as a family piggy bank
July 15, 2014 04:55PM

An amended lawsuit against Ponzi schemer Bernie Madoff’s sons alleges the pair diverted tens of millions from their father’s firm to engineer fake loans they then used to buy Manhattan real estate.

The suit, filed in U.S. Bankruptcy Court in Manhattan and brought by Irving Picard, who is liquidating Bernard L. Madoff Investment Securities, says the activities of brothers Andrew and Mark reflected their “sense of entitlement,” according to Reuters. Picard also accused the two Madoff sons of deleting emails that linked them to their father’s Ponzi scheme during a 2005 U.S. Securities and Exchange Commission investigation. The senior Madoff’s firm, the suit says, virtually operated as a family piggy bank.

Picard aims to retrieve $153.3 million from Andrew Madoff and Mark Madoff’s estate, as well as Mark’s widow, Stephanie Mack.

Attorney Martin Flumenbaum, who represents Andrew Madoff and Mark Madoff’s estate, told Reuters the new allegations are “unfounded” and said neither son “knew of, or knowingly participated in their father’s criminal conduct.”

“The trustee has forgotten that it was Andrew and Mark who turned their father in to the authorities,” he added. [Reuters]Julie Strickland