MANHATTAN (CN) – One of the “net winners” in Bernard Madoff’s Ponzi scheme cannot intervene in the $7.2 billion forfeiture order against the estate of late investor Jeffry Picower, a federal judge ruled.
Adele Fox, who withdrew more money from Madoff’s firm than she deposited, argued that the forfeiture plan was unfair because “net losers” would get first crack at the funds, leaving the scraps, if any remain, for the “net winners.”
Fox’s lawyer told Courthouse News that he was “very disappointed” with the decision and has not decided whether to appeal.
Federal prosecutors announced in December that Picower’s estate returned “every penny” that he made on Madoff’s “deplorable” fraud, representing the largest single forfeiture in U.S. history.
The Bankruptcy Court approved the plan set by Irving Picard, Madoff’s trustee, to give “net losers” first access to Picower’s forfeiture.
Fox, an 86-year old retired New York City school secretary, said she invested her life savings with Madoff, and counts herself as a victim even though she was a “net winner” in the eyes of Picard and the government.
Her attorney, James Beasley Jr., echoed that sentiment in a phone interview. “As soon as these so-called ‘net winners’ put their money into these accounts, it was stolen,” Beasley said, adding that “they paid taxes on illusory profits.”
Fox filed a class action lawsuit on behalf of the “net winners” against Picower in Florida, alleging that he gained the $7.2 billion as one of Madoff’s co-conspirators. The bankruptcy court subsequently enjoined this action.
Picower was reportedly found dead in a swimming pool in Palm Beach, Fla., in 2009.
Barbara Picower, his widow, released a statement at the time of the forfeiture, saying she was “absolutely confident” that her husband played no role in the scheme.
At the December press conference, Manhattan U.S. Attorney Preet Bharara declined to answer a reporter’s question about whether Picower cleared his name of complicity in the scheme.
Fox filed a motion to intervene in Picower’s forfeiture in January, saying that Picard has denied most of the victims’ claims.
In a memorandum filed months later, prosecutors replied, “[T]he Government is highly skeptical of Fox’s claim that, as a ‘net winner,’ she is a victim.”
In a terse five-page ruling, U.S. District Judge Thomas Griesa said Fox’s victimhood status was “too remote” for her to intervene.
“For many reasons, Fox’s status as a victim of Madoff’s fraud is too remote to create the interest necessary to intervene,” Griesa wrote. “Perhaps the most basic reason is that this is a forfeiture action and victimhood does not create an interest in forfeited property as there is no requirement that forfeited property be given to victims. … Thus, Fox has, at most, a contingent interest in forfeited funds, which is an insufficient interest on which to grant intervention as a matter of right.”
The judge wrote that that the “proper avenue” for Fox to pursue her claims would be through her pending appeal of the bankruptcy court’s decision to back Picard’s plan.
Beasley, Fox’s attorney, said he planned to do just that.
Though he has not decided whether to appeal Griesa’s ruling, he said Judge Griesa was “completely incorrect” in finding that “all of the forfeited funds will be used to compensate victims of Madoff’s fraud.”
A spokesman for Irving Picard did not immediately respond to an email request for comment.