Convicted conman Bernard Madoff turned his investment firm into his “personal piggy bank,” using tens of millions of dollars in client funds to cover costs for employees and family members, court papers say.
Madoff used money from his firm, Bernard L. Madoff Investment Securities LLC, to pay loans, satisfy capital calls, fund real estate purchases and hire employees for his children, wife, brother and workers, according to a filing by Irving Picard, the trustee liquidating Madoff Securities.
“He essentially used BLMIS as his “personal piggy bank,” having BLMIS pay for his lavish lifestyle and that of his family,” David Sheehan, a lawyer for Picard, wrote in a legal brief filed in U.S. Bankruptcy Court in New York. “Madoff used BLMIS to siphon funds which were, in reality, other people’s money, for his personal use and the benefit of his inner circle. Plain and simple, he stole it.”
The filing is part of a request by Picard to consolidate the bankruptcy proceedings of the business with the bankruptcy of Madoff’s estate. Picard cited Madoff’s expenses as a basis to join the cases, saying spending by Madoff and his business were so entangled that they can’t be unraveled.
Picard also said he’s seeking the return of “billions of dollars” from so-called feeder funds that funneled money to Madoff. Last month, he told 223 other investors to return as much as $735 million or face legal action. He’s already launched three cases seeking to reverse transfer of funds out of Madoff firm accounts, he said.
According to the filing, Madoff Securities loaned $9 million to Madoff’s brother Peter; gave $5.5 million to Madoff Technologies LLC, in which family members owned a majority stake; and provided a $1.7 million capital contribution to Madoff Energy Holdings, which was owned by his sons Mark and Andrew and niece Shana.
Madoff Securities used $4.5 million in client money to satisfy capital calls on behalf of wife Ruth to funds in which she invested; paid $11.5 million for two yachts his family used; and sent $4.4 million to law firms on behalf of Andrew Madoff and another $6.4 million to law firms on behalf of Mark Madoff, the filing says. Money for his children were used for real- estate purchases, the filing says.
“BLMIS received no apparent benefit” for the funds, Michael Slattery, a Picard investigator, wrote in an affidavit that was part of the court filing.