Bernard Madoff's Family Hit With $255.3 Million Lawsuit

Madoffs Hit With Huge Lawsuit Over Claims They Should Have Caught Ponzi Scheme

May 7 (Reuters) - Members of Bernard Madoff's family were hit with an
expanded $255.3 million lawsuit, saying they should have caught the
patriarch's Ponzi scheme and must return the benefits to victims.

Irving Picard, the trustee seeking money for Madoff's victims, said
family members who worked at Bernard L. Madoff Investment Securities
LLC were "completely derelict" in ensuring that the investment firm's
operations were legal.

The lawsuit adds three former spouses of Madoff's sons as defendants.
Picard said they were unjustly enriched by the scheme through their
marriages, and that "equity and good conscience" required that they
forfeit money to victims, whom he believes are owed $20 billion

Picard filed his complaint late Friday with the U.S. bankruptcy court
in Manhattan, one month after winning court approval to add the
spouses. The case has grown from $226.4 million in November, and
$198.7 million in October 2009.

The family defendants are Madoff's brother Peter, who was the Madoff
firm's chief compliance officer; son Andrew, who was co-director of
trading; the estate of son Mark, who was also co-director of trading
and committed suicide in December 2010; and niece Shana, a compliance

The spouse defendants are Deborah Madoff, who began divorce
proceedings against Andrew Madoff in 2008; Stephanie Mack, Mark
Madoff's widow; and Susan Elkin, who divorced Mark Madoff in 2000.

Picard now seeks $90.4 million from Peter Madoff, $81.3 million from
Mark Madoff's estate, $73.8 million from Andrew Madoff, $15.3 million
from Shana Madoff, $27.7 million from Deborah Madoff, $27.5 million
from Mack, and $2.4 million from Elkin. Some claims overlap.

Like many others sued by Picard, the defendants have said the trustee
waited too long to bring some of his claims. The family defendants
have long said their activities at Madoff's firm were legitimate, and
that Bernard Madoff betrayed them.

Bernard Madoff was arrested on Dec. 11, 2008, and pleaded guilty three
months later. Now 74, he is serving a 150-year term in a North
Carolina prison.

Litigation has prevented Picard from distributing much of the $9.1
billion he has recovered for victims. Just $1.1 billion has been
distributed, including $791 million from the Securities Investor
Protection Corp, Picard said in a April 25 filing.

The trustee is appealing several court decisions dismissing many of
his biggest claims, largely against banks that dealt with Bernard
Madoff. Through March 31, the cost of winding down Madoff's firm
totaled $553.7 million, including $272.8 million of fees and expenses
for Picard and his law firm.

The case is Picard v. Madoff et al, U.S. Bankruptcy Court, Southern
District of New York, No. 09-ap-01503.

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