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Friday
Aug122011

Madoff Trustee Seeks $300 Million From Abu Dhabi Investment Arm

Irving Picard, the court-appointed trustee tasked with recovering assets for defrauded investors of Bernard Madoff's massive Ponzi scheme, filed suit against the entity that acts as an investment arm of the Emirate of Abu Dhabi.  According to the complaint, the Abu Dhabi Investment Authority ("ADAI") withdrew approximately $300 million from investments with a Madoff feeder fund, Fairfield Sentry Limited, that are avoidable under New York and federal bankruptcy law.  

The lawsuit is the latest strategy taken by Picard, who, in his earlier settlement with Fairfield Sentry Limited, had negotiated for the right to 'clawback' profits from investors who had placed funds with Madoff indirectly through Fairfield's family of feeder funds.  At issue are so-called "subsequent transfers" made from Fairfield to ADIA.  Picard alleges that, of the over $3 billon withdrawn from Madoff's broker-dealer by Fairfield, approximately $300 million was subsequently transferred for the benefit of ADIA.  Picard is proceeding under Section 550 of the Bankruptcy Code, which allows a trustee to recover an avoidable transfer from the initial transferee or any immediate transferee of such initial transferee.  

Picard has filed more than 1,000 lawsuits seeking funds for Madoff victims, which have resulted in a recovery of over $10 billion to date.  Investors in Madoff's scheme are estimated to have lost $17.3 billion in principal.

A copy of the ADIA Complaint is here.

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