Irving Picard, the trustee overseeing the liquidation of Bernard L. Madoff Investment Securities ("BLMIS"), has agreed to dismiss several of the common law claims originally asserted against several feeder funds of Madoff's massive Ponzi scheme. These entities, collectively referred to as the "Maxam Funds", were formed by Sandra Manzke, who originally founded Tremont Capital, another large Madoff feeder fund that earlier reached a $1 billion settlement with Picard for its role in the scheme. Picard had filed suit against the Maxam Funds in June, seeking not only the avoidance of transfers under the Bankruptcy Code, but also damages under common law theories of unjust enrichment and constructive trust.
In light of United States District Judge Jed S. Rakoff's recent rulings dismissing Picard's attempt to assert common law claims against HSBC and Bank Austria, many entities facing similar suits sought the same relief. This included a motion to dismiss filed by the Maxam Funds. In a court filing this week, Picard ceded to the Maxam Funds and agreed to drop the common law claims, stating that "the parties wish to avoid the expense and time of additional resources in connection with defendants’ motion to dismiss the common law claims." However, in conjunction with his appeal of the decision to dismiss the common law claims against HSBC filed last week, Picard indicated he would renew the claims should he receive a favorable ruling.
A copy of the original Maxam Complaint is here.