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Saturday, April 4, 2009

Madoff's Brother Gets Some Money, and Lesson, from Future Attorney

Madoff's Brother Gets Permission To Pay Living Expenses, Legal Fees
The New York Law Journal by Vesselin Mitev - April 06, 2009

A Long Island judge has thawed a freeze of Peter B. Madoff's assets enough for him to pay household bills and the attorneys defending him from accusations of complicity with the massive Ponzi scheme orchestrated by his brother, Bernard L. Madoff. Supreme Court Justice Stephen A. Bucaria on Friday accepted a stipulation modifying the temporary freeze on the assets he imposed last week on Peter Madoff, of Old Westbury. The agreement will allow him to spend $10,000 a month for housing, food, transportation and other "necessary" living expenses.  In addition, Mr. Madoff can tap his assets to pay "legitimate, necessary and reasonable expenses and fees" to attorneys representing him in the ongoing legal fallout from his brother's Ponzi scheme. An amount was not specified. Peter Madoff is being sued by Andrew Samuels, a Brooklyn Law School student who claims his $500,000 trust fund was drained to pay "fictitious returns" to Bernard Madoff's investors (NYLJ, March 26).  Peter Madoff, the senior managing director and chief compliance officer for his brother's investment firm, served as sole trustee of the fund for Mr. Samuels and his sister from 2003 to 2008.

According to the complaint in Samuels v. Madoff, 09-5534, Peter Madoff had "full knowledge that it was a fraudulent Ponzi-scheme and nothing more than an unprecedented fraud." His attorneys have denied any wrongdoing. Lawyers for Mr. Samuels, who had requested the asset freeze, negotiated a stipulation to modify the freeze with Mr. Madoff's attorneys before Friday's proceeding. The stipulation "provides some security for a potential recovery and an ongoing ability for Mr. Madoff and his family to function in society," John Spellman, of Spellman Rice Schure Gibbons McDonough & Polizzi, one of his attorneys, told the court.

Steven R. Schlesinger, who represents Mr. Samuels and his family, said the intent of the stipulation was to mirror a voluntary confidential agreement executed between Peter Madoff and the U.S. Justice Department in December 2008, in which he agreed not to dispose of personal assets and limit his spending.  Friday's hearing got off to a slow start, with a skeptical Justice Bucaria initially refusing to approve the stipulation, as he had not been provided the terms of the agreement.  The document "makes reference to an agreement that I know nothing about . . . most importantly, it does not articulate what the court will or will not need to do," Justice Bucaria told the parties, holding up the two-page stipulation. "I certainly cannot ratify and sign on to an agreement I haven't read." "I understand Peter Madoff's reluctance to disclose to everyone in the world what his assets were and what they are," Mr. Schlesinger said, asking the court to consider an amended stipulation that would include similar terms to the Justice Department agreement.

Brief Appearances

After further discussion, Justice Bucaria adjourned the hearing for a five-minute break to allow both sides to hammer out an agreement in acceptable form. Forty-five minutes later, the judge retook the bench, joking that, "You know now what the legal definition of five minutes is." Mr. Madoff, who had been absent for the first part of the proceeding, then entered the courtroom dressed in a dark brown suit, brown-and-white striped tie and black square glasses.  Flanked by Charles T. Spada, another one of Mr. Madoff's lawyers, Mr. Schlesinger then read into the record the agreement capping Mr. Madoff's expenditures at $10,000 per month. Mr. Spada, of Lankler Siffert & Wohl in Manhattan, made no objection, only saying, "My client's here, and that's acceptable to us." During the entire process, Mr. Madoff stared directly at the pair but showed no emotion. He took the stand for only a minute "Do you agree to abide by the terms of [this] agreement?" Justice Bucaria asked him. "Yes," replied a nodding Mr. Madoff. When he left the courtroom, Mr. Madoff looked straight ahead without acknowledging the parents of Mr. Samuels, who were sitting in the audience. Bernard Madoff was a close friend of Mr. Samuels' grandfather; he and his wife provided $40,000 in seed money for the trust. Mr. Madoff did not make any comment as he left the courthouse, surrounded by a phalanx of attorneys, but his planned exit hit an unexpected glitch when the procession mistakenly turned into a podium set up for a post-hearing press conference and had to turn back before entering a waiting car.

Mr. Samuels, 22, who skipped a constitutional law class to attend the hearing, also took the stand briefly to state that he was satisfied with the process and accepted the agreement.  Outside of court, Mr. Samuels said he was "devastated and shocked" to learn of the Ponzi scheme and hoped that there would be money left over to recover.  "Personally, obviously I'd like to be reimbursed," he said.  His father, Howard Samuels, a Central Islip attorney, said that he was proud of his son and called the experience a valuable one for a first-year law student.  Asked if he had any contact with Peter Madoff since news of the investment fraud surfaced, Howard Samuels had some pointed words.  "I didn't speak with him, and no he didn't apologize - he's either a crook or an idiot," he said. The extent of Peter Madoff's assets is unknown, but Mr. Schlesinger, of Garden City-based Jaspan Schlesinger, said outside of court that the modification gives his client a first shot at recovering any assets that may be left over.  To his knowledge, Mr. Madoff's Old Westbury home is worth between $3 million and $5 million and has no mortgage. He added that Justice Bucaria's modification puts his client "in a position of uniqueness" to recover money that may otherwise be seized by the government.

As for Mr. Madoff, "he can now afford that MTA card," Mr. Schlesinger said, in a parting shot referring to a comment made by Mr. Spada that his client could not afford a subway ride under the previous terms of the freeze.  Earlier in the week, Mr. Spada had told the Appellate Division, Second Department, that his client could not afford a cup of coffee. In an interview, Mr. Spellman said his client ran the "legitimate and profitable end of the business," citing Bernard L. Madoff's allocution at his March 12 guilty plea (NYLJ, March 13).  "Our position is, these are separate people and separate businesses," said Mr. Spellman, adding that his client has not been criminally charged with anything.  The civil suit resumes May 8 before Justice Bucaria.  Meanwhile, Bernard Madoff has pleaded guilty and is set to be sentenced June 16. He faces a maximum of 20 years in prison on each of the six top charges and will most likely spend the rest of his life behind bars.  Vesselin.Mitev@incisivemedia.com

11 comments:

Madoff victim said...

ANDREW SAMUELS FOR ATTORNEY GENERAL, this guy gets the job done and he's not even out of law school!!!!!!!!!!!! Peter Madoff belongs in jail with his brother Bernie!!!!!!!!!!

----- Jennifer ----- said...

i like your blog

Anonymous said...

anyone know what is up with this DOJ confidential agreement? especially in light of the allegations in the prior recent article about the cover up for major politicians? this looks bad on the surface for sure and why was this in mineola state court?

Anonymous said...

Look to a certain US Senator who has a very real vested interest in this matter

Anonymous said...

to the above...

Please ellaborate..

My estranged spouse had an interesting friend/business associate.. Part of our case managed its way from Suffolk to Nassau and then after some finagle.. before Judge Bucaria..

Anonymous said...

so would it be a smart guess to assume that it is not a us senator mentioned above who just got appointed?

which would leave chuck as the person of the hour?

Anonymous said...

I woulda thought D'Amato in mine...

Maybe Bucaria is the chosen for influence???

Anonymous said...

or it could have just been the DOJ since family members were already cooperating with the FED...

Anonymous said...

oh i would have thought d'amato and schumer cross over dealings going on to keep what was built together? still odd timing for schumer to have been meeting with bruno in saratoga track when schumer had so much say over nomination of the us attorney investigating bruno to become a judge?

so is it d'amato or schumer? sure happened in d'amato territory for sure.

Anonymous said...

anyone know why 2 technology companies based out of california would file against each other in the northern district of ny years ago? i mean, southern district is easy, wall street is there. but why northern district?

funny, as case was filed with same fed judge that made room during bush tenure for suddaby to leave the bruno investigation and become judge? that would have been lawrence kahn.

strange too as case appears to have no attorneys names or documents available and one of the names of the companies is similar to that company mentioned in the bruno indictment, microadvantage?

anyone know what is up with them and silicon graphics?

Anonymous said...

Great post. Can’t wait to read the next ones :)

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