Manhattan, NY – A federal bankruptcy judge has ruled that Bernard Madoff can be questioned by lawyers for some former customers who lost money when the imprisoned swindler’s firm collapsed in December 2008, a Monday court filing shows.
U.S. Bankruptcy Judge Stuart Bernstein in Manhattan authorized a deposition of Madoff at a March 23 hearing, and Monday’s filing proposed a formal order that it be scheduled. A hearing on that request is scheduled for Wednesday.
Questions would be limited to the meaning of more than 91,000 transactions recorded as “profit withdrawal” on the books of the former Bernard L. Madoff Investment Securities LLC, court papers showed.
Some former customers believe that Irving Picard, the court-appointed trustee liquidating Madoff’s firm, has undervalued their claims.
They have argued that only Madoff would know how to properly account for profit withdrawals, and that what he might say could strengthen their hand in litigation.
Many of these customers have challenged Picard’s methods in court, and also pursued litigation targeting alleged “enablers” who aided Madoff’s Ponzi scheme, including lawsuits that seek billions of dollars from the estate of Florida investor Jeffry Picower.
Picard, who has recouped about $11.1 billion for Madoff’s victims over the last seven years, has argued that the competing litigation interferes with his own, and opposed letting Madoff be questioned.
Picower’s widow also opposed a deposition.
But while expressing concern that a deposition “will not be limited” to the profit withdrawal issue, Bernstein said “the information is certainly relevant,” according to a transcript of the March 23 hearing.
Helen Chaitman, a lawyer for former Madoff customers who sought the deposition, declined to comment. A spokeswoman for Picard also declined to comment.
Any deposition transcript would remain confidential for at least 60 days. Madoff, 77, would be deposed at the North Carolina prison where he is serving a 150-year sentence.
The case is Securities Investor Protection Corp v. Bernard L. Madoff Investment Securities LLC, U.S. Bankruptcy Court, Southern District of New York, No. 08-01789.