May 4, 2019, Southern District of New York – Irving H. Picard as a trustee for the substantively consolidated liquidation of the business of Bernard L. Madoff Investment Securities LLC (“BLMIS”) and the Chapter 7 estate of Bernard L. Madoff (“Madoff”) under the Securities Investor Protection Act recently filed a motion seeking entry of an order, pursuant to section 105(a) of the United States Bankruptcy Code, 11 USC. §§ 101 et seq. and Rules 2002 and 9019 of the Federal Rules of Bankruptcy Procedure, approving a settlement by and between the trustee and the wife of Bernie Madoff, Ruth Madoff.
According to the terms of the settlement agreement, Ruth Madoff has agreed to pay $594,000 and surrender her remaining assets when she dies to settle claims by the court-appointed trustee liquidating her husband’s firm. To be precise, Ruth Madoff, 77, who was never charged in connection with her husband’s Ponzi scheme, will now pay $250,000 in cash and give up $344,000 of trusts for two grandchildren.
The settlement was agreed upon after the trustee brought the adversary proceeding against Ruth Madoff asserting claims for the return of fraudulent transfers and other benefits received from BLMIS over $44 million, as well as claims for unjust enrichment and conversion. Following the trustee’s investigation and multiple settlement negotiations during which counsel for Ruth Madoff raised various defenses to the trustee’s claims, the parties finally settled. According to the settlement terms, Mrs. Madoff will turn over to the trustee virtually all of her remaining assets, subject to allowances for her to pay reasonable living and medical care expenses incurred during her remaining lifetime. Ruth Madoff will make a significant upfront payment of $250,000 in cash to the trustee.
Ruth Madoff also agreed to cooperate with the trustee regarding the trustee’s pending litigations, and she expressed her appreciation for all of the efforts taken by the trustee to recover monies for the victims of Bernard Madoff’s criminal conduct.This settlement will close an important chapter in the trustee’s investigation of the BLMIS fraud and will benefit the customers of BLMIS with allowed claims.
Previously, in June 2009, shortly before Bernard Madoff was sentenced to 150 years in prison, prosecutors had reached an agreement with the Madoffs allowing federal marshals to sell their assets while permitting Ruth Madoff to keep $2.5 million.