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Home / Case News / Madoff Investor Urges Court to Stay Trustee’s $2.8M Clawback Attempt

Madoff Investor Urges Court to Stay Trustee’s $2.8M Clawback Attempt

April 2, 2020, Southern District of New York – Bernie Madoff investor, James Greiff urged a New York bankruptcy court to stay an upcoming trial on whether the Madoff trustee can clawback $2.8 million that Grieff allegedly received from the convicted scammer.

The investor requested for a stay on the upcoming bankruptcy court clawback trial while he moves to have the case removed to the district court, arguing that the bankruptcy court does not have the constitutional authority to try the claims at issue.

Defendant James Greiff filed a motion in the court yesterday under Local Rule 9077-1 and Rule 5011(c) of the Federal Rules of Bankruptcy Procedure for the entry of an order scheduling an expedited hearing and staying further proceedings with respect to the claims asserted against the Defendant in the adversary proceeding pending a ruling by the United States District Court for the Southern District of New York on the Defendant’s motion to withdraw the reference of the adversary proceeding for trial by a jury. 

Citing the Supreme Court precedents, the investor stated that the bankruptcy court lacked constitutional authority to adjudicate a private right claim without the parties’ consent and that a fraudulent conveyance claim under Title 11 is not a matter of a “public right” for purposes of Article III.

Arguing that a defendant to such a claim is entitled to a jury trial under the Seventh Amendment, Grieff urged the Court to enter the order scheduling a hearing on an expedited basis and grant a stay of the trial pending a determination by the District Court on the withdrawal motion.

Following the Defendant’s motion, the Court has ordered the Trustee to show cause as to why the Court should not issue an order staying the scheduled trial pending the disposition of the Defendant’s motion to withdraw the reference. The hearing is scheduled for 18 March, 2020. Any responses or objections to the Defendant’s motion is due by 17 March 2020.

The case is (In re Bernard L. Madoff) Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC vs James Greiff, A.P. No.10-04357. Judge Stuart M. Bernstein is presiding over the Debtor’s bankruptcy cases.