When Ruth Madoff recently agreed to a deal with prosecutors under which she would retain millions, we expressed outrage and opined on the possibility of a civil “clawback” lawsuit. It has now happened. Court-appointed trustee Irving Picard accuses Madoff of a “life of Splendor” funded by illegally gained funds from her imprisoned husband Bernard Madoff. Ruth was last seen cringing on to a fur coat as she was being thrown out of a Manhattan $7 million penthouse when it was seized by agents.
Bankrupted investors are understandable put out to see Ruth living as a millionaire in the aftermath of the conviction of her husband. She can keep $2.5 million under the criminal settlement.
Picard filed this complaint to seek the funds as a civil matter — not barred under the criminal settlement. He argues that “[f]or decades, Mrs. Madoff lived a life of splendor using the money of BLMIS’s customers. Regardless of whether or not Mrs. Madoff knew of the fraud her husband perpetrated at BLMIS … she received tens of millions of dollars from BLMIS for which BLMIS received no corresponding benefit or value and to which Mrs. Madoff had no good-faith basis to believe she was entitled.”
He adds some shocking figures from the last two years — during which the business was being investigated and then her husband prosecuted. Picard notes that Ruth personally made $23.7 million from the Ponzi-based business in the last two years and charged $1.1 million in personal expenses charged to her American Express card. He also claims that she spent 2.7 million in 2007 to pay for her yacht.
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