Late on Friday January 23rd 2009 Reuters reports that at least two customers, who deposited their funds with Bernie Madoff just days prior to his fraud admission, will have those funds segregated from the other monies recovered for distribution to other investors. These funds will remain segregated until these recent investors' judicial claims to be treated differently are resolved.
For those who do not recall, New York fuel company businessman Martin Rosenman wired $10 million on December 5th to JP Morgan Chase for the account of Madoff's firm. This was six days before Bernie Madoff was arrested by the FBI. Mr. Rosenman claims to have been told directly by Bernie Madoff that he could wire the funds early, but his funds would not be invested until the start of the next month when Madoff's investment fund next would be open for investments. Mr. Rosenman apparently received a fax back from some member of Madoff's investment management unit acknowledging receipt of the wire transfer.
Miami business man Stanley Kriegler through his firm Hadleigh Holdings LLC appears to have had a similar experience. He deposited $1 million of funds in a Madoff firm account on December 8th at the same bank. He too apparently received receipt acknowledging that the transfer had been completed.
Both of these Madoff investors are represented by lawyer Howard Kleinhendler. In lawsuits respectively filed on January 1st and 7th against the trustee, lawyer Irving Picard, hired by SIPC and JP Morgan Bank, Mr. Klienhendler argued that these monies could be "traced because it was deposited soon before Madoff's assets were frozen." The cases are Rosenman Family LLC v Picard et al 09-01000 in U.S. Bankruptcy Court for the Southern District of New York (Manhattan) and Hadleigh Holdings LLC v Picard et al 09-01005.
"To the extent funds are transferred from the Chase Account to the Trustee, the Trustee shall withhold from distribution the amount of $10,000,000 until the merits of the (case) are adjudicated," the order in the Rosenman case entered Jan. 20 in U.S. Bankruptcy Court in New York said. The same order was also applied to Hadleigh's $1 million, according to court documents.
Earlier on Friday January 23rd, Toomre Capital Markets LLC ("TCM") posted the article Investigators Work Backward On Madoff Fraud. This article discussed how investigators have been forced to work backwards to figure out who else could have assisted Bernie Madoff, who rather implausibly claims to have committed this fraud alone. Two of the figures that investigators have been focusing on include JoAnn "Jodi" Crupi and Frank DiPascali.
Care to guess the names of the Madoff firm employees that show up on the documentation filed with the Rosenman and Hadleigh Holdings lawsuits? Reader comments and thoughts are welcome.