Ruth Madoff Has $14 Million From Fraud In BNY, Trustee Says

Ruth Madoff’s account at Bank of New York Mellon Corp. (BK) received transfers of at least $14 million that the trustee liquidating her husband Bernard Madoff’s firm wants to “recapture,” according to court filings.

Trustee Irving Picard said last week he had asked the bank for Ruth and her husband’s monthly bank statements, canceled checks and other records from January 2002 through December 2008. Bank of New York had no objection to providing them, he said in the March 10 filing in U.S. Bankruptcy Court in Manhattan. Picard is seeking a total of $44.8 million from Ruth Madoff, according to court papers.

Money going into Ruth Madoff’s personal bank account came from the jailed fraudster’s companies, which received nothing in return, Picard said in previous filings. When the Ponzi scheme collapsed in 2008 the funds became the property of Madoff customers, he said in his 2009 lawsuit against Ruth Madoff.

She is due to respond to the suit by March 31.

Some transfers masqueraded as interest payments on loans made by Madoff companies, which should have gone to the businesses and not to the owner’s wife, Picard said. A $2.3 million deposit originating in the Madoff brokerage was used “for the purchase of a yacht for the personal enjoyment of Mrs. Madoff and her family,” Picard said.

Fraud Profit

Picard said in the 2009 suit he wanted to reclaim for investors Ruth Madoff’s $44.8 million profit from the fraud. In February, she was named in Picard’s $1 billion suit against the Mets baseball team owners. Ruth and her family invested $12 million of “other people’s money” in Sterling Equities Inc. entities, which Picard said he wants back.

The Madoffs, who often invited the families of Saul Katz and Fred Wilpon, partners in Sterling Equities, to family celebrations, cocktail parties and dinners, used funds from the Madoff brokerage for their own benefit in making investments in Sterling entities, Picard said in the Feb. 4 lawsuit.

Ruth Madoff’s lawyer, Peter Chavkin, didn’t immediately respond to an e-mail seeking comment.

U.S. marshals seized the $7 million Manhattan home Ruth Madoff shared with her husband in the year after the fraud was exposed in 2008. Marshals sold the Madoffs’ Montauk home for $9.4 million. Ruth’s 14-carat diamond earrings sold for $70,000 in a Manhattan auction, and her 1999 Mercedes Benz went for $30,000.

Volunteer Work

She lives at her brother-in-law Peter’s $4.5 million Palm Beach, Florida mansion and delivers meals to the homebound in a 1996 Infiniti, the New York Post reported last year.

Picard has sought a total of $198.7 million from Peter Madoff, Ruth’s sons Mark, who killed himself in December, and Andrew, and Bernard Madoff’s niece Shana Madoff Swanson, who all had jobs at the defunct firm.

Mark, 46, was Ruth Madoff’s older son. His suicide was at least the second in the case, after Thierry Magon de la Villehuchet, chief executive officer of Access International Advisors.

In all, Picard has filed more than 1,000 lawsuits seeking $100 billion from 4,000 defendants, partly to compensate investors in the Ponzi scheme who lost $20 billion in principal. The trustee will use any extra money he gets to pay creditors who provided services to Madoff’s firm, and to give investors some of the fake profit they thought they’d earned in the scheme, he said in a statement yesterday.