Madoff’s brother, sons seek dismissal of complaints in NY court alleging they were in on fraud

Madoff family challenges NY trustee claims

NEW YORK — Members of Bernard Madoff’s family want civil complaints alleging they were in on the disgraced financier’s massive securities fraud thrown out.

The accusation by a trustee liquidating Madoff’s assets “is a sensationalistic attempt to lump together members of the Madoff family and create liability by association,” attorneys for brother Peter Madoff wrote in papers filed late Monday in federal bankruptcy court in Manhattan.

Lawyers for the trustee, Irving Picard, declined comment on Tuesday.

The 71-year-old Madoff is serving a 150-year prison term after admitting that his secretive investment advisory service at Bernard L. Madoff Investment Securities was a front for a multibillion dollar Ponzi scheme that spanned decades. He never bought any securities, instead using new investments to pay returns to existing clients.

The trustee has alleged it would have been impossible for them not to know about a scheme that enriched the family, and has demanded they return ill-gotten gains to burned investors.

Madoff, his brother and sons Mark and Andrew have all insisted the three were purposely left in the dark. While the FBI says its investigation is ongoing, none of the family members have been charged with any crimes.

The motions to dismiss the trustees’ complaints portray the brother and sons — who ran a separate market-making and proprietary-trading business they insist was legitimate — as victims of the scheme. They say Peter Madoff was an honest businessman who was surprised and devastated to learn about his brother’s “clandestine and highly complex” fraud.

“Peter Madoff is not Bernard Madoff,” the lawyers wrote.

The case, they added, “has left Peter Madoff mired in litigation, and has devastated his family emotionally and financially.”

The court papers credit the sons with contacting “authorities within hours of learning of their father’s betrayal of their trust (and that of his investors).”

Madoff was arrested the following morning on Dec. 10, 2008, “before he could further dispose of his investors’ assets,” the papers say. “Indeed, it was later revealed that there were $173 million of checks to investors sitting in Madoff’s drawer, additional customer funds that would have — but for Mark and Andrew’s timely action — been dissipated.”

A hearing was set for March 31.