Madoff Feeder Fund Investors Can't Recoup Cash: Judge

Law360, New York (January 5, 2012, 1:25 PM EST) -- Investors in funds that helped feed Bernard Madoff's massive Ponzi scheme are not entitled to money earmarked for the imprisoned fraudster's victims, a New York federal judge ruled Thursday, affirming a bankruptcy judge's decision.

Because the investors aren't “customers” under the Securities Investor Protection Act, which empowers Bernard L. Madoff Securities Investment LLC liquidation trustee Irving Picard to recover money on behalf of the scheme's victims, the bankruptcy judge was right in dismissing their claims, U.S. District Judge Denise Cote said.

“In light of SIPA as...
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