Madoff Son's Widow Fights Picard Clawback Claims (Law360)

By Max Stendahl

The widow of Bernard L. Madoff's son Mark asked a New York bankruptcy court Wednesday to shield her from a clawback suit by the trustee liquidating the Ponzi schemer's collapsed firm.

The filing by Stephanie Mack assailed a bid by trustee Irving Picard to file an amended suit targeting her and several other members of Madoff's extended family. The most recent complaint seeks $226.4 million in alleged illegal transfers from Bernard L. Madoff Investment Securities LLC to Madoff's sons Mark and Andrew, his brother Peter, and Peter's daughter Shana.

The amended complaint would also name Mack, the estate of Mark Madoff, his ex-wife Susan Elkin and Andrew Madoff's wife Deborah. All four filed briefs Wednesday claim Picard waited too long to add them to the suit, which was first filed in October 2009.

The filings provided a fresh look into Madoff's family tree and the complications Picard has faced in mining it for false profits. In particular, the filings assailed Picard's claim that he intended to name the current and former spouses of Madoff's sons in the original complaint, but mistook their identities.

"The trustee made no such mistake," Mack said Wednesday. "To the contrary, it is apparent that the trustee deliberately elected to bring this proceeding solely against certain Madoff family members who had a role at BLMIS."

Mack was married to Mark Madoff from 2004 until his suicide in December 2010, according to Picard. The couple are the joint owners of a home in Nantucket, Mass., that was purchased using $6.6 million transferred from Madoff's firm to Mark Madoff's real estate attorney, Picard claims.

In order to sue Mack over the transfer, Picard would need to prove that she knew or should have known that he intended to name the couple in the original suit, rather than just Mark Madoff, she claims.

"Under these circumstances, the trustee cannot establish that the new claims against [Mack] relate back to the original claims against her deceased husband, and therefore, these claims are time barred," Mack's filing said.

The filings by Mark's estate, Elkin and Deborah Madoff advanced similar arguments against Picard's Dec. 23 motion.

Elkin, who was married to Mark from 1989 until they divorced in 2000, said Picard's "massive investigation" of the fraud would have made it impossible to mistake her identity.

"The trustee and his counsel knew long before the filing of the initial complaint that Ms. Elkin had been married to Mark Madoff, knew that her husband had supported her and knew that he had done so with earnings from BLMIS," Elkin said.

Picard spokeswoman Amanda Remus declined to comment Friday.

Picard's amended complaint would also name Scott Skoller, the former husband of Shana Madoff.

Madoff is currently serving a 150-year prison sentence for the fraud.

Mack is represented by Cooley LLP. Elkin is represented by Day Pitney LLP. Deborah Madoff is represented by Cohen & Gresser LLP. Mark Madoff's estate is represented by Paul Weiss Rifkind Wharton & Garrison LLP.

Picard is represented by Baker Hostetler.

The case is Picard v. Estate of Mark Madoff, case number 09-01503, in the U.S. Bankruptcy Court for the Southern District of New York.

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