Imagine facing the hassle of having to report everything you spend over $100 to a federal bankruptcy judge. That's exactly what Ruth Madoff will have to do based on an agreement she reached with the court appointed trustee.
This agreement is part of a lawsuit filed last week by trustee Irving Picard. Picard's lawsuit against Ruth Madoff seeks to recover $44 million on behalf of victims of the Bernard Madoff fraud. Ruth Madoff says she already signed away her rights to the property identified in this lawsuit. It seems that Picard thinks there are more funds hidden somewhere so he wants to monitor her spending.
Madoff signed away more than $80 million in assets and kept just $2.5 million in an agreement with federal prosecutors. Yet public outrage suggests that even this is too much, given that so many of Madoff victims were left with nothing.
In July federal investigators concluded that they had no physical evidence that Ruth Madoff was involved in the fraud. Unless some new evidence is found, she likely will not be charged with a crime.
Even though she won't be charged, her homes are being sold off to recover funds for victims. Ruth Madoff doesn't yet have a place to rent. She has not revealed with whom she is staying since she had to vacate her New York apartment. She did get her passport back.
Madoff's former real estate is valued at $22 million, including a $7.5 million Manhattan Upper East Side apartment at 133 East 64th Street. Many think it will be sold for less. The Madoffs also owned a four-bedroom house in Montauk that the Feds think is worth about $7 to $10 million. Bernie and Ruth paid $250,000 for it back in 1980.
The largest property to be put on sale is a 6,475 square foot waterfront house on a half-acre in Palm Beach. The Feds list its worth at $7.5 million, but with Florida property values hit hard it will probably sell for less.
Whatever Picard gets for these properties, it sill won't be anywhere near what is needed to pay back Madoff's victims. The next step for Picard is using clawback lawsuits to get money back from those who actually profited from Madoff's fraud.
Lita Epstein has written more than 25 books, including Reading Financial Reports for Dummies.
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