Irving Picard, trustee for the victims of the Madoff fraud, has a new target – other Madoff clients.

Picard has filed lawsuits against hundreds of defendants saying they profited from Madoff's giant Ponzi scheme, withdrawing more than they invested, CNN reported. He's seeking damages on behalf of those who lost money on their investments.

Some of those he is suing had no idea Madoff was a fraud until he was arrested.

"You've got people who've done nothing wrong who took out the money they thought was theirs, and now you've got the trustee saying that money needs go to the victims," said Ilene Kent, coordinator of a victims' group called the Network for Investor Action and Protection.

Kent, whose parents are among the investors being sued, said the suits are "an awful, awful travesty to the victims of this crime."

Madoff ran the biggest Ponzi scheme in U.S. history, defrauding billions of dollars from wealthy individuals and charities.

For years, Madoff cultivated the image of an enormously successful money manager to the rich and famous. Among his victims were Dreamworks CEO Jeff Katzenberg and Fred Wilpon, co-owner of the New York Mets, according to Business Insider.

Picard has been entrusted with recovering money for the victims. In recent weeks, he has filed lawsuits against banks including HSBC (HBC) and UBS (UBS) saying they were complicit in the fraud.

Picard's office issued a statement saying that lawsuits are being filed "against a number of parties who withdrew more than they deposited with Bernard L. Madoff Investment Securities."

The lawsuits against Madoff investors are seeking damages from people of limited means who had no ill intent, Kent said.

"The trustee has portrayed himself as a Robin Hood, taking for the rich and giving to the poor," Kent said, according to CNN. "But in reality he's suing innocent investors."

"These are people who have lost everything and are worried about whether they're going to lose their homes," Kent said.

A Ponzi scheme works by taking money from individuals to make investments. Money from new clients is used to pay old ones, giving the appearance that the investor is turning a profit.

Madoff is currently serving a 150-year prison sentence in North Carolina.

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Mr. Collins, You might want to update your article. As of this afternoon, it was revealed that Fred Wilpon and his companies are among those who withdrew more from Madoff than they invested, and are negotiating the "clawback" with the trustee. You can take him off the "victims" list.

December 07 2010 at 5:55 PM Report abuse +1 rate up rate down Reply