Madoff Friend Pulled Down Big Profits

Based on court papers, Irving Picard, the court-appointed trustee liquidating Bernard Madoff’s assets, is focusing on the 96-year-old Carl Shapiro, reports Newsday.

Shapiro a philanthropist known for founding Kay Windsor, a women’s apparel firm, in 1939, is said to be almost blind in one eye, has problems in his other eye, is suffering from cardiac problems, and has been diagnosed with hypothyroidism, according to Newsday, citing court papers. Shapiro is also widely known for his friendship with the disgraced financier and is one of Madoff’s first investors, reported Newsday. Carl and Ruth Shapiro run a nonprofit called the Carl and Ruth Shapiro Family Foundation.

“He is now fragile,” according to a physician statement filed in Manhattan’s U.S. Bankruptcy Court, quoted Newsday. Shapiro travels between Boston, Massachusetts and Palm Beach, Florida and is embroiled in legal issues to retain his vast fortune, said Newsday. According to papers filed by Picard, Shapiro and his family received more than $1 billion in false profits from Madoff, reported Newsday.

Carl is said to have made an enormous profit, mostly because of how Madoff handled his finances; however, the Shapiro’s claim they lost about $545 million to Madoff with $145 million from the foundation alone, said, previously. If it turns out that the Shapiro’s withdrew more than they invested, they could be subject to clawback. Shapiro remains under ongoing federal criminal investigation due to the Madoff Ponzi fraud, now at an estimated $21-billion, said Newsday

In New York state, clawback enables court trustees to seek recovery of funds from withdrawals made as far back as six years, said USA Today previously, which explained that the thinking behind the law is that those withdrawals are part of the scam and should be sought for proportional distribution back to the victims.

Although Picard continues to negotiate with Shapiro’s attorneys, talks are not going well and a lawsuit could be filed, said Newsday. Shapiro invested with Madoff as far back as 1960; the Shapiro family and foundation allegedly dumped hundreds of millions of dollars into Madoff’s now-defunct firm, Bernard L. Madoff Investment Securities, reported Newsday. The Securities and Exchange Commission sued Shapiro’s son-in-law, Robert M. Jaffee (65) for allegedly receiving fees for driving investors to Madoff’s agency.

Jaffe and the Shapiro’s claim they were unaware of the scam; a family spokesman announced that Shapiro “was victimized by this fraud,” quoted Newsday. Shapiro’s attorneys cite his failing health as a reason to limit testimony and conduct the deposition next month at the tony Breakers Hotel in Palm Beach, according to Newsday.

Picard has, so far, located $1.4 billion and continues to work on additional lawsuits for return of funds likely made by other investors who were unaware of the scam. Picard noted that his office would not pursue those at risk of losing their homes or suffering from serious medical conditions, reported, previously. To date, more than $534 million has been paid out 1,368 victims of the massive Bernard Madoff Ponzi scheme. Those funds, said in a prior report, were paid out of a national fund. The fund insures against failed brokerage firms, said Picard.

Madoff is spending 150 years in prison for orchestrating the massive Ponzi scam.

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