Michael Kline writes:
On June 22, 2012, Bill Rochelle reported in Bloomberg BusinessWeek that Madoff Trustee Irving Picard had filed a mass appeal asking the U.S. Court of Appeals for the Second Circuit “to revive about $10 billion in lawsuits against 635 customers that have been or will be dismissed by U.S. District Judge Jed Rakoff.” Rochelle quoted Judge Rakoff as allowing the mass appeal to “avoid protracted, expensive and potentially duplicative litigation proceedings and facilitate the prompt resolution of the case.” The appeal by the Madoff Trustee will test the validity of a number of Judge Rakoff’s earlier orders and opinions in the now-settled case among Picard and the numerous defendants, constituting the Wilpon-Katz-Mets individual, business, family trust and charitable interests (collectively, the “Wilpons”).
This blog series has been covering for several years the often acrimonious proceedings between Picard and the Wilpons that were finally settled on May 31, and voluntarily dismissed on June 6, 2012. Installment 74 highlighted the highly positive results for the Wilpons in the settlement, including the Wilpons’ ability to reduce their aggregate deferred settlement payments to Picard of $162 million by offsetting the share of Picard recoveries that will be available to some of the Wilpons based upon $178 million of their claims which Picard has allowed. Now the Wilpons are cheering Picard from the bleachers to recover every dollar that he can.
According to the Rochelle article, the earlier rulings of Judge Rakoff that Picard is seeking to overturn include the following:
(1) a limitation by Judge Rakoff to two years, rather than six years, for the period during which Picard can seek to recover “fictitious profits” from Madoff investors (the $162 million settlement amount between the Wilpons and Picard actually covered six years of alleged fictitious profits);
(2) denial by Judge Rakoff of recovery by Picard of “preferences” in bankruptcy received by certain Madoff investors within 90 days prior to the filing of the bankruptcy proceedings; and
(3) the assumption by Judge Rakoff of jurisdiction over the multitude of Madoff cases rather than leaving them to the bankruptcy court to decide.
Picard will now be playing on a new ball field in the Second Circuit Court of Appeals while the Wilpons are happy to be fans vigorously encouraging him all the way.
(Michael J. Kline, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm’s Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)
[To be continued in Installment 80]