Madoff Investors Brace for Lawsuits

The Wall Street Journal reports:

The court-appointed trustee recovering money for Bernard L. Madoff's victims is preparing a wave of new lawsuits seeking to wrest funds away from investors who also were duped by the Ponzi scheme.

In an interview, Irving Picard said he could wind up suing about half the estimated 2,000 individual investors he has called "net winners" from their dealings with Mr. Madoff. Such investors withdrew more from Mr. Madoff's firm than the amount of principal they invested.

"The people who made money, who got more, have made money at the expense of the people who didn't," said Mr. Picard, who has the power under federal bankruptcy provisions to pursue money withdrawn from Bernard L. Madoff Investment Securities LLC before it collapsed in December 2008 and redistribute the funds fairly among victims.

Mr. Picard must file any so-called clawback lawsuits by December, the two-year anniversary of Mr. Madoff's arrest and the filing of regulatory proceedings against him. "We're not going to wait until the last minute," Mr. Picard said.