New York (HedgeCo.Net) – The trustee in charge of recovering money for the victims of Bernard Madoff’s hedge fund Ponzi scheme aren’t allowed to track down the big banks who allegedly aided in the fraud, a federal appeals court has ruled.
Trustee Irving Picard had sought to recover “mega-billions” from the banks, the Am Law Litigation Daily reports, arguing that they had ignored red flags of Madoff’s fraud because they wanted to earn banking fees. But the New York-based 2nd U.S. Circuit Court of Appeals ruled on Thursday that Picard can’t sue because of the doctrine of in pari delicto, according to Litigation Daily, Reuters, the Associated Press and Bloomberg.
In pari delicto, Latin for “in equal fault” is a legal term used to indicate that two persons or entities are equally at fault. The phrase means, in essence, that since both parties are equally at fault, the court will not involve itself in resolving one side’s claim over the other, and whoever possesses whatever is in dispute may continue to do so in the absence of a superior claim.
The Litigation Daily says Picard was seeking to recover nearly $80 billion from the banks, while Reuters and Bloomberg put the figure at close to $30 billion. The ruling was upheld by two lower court judges.
Madoff’s hedge fund fraud holds the world record, with approximately $17.5 billion in losses. Five years of investigation has revealed that Madoff’s Ponzi scheme is unprecedented in its global reach.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership in HedgeCo.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!