In the 1980s stock trader Martin Joel worked in Bernard Madoff's office. Joel not only invested with Madoff's company but also made the Wall Street executive the executor of his estate. Joel's kids even baby-sat for Madoff's toddlers.
Joel died in 2003 and didn't live to see how Madoff betrayed him and everyone else through an estimated $20 billion Ponzi scheme in December 2008.
Now, Joel's heirs are among a number of Long Islanders being sued for millions of dollars, as the repercussions from Wall Street's biggest scam continue to spread. In a flurry of activity last week, Irving Picard, the trustee in the Madoff case, filed dozens of clawback lawsuits in an effort to take back money he alleges were phantom profits for investors. A number of cases involve extended relatives of Madoff and his wife, Ruth. More suits, numbering in the hundreds, are expected to be filed this week in Manhattan federal bankruptcy court.
Among those sued for a combined total of $9.6 million were Joel's daughter, Patricia Samuels, 59, and her attorney husband, Howard, 62, of Dix Hills, as well as their son Andrew, 24, also of Dix Hills. Joel's widow Sylvia, of Scarsdale, was also named as a defendant as were a few other relatives.
In a complaint filed with the bankruptcy court, Picard alleged that Joel's family members received $9.6 million in fake profits, money that the trustee maintains was really cash taken by Madoff's scheme from other investors. Picard said in his complaint that Joel and his family over the years had 36 accounts funded with fictitious profits. Any investors who received more from their accounts than they put in are considered by Picard to be "net winners" and have to give the money back.
Steven Schlesinger, a Garden City attorney, insisted Sunday that Joel's fortune was all made legitimately.
"I think it is outrageous," Schlesinger said of the Picard lawsuit. "We have provided them with extensive evidence that Martin Joel traded in real accounts, not fake accounts."
Schlesinger said that Madoff, who is serving a 150-year sentence in federal prison in North Carolina, withdrew money from various Joel accounts in order to pay estate taxes after the death of his friend. Those withdrawals had the effect of making the accounts "net winners" and they are now subject to clawback lawsuits, explained Schlesinger.
Joel's grandson Andrew Samuels sued Madoff's brother Peter, who worked with Bernard Madoff, in 2009, alleging that as trustee Peter Madoff allowed his $500,000 trust to be lost in the Ponzi scheme. The case was settled with Peter Madoff agreeing to pay an undisclosed amount.
Picard also sued Peter Madoff's wife Marion, 64, of Old Westbury. Marion allegedly got $1.5 million for a no-show job at the Madoff investment company and reaped $14 million in investor funds, Picard stated in bankruptcy court papers. Her attorney couldn't be reached.
So far, Picard has recouped $1.5 billion for investors and hopes to reap billions more in settlements, officials said.