Ex-Islander Nystrom sued in Madoff case
GalleriesCountdown: Top 10 Islanders of all-time
Former Islanders great Bobby Nystrom is listed as a co-defendant on a $1-million clawback lawsuit filed three months ago by the special trustee in the Bernard Madoff fraud case, Newsday has learned.
The other defendant is Denver-based NTC & Co. LLC, referred to in court papers as Nystrom's "former custodian of the Individual Retirement Account." The money in that account had been invested with Madoff's Ponzi scheme.
The lawsuit, filed Nov. 30, 2010, contends that either Nystrom or NTC & Co. received $1 million in "fictitious profits" from Madoff during the six years before the fraud mastermind's surrender in December 2008.
Reached by phone on Monday, Nystrom said this was the first he is learning about the lawsuit and declined to comment. A clerk for U.S. Bankruptcy Court in Southern District of New York, which is where the lawsuit was filed, said Tuesday there was "a filing error" with the complaint that needed to be fixed before papers eventually are served to Nystrom and NTC & Co.
An attorney representing NTC & Co., who filed a motion last month to request a copy of the complaint, did not return messages seeking comment.
The lawsuit does not allege any wrongdoing on the part of Nystrom or NTC & Co. Rather, it is the trustee's job to recoup profits from those whom he contends benefited from investing with Madoff and return those funds to people who lost money in his Ponzi scheme.
A spokeswoman for special trustee Irving Picard said, "This matter is in litigation and we have no comment."
Nystrom filed paperwork in February 2009 to be considered one of the many victims in the Madoff scandal, according to the lawsuit, but Picard denied his claim in a letter dated Jan. 6, 2010.
Picard's letter, which was attached to the complaint as evidence, says Nystrom requested $5,132,950.36, representing the money that Nystrom had been led to believe was in his account on the day Madoff's Ponzi scheme collapsed. But Picard contends Nystrom withdrew more than $1 million more than he had deposited during his years as a Madoff investor.
"The amount of money you received in excess of the deposits in your account ($1,067,619.70) was taken from other customers and given to you," Picard writes in the letter.
Nystrom did not file an objection with the court regarding Picard's determination, according to the lawsuit.
Nystrom, 58, of Oyster Bay, was a leading member of the Islanders teams that won four straight Stanley Cup titles from 1980-83. Most notably, he scored the overtime goal that defeated Philadelphia in 1980 and gave the Islanders their first-ever championship in 1980.
Nystrom's son, Eric, plays for the Minnesota Wild.
Other sports figures Picard has filed clawback lawsuits against include the owners of the Mets as well as former Mets second baseman and current Triple-A manager Tim Teufel.
Picard is seeking more than $300 million from the Wilpons in fictitious profits and hundreds of millions more because he alleges the Wilpons either knew or should have known what Madoff was doing. From Teufel, Picard is seeking $1.23 million.