Madoff moves closer to involuntary bankruptcy

Bernard Madoff, already destined to a life behind bars, has moved a step closer to finding himself doing time like an inmate in debtor's prison. As expected, a group of Madoff's investors Monday filed court papers to push the 70-year-old Wall Street swindler into involuntary bankruptcy and strip him of whatever personal fortune he has left. In a four-page filing in federal bankruptcy court in Manhattan, a group of five investors that included individuals, a trust and a partnership said that Madoff defrauded them of $63.9 million through the infamous Ponzi scheme to which he pleaded guilty last month. The investors want to put Madoff into personal bankruptcy as a way of assuring that his assets come under the jurisdiction of the New York bankruptcy court, which is already liquidating his fraudulent business. The business bankruptcy, being supervised by a special trustee, has located more than $1 billion in customer funds. Madoff's own court filings indicated he and his wife, Ruth, who isn't affected by the personal bankruptcy action, had accumulated more than $823 million in assets. While federal prosecutors and the Securities and Exchange Commission objected to the latest bankruptcy filing as possibly raising costs and duplicating criminal forfeiture actions, a federal judge on Friday ruled that the creditors should be allowed to push Madoff into personal bankruptcy. "This is not a fight for assets," said Manhattan attorney Jonathan M. Landers, who filed the bankruptcy petition. "At the end of the day the investors will get it all." Ira Sorkin, Madoff's defense attorney, declined to comment Monday. Madoff is in jail awaiting sentencing in June and faces an effective life term. The bankruptcy filing against Madoff comes at a time when numerous legal actions are aimed at seizing his business and personal assets. Aside from the actions of special trustee Irving Picard in the United States, other creditors in Europe have moved to seize a boat owned by Ruth Madoff in France. Two weeks ago federal agents seized three of her boats and an apartment in Palm Beach. Ruth Madoff's attorneys said she consented to those seizures because the assets were expensive to maintain. She reserved the right to fight over whether the money from the asset sales should be turned over to the government as proceeds of her husband's crimes, the attorneys said. Landsman admitted that in the face of a $65-billion estimate of the Ponzi scheme loss, the recovery of assets under bankruptcy might seem small. But over time things will mount up, he said.