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Madoff sons, brother, niece to be sued

Epic swindler Bernard Madoff's two sons, his brother and a niece will be sued this week for $198 million, the trustee winding down the Madoff firm told CBS News' “60 Minutes.”

Sons Mark and Andrew, brother Peter and niece Shana all held executive positions with the firm and should have known about the multibillion-dollar, worldwide 20-year-long Ponzi scheme, trustee Irving Picard and his chief counsel David Sheehan, told the program.

Wall Street's biggest investment fraud, a Ponzi scheme in which early investors are paid with the money of new clients, collapsed in the declining economy last December. Madoff confessed to the fraud of as much as $64.8 billion and is serving a 150-year prison sentence.

Asked by “60 Minutes” whether investigators were working under the assumption that there was money still hidden, Sheehan said: “Yes, we are” and Picard said, “We'd assume it's millions and millions of dollars.”

Sheehan told “60 Minutes” he estimated about $36 billion went into the whole scheme. “About $18 (billion) of it went out before the collapse. And $18 (billion) of it is just missing. And that $18 billion is what we're trying to get back.”

New York lawyers Picard and Sheehan said the latest lawsuit to recover money for defrauded investors under the Securities Investor Protection Act would accuse the family members of negligence and breach of fiduciary duty. The lawsuits to be filed in US bankruptcy court in New York would also accuse them of profiting personally in the tens of millions of dollars while working at the firm.

All of the family members have said in previous statements that they had no knowledge of Madoff's crimes.

The sons withdrew $35 million from accounts with little or no investment, Picard told “60 Minutes.”

“Whether or not they have a criminal problem we will pursue them as far as we can pursue them,” Picard said. “And if that leads to bankrupting them---then that's what will happen.”

The trustee and his lawyers have filed 13 suits already in an effort to recover about $15 billion, including one against Madoff's wife Ruth and several claims against so-called Madoff feeder funds.

Only $1.5 billion has been recovered so far and the estimates for the actual money that was lost in the fraud have varied from $13 billion to $64.8 billion. (Reuters)