As expected, the Madoff trustee has begun to target Madoff investors who received funds distributed from the Ponzi scheme. An April 10, 2009 article in the Wall Street Journal, “Madoff Trustee Sues Investors to Recover Funds” reports that the trustee has commenced legal action against Vizcaya Partners Ltd., a Madoff investor in the British Virgin Islands, seeking funds which were withdrawn prior to the collapse of the Ponzi scheme in December.
The article notes that under the U.S. bankruptcy code, the trustee “can sue investors for any fictional profits as well as the principal investment that [investors] withdrew in the past six years . . . . Also under the code, if investors made withdrawals in the 90 days prior to the Madoff firm’s collapse, the process for grabbing that money is easier for [the trustee]. The trustee could target both investors who were direct clients of the Madoff firm as well as those who invested through so-called feeder funds.”