A federal bankruptcy court judge this morning denied a motion by a victim of Bernard Madoff's Ponzi scheme to remove the trustee overseeing the liquidation of Madoff’s brokerage business.
Madoff victim Helen Chaitman, who is also an attorney, argued that federally appointed trustee Irving Picard struck what she called a "sweetheart deal" with the family of late Madoff investor Norman Levy.
Picard is working to recover money for Madoff’s victims. He arranged the $220 million deal with Levy’s widow.
Chaitman says that Picard did not disclose exactly how much Levy had invested with Madoff and wants the deal voided.
"The intolerable part of it is that we have to know the truth,” said Chaitman. “If we can't rely upon Irving Picard to tell the truth to the court as he's required to do under all the bankruptcy rules, then he can't function as the trustee in this case."
The judge also declined Chaitman’s request that the settlement be dismissed. He said that Chaitman had made an unsophisticated attempt to remove Picard as a trustee.
According to Picard’s attorney, the trustee has managed to recover millions of dollars a day since the investigation began.
"Unfortunately Mrs. Chaitman in her brief made some statements that I felt were out of line,” said Picard’s lawyer David Sheehan. “And the judge noted that in his opinion, as well, that they were inappropriate, such as suggesting that the trustee was dishonest or that he was appallingly arrogant."
Chaitman says that she is considering an appeal.