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Former Madoff Employee Andrew Cohen to Give Up $1.1M He Received During the Madoff Ponzi Scheme

February 27, 2017, New York — A New York federal judge ruled that a former employee of Bernie Madoff will have to give up $1.1 million he withdrew from his investment account at Bernard L. Madoff Investment Securities LLC. The trustee Irving Picard sued Andrew H. Cohen, who worked at Madoff Investment Securities from 1991 through 2000 and was not part of the fraud, to recoup the amount by which Cohen’s withdrawals exceeded his investments. The Court held that the alleged amount that he thought were profits on investments was instead money from newer victims of the Ponzi scheme. Cohen was a BLMIS investor who was a “net winner” – he withdrew more from BLMIS than he invested. Cohen raised the “value” defense under §548(c) of the Bankruptcy Code, which, in brief, would allow him to retain payments received from BLMIS to the extent that he gave value to BLMIS in exchange for the payments. Cohen’s principal defense was that BLMIS owed antecedent debts that were satisfied by the payment of fictitious profits, and therefore, the fictitious profits were received for value. The Bankruptcy Court, after a trial, issued proposed findings of fact and conclusions of law, which the District Court reviewed de novo. The District Court ruled for the Trustee and granted the judgment of $1,143,461.00 against Cohen.

The case is Irving H. Picard, as Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff v. Andrew H. Cohen, case number 1:16-cv-05513, in the U.S District Court for the Southern District of New York