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Madoff Trustee May Not Clawback Monies From Koch Brothers

New York, November 23, 2016 – Koch Industries and others who invested in the Madoff fund from offshore accounts won a key ruling in the bankruptcy court later this month. The court ruled that the funds held abroad, estimated at $2 billion could not be made available to victims of the Madoff scheme because of international concerns.

The billionaire brothers, Charles and David, and about 100 other Madoff customers claimed that the trustee can’t recoup their profits for distribution because the money had been transferred outside the U.S. long before Madoff got arrested in December 2008. The trustee argued that he should get the money because the investors used the feeder funds that operated in the United States even though they were registered offshore, i.e., those funds gathered investor money on behalf of Madoff. However, Judge Stuart M. Bernstein in the Manhattan bankruptcy court said that the foreign bankruptcy proceedings blocked the trustee from accessing the money.

Koch Industries is one of 88 cases in which management, service providers and investors received overseas transfers of money. Koch Industries began investing in the Madoff fund well before its collapse and pulled $21.5 million out in 2005. The money withdrawn from the Madoff fund went to a fund registered in the British Virgin Islands and then to a Koch entity in Britain.