$441 on bagels: credit card bill details Madoff family's largesse

Investigators reveal how convicted fraudster and his relatives ran up huge bills

Stephen Foley
Friday 15 May 2009 00:00

Members of Bernard Madoff's family spent thousands of dollars buying clothes, jewellery and gourmet bagels on the Wall Street swindler's company credit card and could face legal action to recover the money.

Court filings by the team trying to recover assets for the thousands of victims of America's biggest fraud paint a picture of lavish spending not just by Madoff and his wife, Ruth, but also by other family members and business associates. Numerous family members were on the payroll and treated Madoff Investment Securities as a "personal piggy bank", the receiver said.

Yesterday, the man in charge of compensating victims said he was considering lawsuits against the beneficiaries of Madoff's largesse, even if they are not charged with any criminal wrongdoing.

The victims face a long wait to find out how much money they might receive back, after discovering that every statement they were sent by their mysterious investment adviser was a fiction. The $65bn (£43bn) he said was in client accounts was never really there and he never carried out a single investment on their behalf. So far, just $1bn has been recovered.

Stephen Harbeck, the president of the Securities Investor Protection Corporation (SIPC), which is assessing victims' claims, said family members could be next in his legal sights: "The fact that we have not bought a lawsuit yet against members of the family shouldn't be taken as us deciding not doing so. It is a matter that is being worked on.

"We are doing what we have to do and at an appropriate time we will bring on the appropriate litigation. The SIPC believes that wrongdoers should pay for their wrongdoing, and we believe in taking an aggressive stance."

In a blizzard of legal filings to support their efforts to recover as much money as possible for victims, Mr Harbeck and Irving Picard, the receiver, included an extraordinary series of corporate credit card bills from last year, which show members of Madoff's family and senior staff members spending more than a million dollars, often on luxuries that appear to have little to do with the running of the business.

In one month, Ruth Madoff racked up $29,888 in spending, including on a shopping spree in Paris where she handed over $2,000 at a Giorgio Armani boutique and $1,237 for items from the designer Jil Sander. She also paid $5,000 for membership of the exclusive yacht club in Montauk, where the couple kept one of their four homes.

Peter Madoff, Bernard Madoff's brother and de facto deputy at the company, spent $441 on food from a gourmet deli called Tal Bagels on Manhattan's Upper East Side.

In a single month last summer, Mark Madoff spent almost $81,000 dollars on the card, after spending $8,400 on a single night's hotel bill earlier in the year as well as $2,166 in New York's Apple Store. His brother Andrew spent $2,395 on family clothing at Polo Ralph Lauren.

Bernard Madoff confessed last December that his investment business was "all just one big lie", and he was jailed in March after admitting 11 criminal charges. However, deep mystery still surrounds how he conducted his fraud, and when it began.

He has not been cooperating with the receiver, and neither have family members. Of the employees of the business that are helping to track down what remains of the money, "none of them is named Madoff and none of them is related to Madoff," Mr Harbeck said. Family members are believed to have been among dozens of people close to Madoff Investment Securities who withdrew $735m in the 90 days before the fraud collapsed, leading investigators to suspect they may have had an inkling that Madoff was in difficulty.

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