Bankruptcy judge OKs consolidating Madoff cases

Bankruptcy judge OKs consolidating Madoff cases
Tue Jun 9, 2009 7:25pm EDT

NEW YORK (Reuters) - A judge agreed on Tuesday to consolidate bankruptcy cases involving jailed swindler Bernard Madoff, saying the move would save money and increase the odds of retrieving stolen assets.

Judge Burton Lifland of U.S. Bankruptcy Court in Manhattan said having one common trustee oversee Madoff's personal bankruptcy case and another case brought by the Securities Investor Protection Corp would "maximize" the odds of asset recovery and avoid duplication of efforts.

"The reduction of costs means it makes sense to consolidate the cases," Lifland told the court.

Madoff pleaded guilty in March to running a long-standing, $65 billion fraud.

Lifland said the creditors of Madoff's estate stood to "reap benefits because SPIC is underwriting the costs of the recovery" and that the trustee in the bankruptcy case would have more than a "titular role."

At a hearing in April, Lifland said activities by various authorities to recover Madoff assets had been "disjointed and uncoordinated."

U.S. prosecutors, the U.S. Securities and Exchange Commission, the court-appointed trustee liquidating Madoff's brokerage firm and groups of investors are among those seeking to find and recover billions in assets, which include homes, boats, cars and business interests.

A lawyer for the SIPC trustee, Irving Picard, said after the hearing that he expected the total amount of assets recovered for Madoff's victims could increase by $235 million to $1.2 billion by next week.

Picard, a New York lawyer spearheading a global search to return money to the swindler's former clients, said in May he had filed lawsuits to recover $10.1 billion in fictitious profits of Bernard L. Madoff Investment Securities LLC after Wall Street's biggest investment fraud.

The case is Securities Investor Protection Corp v Bernard L. Madoff Investment Securities 08-01789 in U.S. Bankruptcy Court for the Southern District of New York.

(Reporting by Phil Wahba; Editing by Lisa Von Ahn, Richard Chang)