Business News : Judge to review moving hundreds of Madoff cases

NEW YORK (Business News) - In the sprawling litigation to recover money related to Bernard Madoff's fraud, a federal judge said he would decide whether a 2011 U.S. Supreme Court ruling prevents a bankruptcy court from resolving hundreds of lawsuits brought by the Madoff firm's trustee.

Defendants in those cases have sought to transfer their cases to district court from bankruptcy court, citing the U.S. Supreme Court decision involving the estate of former Playboy model Anna Nicole Smith that limited the power of bankruptcy judges to review claims.

In an order published Friday, U.S. District Judge Jed Rakoff said he will review how that decision affects cases brought by the trustee, Irving Picard, against people he believes benefited improperly from Madoff's fraud.

Rakoff consolidated 341 cases in his order and gave the defendants until June 11 to appoint lead counsel to argue on their behalf. He scheduled oral argument for June 18.

Smith, who died of a drug overdose in 2007, had waged a long legal battle to get part of the fortune left by her late Texas oil baron husband, J. Howard Marshall, whom she had married in 1994 when she was 26 and he was 89.

Picard was appointed in December 2008 to recover money for victims of Madoff, a financier who ran a multibillion-dollar investment fraud over several decades, swindling investors large and small across the globe.

Madoff pleaded guilty in March 2009 to what prosecutors and the trustee have described as the biggest investment fraud in history. Madoff, 73, is serving a 150-year prison sentence.

Picard, who filed his cases in bankruptcy court, says he has recoveries and settlement agreements totaling $ 9.068 billion, but $ 6.4 billion of that is unavailable due to appeals and reserves. Picard says Madoff defrauded customers of about $ 20 billion.

In the latest settlement last month, Rakoff oversaw a deal between Picard and the principal owners of the New York Mets Major League Baseball team, Fr ed Wilpon and Saul Katz, who were longtime friends with Madoff as well as investors.

The case is Securities Investor Protection Corporation v Bernard L. Madoff Investment Securities LLC, U.S. District Court for the Southern District of New York, No. 12-mc-0115.