Lawsuit Demands Koch Industries Return Profits From Madoff Ponzi Scheme Investments

[jaxx]

Lawsuit Demands Koch Industries Return Profits From Madoff Ponzi Scheme Investments
By Josh Israel on Feb 14, 2012 at 10:10 am

The trustee charged with liquidating the firm of convicted Ponzi-schemer Bernard Madoff has filed a lawsuit against a subsidiary of Koch Industries Inc. — the massive energy, oil, chemical, fertilizer, and finance conglomerate owned by Charles and David Koch. Though the suit alleges no wrongdoing on the part of the subsidiary, it seeks the return of $21.5 million on the grounds that it was not legitimately an investment return, the Wall Street Journal reports.

A Koch spokeswoman disputed the demand, arguing, “The Koch entity involved made an investment in an entirely separate fund. That Koch entity no longer exists and its investment was redeemed in 2005, long before anyone knew of Madoff’s fraud.”

http://thinkprogress.org/economy/2012/02...?mobile=nc

Will be interesting to see where this goes.

[pappy]

Quote:its investment was redeemed in 2005, long before anyone knew of Madoff’s fraud.

Maybe, maybe not. Just proclaiming ignorance of material facts does not prove it.

The fact that the public at large and/or regulators did not have knowledge of the scheme does not preclude the possibility of other investors (in this case specifically the Koch brothers company) not having knowledge and therfore getting out due to insider knowledge.

[jaxx]

It brings it out to the public and that is good. These are the people funding the GOPers.

[Velleity]

I assume this is based on a fraudulent conveyance or the preference provisions of the bankruptcy code. It's pretty straightforward stuff. If you're a participant in a Ponzi scheme you can be compelled to disgorge yourself of payments over and above anything you, yourself put in.

A bankruptcy trustee loves cases like this because they can charge hefty fees for the service.