Madoff deal may frustrate creditors, says Morris-Cotterill
London and Kuala Lumpur: 11 March 2009
Embargo: none
The deal to bring the Madoff criminal case to a swift conclusion may act to disadvantage creditors trying to locate and recover some of the USD50,000 million which Madoff has defrauded over the years, says Nigel Morris-Cotterill, Head, The Anti Money Laundering Network.
“It’s devious and clever,” says Morris-Cotterill. “Civil litigators have many tools at their disposal, but nothing trumps the co-operation agreements between countries. So the best chance many creditors have of seeing some of their money come back is if the USA is looking for it under freeze and forfeit provisions. If they do recover money, then it must be passed to the victims.”
But if Madoff pleads guilty and is sentenced, and prosecutors accept that the money is long gone, they will abandon the investigation. That, says Morris-Cotterill, will leave creditors with long, expensive litigation.
The position is complex, says Morris-Cotterill. There are already insolvency practitioners involved – but they have indicated that they think recovery is unlikely, but if creditors do identify and recover funds, it is unclear whether they will have to hand those funds over to the insolvency team.
“In short, Madoff’s acceptance of the guilty plea will have the effect of making it much more difficult for victims to find and recover the money they have lost,” says Morris-Cotterill. “It is difficult to imagine that USD50,000 million can simply disappear. The victims certainly don’t think it has evaporated but without the muscle of the state behind them the cases will be much more difficult to prosecute.”
(269 words)
Notes for editors:
1. The Anti Money Laundering Network – Group background and details at www.antimoneylaundering.net
2. Nigel Morris-Cotterill – former civil litigation lawyer, London. Counter-money laundering strategist since 1994. Head The Anti Money Laundering Network.
3. Contact information: Global Response Centre: Kuala Lumpur, Malaysia (GMT +8) +6 03 2078 9152 or via form at www.antimoneylaundering.net
