Madoff Family Members Withdrew Heavily In Days Before Collapse

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Here’s more evidence that Madoff’s inner sanctum, including his family members, were aware of the ongoing fraud and decided to get out of the oncoming train.

Daily Beast: The Daily Beast has learned that in the 90 days leading to the collapse of Bernard L. Madoff Investment Securities, $735 million was withdrawn from accounts controlled by Madoff’s relatives, employees, and their relatives, and by people who fed billions of dollars of investors’ money to Madoff. The dollar amount has been previously known. What has not been reported until now is the unusually short period in which the withdrawals were made, and how close it was to the collapse of the Madoff firm and to his confession on December 10, 2008.

The timing of those withdrawals prompted Irving Picard, the bankruptcy trustee, to send “clawback letters” in mid-April to 223 people among the more than 8,000 investors who had accounts with Madoff. What this shows is that the bankruptcy trustee is not randomly trying to recover money from every Madoff investor—he’s looking for people who may be culpable.

“If you were a close relative of Bernie or Ruth, you got a letter,” said David Sheehan, who is a leader of Picard’s legal team at Baker, Hostetler.’

Not only is this interesting in terms of timing, but it also indicates that Picard isn’t just indiscriminately mailing out clawback letters to the Madoff winners. Not everyone is being asked to give the money back — only, it seems, those folks with some kind of connection to the company and a reason to believe that the funds were actually gained fraudulently.

Still, if you were a family member and you know the fund was a fraud, why would you have any money with the firm at all?

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