Apr 7, 2009 2:51 pm US/Eastern
Tentative Deal Set To Sell Madoff Trading Division
NEW YORK (AP) ―
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Financier Bernard Madoff arrives at Manhattan Federal court on March 12, 2009, in New York City.
Stephen Chernin/Getty Images
A Manhattan bankruptcy judge approved a plan Tuesday that would allow a Boston firm to take over a securities trading operation owned by disgraced financier Bernard Madoff, barring any last-minute offers from other potential buyers.
A court-appointed trustee overseeing the liquidation of Bernard L. Madoff Investment Securities had announced last month that Castor Pollux Securities wanted to buy the former Nasdaq chairman's legitimate market-making business. It agreed to pay $500,000 at closing and then up to $15 million in revenues from trades through 2012 -- a total representing a fraction of what Madoff once estimated his business was worth.
Under an order signed Monday by U.S. Bankruptcy Judge Burton Lifland, the deal with Castor Pollux would go through if more lucrative bids don't surface by April 22. Any prospective buyers offering a $550,000 closing payment or more would trigger an auction on April 27.
An action that drives up the price would favor victims of the massive multibillion fraud because the trustee plans to use sale proceeds to pay their mounting claims. A lawyer for the trustee has said more than $1 billion in assets from Madoff's businesses have been found so far.
Madoff, 70, was jailed last month after pleading guilty to charges that he ripped off thousands of investors. FBI agents arrested him in December after he confessed to his two sons that his secretive advisory service for wealthy clients was a massive Ponzi scheme.
He insisted during his plea that the separate market-making and proprietary trading side of the firm -- supervised by his brother and sons -- were "legitimate, profitable and successful in all respects." In a document prepared for the Securities and Exchange late last year, Madoff listed the "net value of ownership in business" as $700 million.
Madoff informed investors at the end of November that they had nearly $65 billion in their accounts. But investigators say the total probably was a fabrication based on what accounts originally valued at less than $20 billion would be worth if he had actually delivered the steady profits he reported.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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