$75 million of Madoff Assets located in Gibraltar

According to the New York Post, a lawyer for the trustee seeking to locate assets belonging to self-confessed Wall Street scammer Bernie Madoff said today that more than $1 billion has been located - far less than the staggering $64 billion the feds said he stole from investors.

Lawyer David Sheehan said $75 million has been located in an account in Gibraltar, raising to $1 billion the amount a trustee has recovered for investors.

David Sheehan, a lawyer acting for Irving Picard, who was appointed by the Securities Investor Protection Corp. to unwind Madoff’s businesses, also said at a court hearing today that French authorities may soon seek to seize Madoff’s chateau in that country, which is worth about $1.6 million.

Sheehan’s disclosure came at a court hearing where he urged a judge to award SIPC, which is conducting a broad investigation of the assets of Madoff Securities, a power of attorney over Madoff’s UK unit.

SIPC is a government-backed corporation to cover losses when brokerages fail. US prosecutors probing Madoff urged US District Judge Louis Stanton in New York to hold the power in escrow and not to grant it to Picard. Stanton didn’t rule on the matter.

Madoff, 70, was jailed two weeks ago after he pleaded guilty to orchestrating a Ponzi scheme where he ripped off thousands of investors.

Madoff faces 150 years behind bars when he is sentenced in June.

Missing Madoff Money Found in Gibraltar Bank

In a Daily Beast exclusive, Lucinda Franks reports that at least $50 million in Madoff funds has been discovered in a Gibraltar bank.

Now, the fight begins over who actually gets it.

More than $50 million in missing Bernard Madoff funds has been found in the Gibraltar branch of the International Safra Bank and is likely to become the subject of litigation there. The bank, seeing Madoff’s name on transfer documents, froze the money and notified police.

According to a Franks' source close to the investigation, the Gibraltar case is just one of many instances in which banks in Europe and the Caribbean have identified and stopped any monies with a link to Madoff’s investment funds since December, when he confessed to running a massive Ponzi scheme.

Millions of dollars linked to Madoff have been tagged and frozen in offshore banking havens in Europe and the Caribbean.

The Gibraltar funds were deposited at Safra just a few weeks before Madoff was exposed, according to a source close to the Gibraltar police. This money may have been placed with Madoff through a feeder fund operated by Safra, which asked Madoff to redeem a portion, but not all, of its investment—somewhere between $50 million and $75 million. The returned funds were still being held in the Safra branch when the scandal broke.

After the bank put a stop on the funds, local police informed authorities in the US and are now cooperating with the New York investigation.

Gibraltar, like some other offshore havens, has been making great efforts in recent years to police illegal activity. On Friday, there was a proceeding in chambers at the Gibraltar court. The outcome of this hearing is not yet known.

In general the behavior of the international banking community in the Madoff case demonstrates an unprecedented level of cooperation with American prosecutors—far more, certainly, than investigators received in earlier cases such as the BCCI scandal.

There was a possibility, of course, that any overseas transfers in this time frame could be part of a scheme by Madoff to hide assets. But the Gibraltar transfers could also reflect legitimate withdrawals from his investment funds, made without any connection to the Ponzi scheme. Those investors will probably sue to have the funds released, while the New York-based trustees are equally determined to claim the money for victims’ compensation.

Even investors who cashed out of Madoff’s scheme before it collapsed may not be entirely protected from losses. In a legal procedure known as a “clawback,” trustees overseeing fraud cases can force investors to return funds they withdrew earlier from the phony operation in order to distribute it evenly among those affected. Unlike in, say, a stock crash, clawbacks mean that there is no such thing as "getting out at the right time."