The U.S. judge overseeing the liquidation of Bernard Madoff's investment firm has asked Gibraltar's Supreme Court to transfer $73.1 million so it may be used to compensate victims of the imprisoned Ponzi schemer.
In a letter dated Monday, U.S. Bankruptcy Judge Burton Lifland said the money would be used to partially satisfy a $180 million default judgment entered on August 3 against the Vizcaya Partners Ltd hedge fund and other defendants.
In an April 2009 lawsuit, Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, accused Vizcaya of profiting improperly from Madoff's fraud.
Lifland entered the judgment against Vizcaya after the British Virgin Islands-based fund failed to plead its case or otherwise respond properly to Picard's complaint.
The judgment also applies to three other entities: Asphalia Fund Ltd, Siam capital Management and Zeus Partners Ltd.
"At this stage," Lifland wrote in a letter to Chief Justice Anthony Dudley of the Supreme Court of Gibraltar, "it would be in the best interest of the BLMIS estate to turn the Gibraltar funds over to either this court or the trustee."
The Gibraltar court took possession of the $73.1 million last year in the course of separate litigation.
Through March 31, Picard had recovered more than $1.5 billion for Madoff victims.
He is seeking billions of dollars more from companies that fed money to Madoff and from former Madoff clients who may have withdrawn more money from his firm than they deserved.
Madoff, 72, is serving a 150-year sentence in a North Carolina federal prison.
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