The SS Madoff Sinks; Wake Lifts All Boats?

John Pacenti of the DBR turns in a nice piece on the local lawyers and accountants salivating over the Madoff disaster:

Mark Raymond, managing partner of Broad and Cassel’s Miami office, said he represents a number of clients who lost millions when Madoff’s house of cards collapsed.

“There are people whose boat has capsized, and they are adrift,” he said. “There are families who went to bed at night with multimillion-dollar networks. I’m talking about networks worth $30, $50, $70 million, and all they have left are their homes and their cars because they put all of their money with Madoff.”

Raymond and other attorneys contacted for this story said the receiver, New York attorney Lee Richards of Richards Kibbe & Orbe, will take over what’s left of the investment firm bearing Madoff’s name and target investors who made money before the fall.

“They may have gotten out of the Titanic alive, but the ship may come back and sink them down the road,” said Lewis Freeman, a forensic accountant and attorney with Lewis B. Freeman & Associates in Miami.

Fired up, Lew continued:

"Yeah, it's like the investors are a penniless stowaway who think they're the king of the world, and Madoff is like a beautiful young socialite who is dangerously attracted to the stowaway but has agreed to marry Billy Zane. And Norm Braman is like Molly Brown. Is any of this making any sense?"

You know, I was ok with the sinking boat imagery when it was in Mark's steady hands. But leave it to Lew to always finds a way to take it one step too far.

UPDATE:

Intrepid reporter Julie Kay finds more local lawyers who want to sue some as-yet-unknown entities over Madoff. No sinking boat references, but there is this:

Michael Tein of Lewis Tein in Coconut Grove, Fla., is also looking to target third parties.

"We're going to be as aggressive as possible in pursuing third-party liability to the extent that we can," said Tein. Tein and his partner, Guy Lewis, are representing investors from South American and Manhattan who had invested $20 million with Madoff, including one client who invested $11.5 million. He declined to name the clients.

"I am very pessimistic about the ability to recover the investment itself," Tein said. "But the fraud is too big for there not to be a problem with banks, brokerage houses, clearinghouses and third party fiduciaries. It's not as if this gentleman kept all his money in-house."

And if he did, sue the maid!

Pretty soon it will be impossible to bump into anyone in this town who is not on one side or another of this thing.

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Re-Reading the Sharper Image Opinion

Having had some time to review the docket and some of the key pleadings in the Sharper Image order by Judge Altanaga, I have come to blame Bob Parks less. Reviewing the November 2006 affidavit of Christopher Payne, the Texas lawyer who had the certified nationwide class ready for trial in California, it appears that Parks was, as he told Payne in a telephone call about the Miami settlement, "just local counsel." He told Payne to "go talk to the Alabama lawyers" about the settlement that wiped out a pre-existing certified, nationwide class set for trial.

Incidentally, the California lawyers were charged $260k by Sharper Image to run notices in their catalogs.

But it does seem that the California lawyers, who had an Executive Committee set up and were preparing the matter for trial, were really "frozen out" by the Alabama firm who spearheaded the Miami settlement. Now Parks lent his name and credibility to the settlement, particularly in front of the Court, but he may not have had all the details in front of him as he assented to the actions taken to wipe out a colleague's nationally certified class.

I also think Judge Altonaga has to share the blame. Right from the get-go, when Parks presented the settlement for preliminary approval in November, she was aware of the existence of the California case, yet she approved the settlement (slightly revised) days later. She was also aware of the very weakened bargaining position that Parks negotiated from, which she criticizes in the "procedural unfairness" component of her opinion, yet she allowed the process to continue. Why not stop it in real time? If she knew Parks was negotiating from a position of weakness, and she knew Mike Tein and his California crew had a certified class ready for trial, why did she allow the Miami attorneys to continue to tinker for another year with the deal? As she concluded, by the Third Amended Settlement Agreement, the deal was a "near-perfect" coupon settlement, but she denied it because of facts she was aware of a year ago -- that the Miami case should really have been abated, that Parks had no bargaining position of any value, and that the Defendant had selected the weakest link in the chain. In other words, no improvements to the deal would have rendered it acceptable, based on facts and circumstances that the Court was well-aware of a year ago.

I suppose one could say she allowed the process to continue so that the record could be as complete as possible, including affidavits and depositions from experts on all sides, contentious discovery, and a two-day evidentiary hearing.

Boy, the plaintiffs' lawyers on all sides spent a bundle on this one. Where is the payday if, as argued by Sharper Image and Parks, this defendant is near bankruptcy?

On balance, the Alabama attorneys did Parks no favor. They played cutthroat with the California attorneys, leveraging Bob Parks' reputation in the process. It is unclear how much of the relatively modest $1.85 million pay day Parks was slotted to receive, but it is now clearly blood money, soiling an otherwise exemplary career in its final stages. That's something that takes a lifetime to build, but no time to lose.

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