Article Courtesy of Reuters
By Jonathan Stempel
Published December 2, 2017
NEW YORK - A new lawsuit accuses a lawyer
representing hundreds of victims defrauded by Bernard Madoff of cheating
her own clients through overbilling, discouraging settlements and
having conflicts of interest.
The proposed class-action complaint was filed on Wednesday against
Becker & Poliakoff LLP and Chaitman LLP over the alleged conduct of
Helen Chaitman, who has been perhaps the most visible lawyer
representing victims of Madoff since his December 2008 arrest. Madoff,
79, is serving a 150-year prison term.
“We have no comment,” Chaitman said in an email on behalf of her
namesake firm. Becker & Poliakoff, her former employer, did not
immediately respond to requests for comment.
The complaint was filed in the U.S. District Court in Manhattan by
trustees of the Florence Shulman Pourover Trust, a defendant in a 2010
lawsuit by Irving Picard, a court-appointed trustee liquidating Bernard
L. Madoff Investment Securities LLC.
Picard, who has recovered roughly $12.8 billion for former Madoff
customers, sought to recover $1.62 million of “fictitious profits” from
the Shulman trust and other defendants that he said were derived
improperly from Madoff’s fraud.
In Wednesday’s complaint, the Shulman trustees said Chaitman’s
“self-promotion as a savior for other Madoff victims paid off” with a
large base of clients.
But they said this left Chaitman with an “irreconcilable” conflict
because she represents three groups of plaintiffs with competing
interests: “net winners” who withdrew more money from Madoff than they
put in, “net losers” who lost money, and “early investors” whose alleged
profits predated the fraud.
The Shulman trustees also said Chaitman misled net winners by saying
Picard would never settle for less than all he sought, enabling her to
bill for “unnecessary” and “often unproductive” work, and did not
specify on invoices what work she did.
Both law firms “billed and were paid for needless and quixotic legal
work, ostensibly for the benefit of FSPT and members of the proposed
class, but which in reality only benefitted defendants in the form of
increased fees,” the complaint said.
Dylan Ruga, a lawyer for the Shulman trustees, was not immediately
available for comment.
The lawsuit seeks unspecified damages on behalf of people represented by
and who paid legal fees to the law firms in connection with the Madoff
The case is Shulman et al v. Becker & Poliakoff LLP et al, U.S. District
Court, Southern District of New York, No. 17-09330.