A judge temporarily froze the assets of Bernard Madoff's brother yesterday after he was accused in a lawsuit of losing nearly a half million dollars in a trust he administered.
The lawsuit, filed in a Nassau County, claims Peter B. Madoff took $478,000 that belonged to Andrew Ross Samuels, 22, and invested it in his brother's Ponzi scheme that fleeced investors of billions of dollars.
Samuels, a Brooklyn law student from Long Island, received the money from his grandfather, Martin J. Joel, who had placed it in the trust in 1997 to help pay for the young man's education. It was supposed to be his inheritance.
Both Peter Madoff and Joel administered the trust, the lawsuit said. But after Joel died in 2003, Peter Madoff became the sole trustee and invested Samuels' money in his brother's firm, Bernard L. Madoff Investment Securities, the lawsuit said.
Steven R. Schlesinger, Samuels' lawyer, said Wednesday Peter Madoff had a fiduciary duty to protect the money.
“Instead, he put in a phony business,” Schlesinger said. “He blew it.”
The lawsuit claims the student's money was “used to pay fictitious returns to other investors of BMIS as part of the massive Ponzi scheme.” The lawsuit also said that Peter Madoff had “full knowledge that it was a fraudulent Ponzi scheme and nothing more than an unprecedented fraud.”
The trust is now worthless, according to the lawsuit filed last week.
Peter Madoff served as chief compliance officer and senior managing director his brother's firm. He hasn't been charged in the $65 billion scam. His lawyer didn't immediately return a call or e-mail seeking comment.
Bernard Madoff pleaded guilty March 12 and remains jailed. The 70-year-old financier could get up to 150 years in prison at sentencing in June.