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Picower’s spot on Forbes 400 may be short-lived

By A. James Memmott

October 6, 2009 at 12:16pm

Jeffry M. Picower made the Forbes list of the 400 richest Americans for the first time this year, his $1 billion in worth placing him tied for No. 371 on the list.

But if Irving H. Picard has his way, Picower may not be among the super rich next year.

As the trustee trying to get back some of the money Bernard L. Madoff took from investors, Picard in May filed a so-called “claw back” lawsuit against Picower and his wife, Barbara.

The lawsuit also named the Picowers’ two foundations and some of the investment partnerships Jeffry Picower controlled.

Picard alleged that the Picowers, who live in Florida, need to pay back $5.1 billion in Madoff money they don’t deserve because it came from other people’s investments rather than from earnings on legitimate investments. Last week, Picard filed a second lawsuit asking for $2.1 billion more.

The Picowers “knew or should have known that they were profiting from fraud because of the implausibly high rates of return that their accounts supposedly achieved,” the first lawsuit claims.

According to the lawsuit, some of the Madoff-connected Picower accounts had annual rates of return of 50 to 100 percent between 1996 and 2007.

Picard also alleges that during one period, two Picower accounts had returns ranging from 120 percent to 550 percent. In one year, an account returned 950 percent.

Through a lawyer, the Picowers denied the allegations of fraud.

“Mr. and Mrs. Picower considered themselves friends of the Madoffs for over 35 years,” William D. Zabel told The New York Times. “They were totally shocked by his fraud and were in no way complicit in it.”

Jeffry Picower, 67, is a lawyer, accountant and investor who made millions selling Alaris, a medical device maker in 2004.

As Jake Bernstein wrote in a detailed analysis in ProPublica, Jeffry Picower and his wife had been seen as Madoff victims before the Picard lawsuit.

In large part this was because The Picower Foundation, which the Picowers created in 2002, had to shut down after Madoff’s fraud was revealed, its $1 billion in assets having been wiped out.

The foundation had given away millions of dollars, including $50 million in 2002 to establish the Picower Institute for Learning and Memory at the Massachusetts Institute of Technology.

Reports filed with the Internal Revenue Service indicate the Picower Foundation also gave hundreds of thousands of dollars to fund research on Parkinson’s disease.

Non-profit institutions receiving donations included the New York City Ballet, the Center for Reproductive Rights and the Children’s Health Fund.

The foundation was also named in the Picard lawsuit, as was the Picower Institute for Medical Research.

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