Picard v. Estate (Succession) of Doris Igoin (In re Bernard L. Madoff Inv. Sec. LLC), Case No. 08–99000 SMB

CourtUnited States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
Writing for the CourtSTUART M. BERNSTEIN, United States Bankruptcy Judge
Citation525 B.R. 871
PartiesIn re : Bernard L. Madoff Investment Securities LLC, Debtor. Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Plaintiff, v. The Estate (Succession) of Doris Igoin, Laurence Apfelbaum, individually and in her capacities as executor and beneficiary of the Estate (Succession) of Doris Igoin, and Emilie Apfelbaum, Defendants.
Docket NumberCase No. 08–99000 SMB, Adv. Pro. No. 10–04336 SMB,Adv. Pro. No. 08–01789 SMB SIPA LIQUIDATION
Decision Date13 February 2015

525 B.R. 871

In re : Bernard L. Madoff Investment Securities LLC, Debtor.

Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Plaintiff
The Estate (Succession) of Doris Igoin, Laurence Apfelbaum, individually and in her capacities as executor and beneficiary of the Estate (Succession) of Doris Igoin, and Emilie Apfelbaum, Defendants.

Case No. 08–99000 SMB
Adv. Pro.
Adv. Pro.
No. 10–04336 SMB

United States Bankruptcy Court, S.D. New York.

Signed February 13, 2015

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BAKER & HOSTETLER LLP, Attorneys for Plaintiff, Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, 45 Rockefeller Plaza, New York, N.Y. 10111, David J. Sheehan, Esq., Tracy Cole, Esq., Ona T. Wang, Esq., Of Counsel.

KELLEY DRYE & WARREN LLP, Attorneys for Defendants the Estate (Succession) of Doris Igoin, Laurence Apfelbaum, and Emilie Apfelbaum, 101 Park Avenue, New York, N.Y. 10178, Jonathan K. Cooperman, Esq., Jessica L. Klarfeld, Esq. Of Counsel.


STUART M. BERNSTEIN, United States Bankruptcy Judge:

Irving H. Picard (“Trustee”), as trustee for the substantively consolidated liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”) under the Securities Investor Protection Act, 15 U.S.C. §§ 78aaa, et seq. (“SIPA”) and the estate of Bernard L. Madoff, commenced this adversary proceeding to avoid and recover fraudulent transfers aggregating in excess of $150 million. The Defendants, French residents, have moved to dismiss the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure and for forum non conveniens. After the motion was heard, the Court permitted jurisdictional discovery, and the parties thereafter submitted supplemental papers.

The Court concludes that the Trustee has made a prima facie showing of personal jurisdiction. However, the jurisdictional facts remain in dispute and are intertwined with the merits. Hence, the Court will try the issue of personal jurisdiction together with the trial on the merits. The branch of the Defendants' motion to dismiss based on forum non conveniens is denied.


A. The Accounts

The facts surrounding Bernard Madoff's Ponzi scheme have been described in numerous reported decisions. E.g., Picard v. JPMorgan Chase & Co. (In re BLMIS), 721 F.3d 54, 58–59 (2d Cir.2013), cert. denied, ––– U.S. ––––, 134 S.Ct. 2895, 189 L.Ed.2d 832 (2014) ; Sec. Investor Prot. Corp. v. BLMIS (In re BLMIS), 424 B.R. 122, 125–32 (Bankr.S.D.N.Y.2010), aff'd, 654 F.3d 229 (2d Cir.2011), cert. denied, ––– U.S. ––––, 133 S.Ct. 24, 183 L.Ed.2d 675 (2012). The Court assumes familiarity with those facts and limits its discussion to the facts relevant to this

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proceeding.1 The Defendants Laurence Apfelbaum (“Laurence”) and her daughter Emilie Apfelbaum (“Emilie”) reside in Paris, France. Laurence is a sixty-five year old practicing psychoanalyst, (Defendants Facts, ¶ I.A), and Emilie, thirty years old, works in an art gallery and lives with her mother. (Apfelbaum Deposition, 23:2–19; Apfelbaum Declaration, ¶ 4.) Doris Igoin (“Doris”), Laurence's mother, passed away in 2005, (Apfelbaum Declaration, ¶ 1), and the Estate (Succession) of Doris Iogin (“Doris's Estate”) is the third defendant. The term “Defendants” used in this opinion includes Doris during her lifetime and Doris's Estate after her death.

The accounts that are subject of this action originated with Laurence's father, Albert Igoin, who passed away in 1995. (Trustee Facts, ¶ 2; Defendants Facts, ¶ II.D.) Following his death, Laurence learned that her father's primary investment was an account at a French Bank—Banque Pour l'Industrie Francaise (“BIF”)—which, in turn, was invested with BLMIS. (Apfelbaum Declaration, ¶¶ 8, 11.) BIF later became Finama bank. (Apfelbaum Deposition, 77:16.)

Albert's will provided that his wife Doris inherit 50% of his assets, and the other 50% pass to his daughter and granddaughter, Laurence and Emilie, respectively. (Trustee Facts, ¶ 32; Defendants Facts, ¶ VII.C.)2 After Albert's death, Madoff met with Laurence in Paris, and following that meeting, Laurence decided to keep the assets that she and Emilie had inherited invested with BLMIS. (Apfelbaum Declaration, ¶ 8.) On June 12, 1995, Laurence signed a customer agreement with BLMIS (the “Laurence Customer Agreement ”).3 The Laurence Customer Agreement, which was written in French, provided, among other things, as follows:

This agreement is between Bernard L. Madoff Investment securities (“Madoff”), the offices of which are at 825 Third Avenue, New York, N.Y. 10022 USA, and Laurence Apfelbaum, “client”), residing at [street address] Paris.
Given that the client wishes to make certain securities investments through Madoff, and that Madoff wishes to make these, and given that the client had requested specific insurances and conditions and that Madoff had accepted these, the two parties agree as follows:
1) The client agrees to deposit funds and/or securities with Madoff, so that these can be deposited into an account at Madoff for the client's benefit.
2) Madoff agrees to set up this account for the client's benefit and to invest
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these funds in securities listed on the United States stock market and to invest the returns therefrom on the client's behalf.
4) The client will pay Madoff, in commission, fees not exceeding 12.5 U.S. cents per share and 300 U.S. dollars for every 1,000,000 dollars in American Government bonds. These commissions are less than the customary and generally accepted commissions charged by the “US registered Broker–Dealers” and members of the “National Association of Securities [Dealers].”

(Laurence Customer Agreement at 1 (emphasis added).)

Because Emilie was only eleven years old at the time of her grandfather's death, a French guardianship judge—Judge Standish—oversaw her inheritance. (Apfelbaum Deposition, 173:15–22.) Judge Standish would not permit all of Emilie's assets to be invested with BLMIS. (Trustee Facts, ¶ 35; Defendants Facts, ¶ VII.J.) Instead, he required that half of Emilie's inheritance be invested in French treasury bonds, (Trustee Facts, ¶ 35; Defendants Facts, ¶ VII.J), while the remaining half could be invested in BLMIS only if Madoff personally guaranteed that losses would not exceed 5% per year. (Trustee Facts, ¶ 36; Defendants Facts, ¶ VII.K.) Madoff agreed to provide the required guarantee and on June 12, 1995, entered in a customer agreement with Emilie, also written in French (“Emilie Customer Agreement,4 and together with the Laurence Customer Agreement, the “Customer Agreements ”).5 Laurence signed the Emilie Customer Agreement on behalf of her minor daughter. (Apfelbaum Declaration, ¶ 9.) After Emilie attained majority, the money that was previously invested in French treasury bonds was invested with BLMIS. (Apfelbaum Deposition, 236:2–238:25.)

Until late 1999, the Defendants' BLMIS accounts were held and administered by BIF and later Finama through Finama's foreign services bureau in Paris. (Apfelbaum Declaration, ¶ 11.) In late 1999, Finama informed the Defendants that it was closing its foreign services bureau, and the Defendants would have to maintain their accounts directly with BLMIS. (Id., ¶ 12.) Thereafter, Laurence managed her and Emilie's BLMIS accounts, and Doris continued to handle her own BLMIS account. (Id., ¶ 13.)

According to Exhibit B attached to the Amended Complaint, dated Apr. 23, 2012 (ECF Doc. # 27), Laurence's and Emilie's accounts were opened on May 1, 1995, and each was funded with a $33,150,157 transfer, presumably from Albert's account.6 Between then and December 11, 2008 (the “Filing Date”), over 145 withdrawals totaling $147,261,229 were made from Laurence's account, including fifty withdrawals totaling $79,404,202 within six years of the Filing Date and nineteen totaling $16,962,339 within two years of the Filing Date. Exhibit B also shows that there were over 130 withdrawals totaling $34,668,026 during the life of Emilie's BLMIS account, including fifty-one withdrawals totaling $15,456,814 and sixteen

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totaling $8,142,060, respectively, within six years and two years of the Filing Date. No monies were withdrawn from Doris's Estate's account within two years of the Filing Date, and for the reasons discussed below, no claims lie against it.

Although the Defendants admit that they withdrew money from their BLMIS accounts, they concede little else of what the Trustee has alleged. They challenge the authenticity and admissibility of Exhibit B and claim they were denied discovery of the underlying data. Laurence generally contends that her contacts with BLMIS were few and...

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