The trustee liquidating the Bernard Madoff Ponzi scheme under the Securities Investor Protection Act won a major victory in a test case in the Second Circuit.  Among other things, the appeals court held that a Madoff customer who refused to return fictitious profits must pay 4% in prejudgment interest on judgments in favor of the trustee.

Because the lawsuits were filed some 12 years ago, defendants will be paying almost 50% more than the principal amount of the judgments.

The September 20 decision by Circuit Judge Rosemary S. Pooler agreed with the district court that there were no disputed issues of material fact and that the Madoff trustee was entitled to summary judgment mandating the return of fictitious profits received by customer within two years of bankruptcy.

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