Madoff victims – cry me a river?

There are certainly some unfortunate tales of people who entrusted their money to Bernie Madoff only to have that trust betrayed. And then there are those like Helen Davis Chaitman, who seem less deserving of my concern.

Today’s New York Times covers her thus:

“The S.E.C. has done nothing to enforce the Securities Investor Protection Corp.,” said Helen Davis Chaitman, a retiree who spoke at the rally. Ms. Chaitman is leading a group of Madoff victims who have sued Mr. Picard to change the way he calculates claims.

“No one can trust the honesty of the securities industry,” Ms. Chaitman added later. “We have learned that from Madoff, from Stanford and from the global economic collapse caused by the unremitting greed of Wall Street,” she said, referring to R. Allen Stanford, the Texas billionaire who is involved in his own legal battle amid accusations by the S.E.C. that he operated a big Ponzi scheme.

“From our perspective, the S.E.C. is a waste of taxpayer dollars,” her husband chimed in.

So who is this “retiree” who trusted so blindly, who relied on the SEC to protect her? A lawyer who specialized in bank fraud.

Her biography states:

Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense.  In 1995, Ms. Chaitman was named one of the nation’s top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants’ malpractice case.  Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990) which is periodically updated and, since 1987, has authored the monthly newsletter, The Lender Liability Law Report.  In early 2009, Ms. Chaitman spearheaded the firm’s pro bono representation of investors in Bernard L. Madoff Investment Securities LLC.  She has been successful in publicizing the plight of the victims of Madoff’s Ponzi scheme and has been interviewed or reported on by media outlets worldwide, including The New York Times, Bloomberg, The Guardian and The American Lawyer

Ms. Chaitman practices regularly in New York and New Jersey and has been admitted to practice pro haec vice in numerous jurisdictions throughout the United States.

Representation Details Regarding Areas of Experience:

Bank Litigation
Ms. Chaitman has handled all kinds of debtor/creditor litigation.  She has prosecuted and defended RICO claims; she has defended banks in various lender liability actions; she has represented borrowers and guarantors in litigation against financial institutions. 

Lender Liability
Ms. Chaitman is not only the author of the leading treatise on lender liability, she coined the term “lender liability.”  She has been involved in some of the seminal decisions defining the obligations of financial institutions, particularly in the area of good faith and fair dealing.  She has written the monthly newsletter “The Lender Liability Law Report” since 1987 and has spoken at professional conferences on lender liability since the 1980s.

Bankruptcy and Restructuring
Ms. Chaitman has represented several corporate debtors in chapter 11 cases that were successfully reorganized.  She has represented creditors in defending preference and fraudulent conveyance claims.  She has had extensive experience representing lenders and corporate borrowers in debt restructurings and workouts.

Professional Malpractice Litigation
Ms. Chaitman has litigated malpractice cases against both accountants and lawyers.  Indeed, the National Law Journal named her one of the nation’s top ten litigators in 1995 based upon a jury verdict she won in New York Supreme Court against an accounting firm on behalf of a client whose accountant embezzled funds.  She also litigated a legal malpractice case against Rogers & Wells.

RICO Litigation
Ms. Chaitman has extensive experience litigating RICO cases on behalf of creditors.   She won a RICO judgment in the Eastern District of New York in a bench trial before the Honorable Jack Weinstein, which was affirmed on appeal by the Second Circuit.  She successfully defended Credit Lyonnais (Suisse) S.A. in a RICO action in the Southern District of New York. 

Trusts & Estates Litigation
Ms. Chaitman has done substantial litigation involving trusts and estates both in New York and New Jersey.  In one instance, she was asked to try a case in New Jersey one week before the trial was scheduled to begin.  The case was a suit by an executor to recover hundreds of thousands of dollars in cash gifts given to the defendant in the last two years of the decedent’s life.  During the course of the trial, the judge urged Ms. Chaitman to settle because he was convinced that the jury was against Ms. Chaitman’s client.  The executor refused the generous settlement proposal offered by Ms. Chaitman’s client and she had no alternative but to proceed with the trial.  The result: The verdict was in favor of Ms. Chaitman’s client. The jury found that the inter vivos not the result of undue influence.  The jury verdict was affirmed on appeal.

White Collar Criminal Defense
Ms. Chaitman defended a bank director charged by the United States with bank fraud – a charge of which the defendant was found not guilty.  Ms. Chaitman has also represented a criminal defendant in post-trial proceedings and provided advice to clients facing charges of bank fraud. 

A representative sampling of Ms. Chaitman’s reported decisions include:

  • McAninch v. Kansas Bankers Surety Co., 478 F. 3d 882, 2007 WL 655454 (8th Cir. 2007) 
  • Hunts Point Terminal Produce Cooperative Association v. New York City Economic Development Corporation, 36 A.D. 3d 234, 824 N.Y.S. 2d 59, 2006 N.Y. Slip Op. 08073 (2006). 
  • Levchuk v. Jovich, 2005 WL 2364826 (N.J. App. Div.) 
  • Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 220 F. Supp. 2d 283 (SDNY 2002) Sinclair v. United States, 49 Fed. Cl. 274 (2001); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 2000 U.S. Dist. LEXIS 1438 (S.D.N.Y.) 
    Logan & Kanawha Coal Company, Inc. v. Banque Francaise du Commerce, 1996 WL 551718 (SDNY) 
  • Sterling National Bank v. Longa, 2000 U.S. Dist. LEXIS 13306 (S.D.N.Y.) 
  • Stochastic Decisions, Inc. v. DiDomenico, 995 F. 2d 1158 (1993) 
  • Bank of China v. Chan, 937 F. 2d 780 (2d Cir. 1991) 
  • Baxt v. Liloia, 155 N.J. 190, 714 A. 2d 271 (N.J. 1998) 
  • Bevill, Bresler & Schulman Asset Mgmt. Corp. v. Spencer S&L Assn., 878 F. 2d 742 (3d Cir. 1989) 
  • International Minerals & Mining Corp. v. Citicorp North America, Inc., 736 F. Supp 587 (D.N.J. 1990) 
  • In re Wedgewood Realty Group, Ltd., 878 F. 2d 693 (3d Cir. 1989) 
  • Stochastic Decisions, Inc. v. DiDomenico, 236 N.J. Super. 388, 565 A. 2d 1133 (N.J. App. Div. 1989) 
  • John Doe v. United States, 520 F. Supp. 1200 (S.D.N.Y. 1981).

Ms. Chaitman is a member of the Character & Fitness Committee of the New York State Appellate Division – First Department.  She served as the chair of the Commercial Financial Services Committee of the Business Law Section of the American Bar Association from 1994 to 1997.  She is a member of the American Law Institute and serves as an adviser on the Restatement (Third) of Restitution. 

Ms. Chaitman has written numerous articles published in various journals on banking law and other subjects, including:

  • “The Ten Commandments for Avoiding Lender Liability” The Secured Lender November/December 1986
  • The Equitable Subordination of Bank Claims” The Business Lawyer, August 1984 
  • “Enjoining Payment on a Letter of Credit in Bankruptcy: A Tempest in a Twist Cap” The Business Lawyer, November 1982 
  • “David, Inc. v. Goliath National Bank” Litigation  Vol. 13 No. 4 Summer 1987
  • “The Ten Commandments for Avoiding Lender Liability” Commercial Law Annual 1991 
  • “Do Unto Others…” Business Law Today, November/December 1993 
  • “Supreme Court Chills Prejudgment Remedies” The Banking Law Journal, July/August 1999

I am not saying that a sophisticated investor like Attorney Chaitman deserved to be ripped off by Madoff or any other crook. I am saying that I am not particularly touched by her demand that I make up for her losses. Go back to work, madam, and earn it back – probably won’t take you more than a few years of lecturing those “Greedy Wall Street Bankers” on the ins and outs of “avoiding lender liability”.


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8 responses to “Madoff victims – cry me a river?

  1. Retired IB'er

    Knee jerk reaction to her situation (and profession) is “karma’s a bitch”.

    I have very little sympathy for the Madoff victims, especially those that had substantial percentages of wealth invested with one guy.

    Firm believer in “trust but verify” when I invest; and, I go in with my eyes open. Most (all) of Madoff investors pursued the guy because he was generating “outside” returns. Their own greed got them… oldest story in the book.

  2. anonymous

    Dumb, greedy “victims” failed to do basic due dili and didn’t properly diversify their portfolio

    Besides, many of these clowns may have ripped off many customers and employees (and the IRS and fellow, more honest taxpayers) in their years running lucrative car dealers, RE firms, and other sweatshops or scams of their own

    Always encouraging to see natural selection prevail

  3. Peg

    Put me down as having plenty of sympathy for “investors” – seriously. People can be great at their business and decent people, too – without being as sophisticated and knowledgeable as they might about investing. Shocking that so many did not follow one of the basic principles of handling your money: diversify, diversify, DIVERSIFY!

    Still – no evidence that many of these people were greedy, conniving jerks.

    While I don’t think that they should be made whole (as I read somewhere: “when folks get robbed, the U.S. government doesn’t pay them back.”) Still – my sympathy? They have it.

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  6. fred

    Anybody know the story on the Chicago Climate Exchange and pray tell, who is going to regulate it?


  7. Ted

    Did Chaitman claim she lost money (which would be unlikely if she’s an attorney for other members of the class), or was she just speaking on behalf of her clients at the rally?