A bankruptcy judge had the authority to block private plaintiffs from suing the estate of Jeffry Picower in the Bernard Madoff Ponzi scheme because their claims were derivative to those brought by a trustee working to recover money for all Madoff investors, a federal appeals court ruled Monday.
The U.S. Court of Appeals for the Second Circuit said the late Southern District Bankruptcy Judge Burton Lifland was right to halt two actions in Florida federal court which sought direct recovery from the Picower defendants and that the judge did not exceed the limitations on his authority under Article III of the United States Constitution.
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