On August 3, 2012, Stephanie Mack and Deborah Madoff, the spouses of Bernard L. Madoff’s sons, filed a brief before federal judge Jed S. Rakoff, arguing that they cannot be the subject of Madoff trustee Irving Picard’s clawback lawsuit styled Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC. Specifically, the Madoff spouses maintain that they are protected by the doctrine of in pari delicto, which provides that a lawsuit may not be brought against third-party wrongdoers where all parties are equally at fault. Picard has argued that because Madoff’s sons deposited funds from the Ponzi scheme into accounts jointly owned by the wives, the wives constitute “insiders” and thus the in pari delicto doctrine does not apply to them. The wives, nevertheless, contend that they cannot be considered insiders based solely on their marital status with Madoff’s sons and argue they had no control over the investment company.
According to court documents, Deborah Madoff was married to Andrew Madoff in 1992 and began divorce proceedings in 2008, while Stephanie Mack was married to Mark Madoff from 2004 until his suicide in 2010. Picard hopes to recover $27 million from Deborah Madoff, $27.5 million from Stephanie Mack, and an additional $3 million collectively from Mack, Deborah Madoff and Susan Elkin, Mark Madoff’s former wife. (“Wives Of Madoff Sons Fight ‘Insider’ Label in $58M Suit,” Law360, August 6, 2012).