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Madoff Trustee vs Enrica Cotellessa-Pitz

Madoff Trustee vs Enrica Cotellessa-Pitz

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Published by mrspanstreppon
Madoff bankruptcy trustee, Irving Picard's lawsuit against former Madoff controller, Enrica Cotellessa-Pitz.
Madoff bankruptcy trustee, Irving Picard's lawsuit against former Madoff controller, Enrica Cotellessa-Pitz.

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Published by: mrspanstreppon on Nov 17, 2010
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01/06/2011

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Baker & Hostetler LLP
45 Rockefeller Plaza New York, NY 10111Telephone: (212) 589-4200Facsimile: (212) 589-4201David J. SheehanKeith R. MurphyGeraldine E. Ponto
 Attorneys for Irving H. Picard, Esq., Trustee for the Substantively Consolidated SIPA Liquidationof Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff 
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK 
SECURITIES INVESTOR PROTECTIONCORPORATION,Plaintiff-Applicant,v.BERNARD L. MADOFF INVESTMENTSECURITIES LLC,Defendant.Adv. Pro. No. 08-01789 (BRL)SIPA LIQUIDATION(Substantively Consolidated)In re:BERNARD L. MADOFF,Debtor.IRVING H. PICARD, Trustee for the Liquidationof Bernard L. Madoff Investment Securities LLC,Plaintiff,v.ENRICA COTELLESSA-PITZ and THOMASPITZ,Defendants.Adv. Pro. No. 10-_______ (BRL)
 
-2-
COMPLAINT
Irving H. Picard (the “Trustee”), as trustee for the liquidation of the business of BernardL. Madoff Investment Securities LLC (“BLMIS”), under the Securities Investor Protection Act,15 U.S.C. §§ 78aaa,
et seq
. (“SIPA”),
1
and the substantively consolidated estate of Bernard L.Madoff individually (“Madoff”), by and through his undersigned counsel, for his Complaint,states as follows:
INTRODUCTION
1.This adversary proceeding arises from the massive Ponzi scheme perpetrated byMadoff. Over the course of the scheme, there were more than 8,000 client accounts at BLMIS.In early December 2008, BLMIS generated client account statements for its approximately 4,900open client accounts at BLMIS. When added together, these statements purportedly show thatclients of BLMIS had approximately $65 billion held in accounts with BLMIS. In reality,BLMIS had assets on hand worth a small fraction of that amount. On March 12, 2009, Madoff admitted to the fraudulent scheme and pled guilty to 11 felony counts, and was sentenced onJune 29, 2009 to 150 years in prison. The within Defendants Enrica Cotellessa-Pitz and ThomasPitz (“Defendants”) received avoidable transfers from BLMIS.2.Defendant Enrica Cotellessa-Pitz (“Pitz”) was BLMIS’ Controller and acertified securities professional with a sound understanding of practices, policies and recordingrequirements inherent in the securities industry. Pitz played a key role in disguising thefraudulent Ponzi scheme from investors and investigators. BLMIS was composed of threeseparate business units. On one floor of BLMIS’ offices were the proprietary trading and marketmaking businesses, together known as “House 5.” On the 17th floor was the investment
 
-3-advisory arm of BLMIS (the “IA Business”), from which the Ponzi scheme was conducted. TheIA Business operated by depositing customer money into a bank account at JPMorgan Chase &Co., Account #xxxxxxxxxxx1703 (the “BLMIS Bank Account”) and fabricating fictionalsecurities transactions to create the appearance that customer deposits were used to purchasesecurities. On its face, House 5 appeared to be an autonomous, legitimate and successfulenterprise. In fact, House 5 was a failing business, and operated to hide the true nature of the IABusiness from investors and investigators. BLMIS ensured that House 5 would continue as ashield for its misconduct by: (i) funneling large amounts of money to House 5 from the IABusiness, often through a complicated international maze of transactions; (ii) conspiring withexternal auditors to provide false audit reports; and (iii) selectively complying with certainregulatory requirements of various securities agencies in order to avoid raising suspicion.3.Pitz had a number of roles, many of which exposed her to irrefutable evidenceof fraud at BLMIS. As Controller, Pitz was responsible for closing the company’s books eachmonth and preparing monthly and quarterly FOCUS Reports and annual audited financialstatements, which were then filed with both the Securities and Exchange Commission (“SEC”)and the Financial Industry Regulatory Authority (“FINRA”). Pitz also served as the primaryliaison between BLMIS and both the SEC and its external auditor, Friehling & Horowitz,although this entailed little more than delivering to them incomplete financial data. Notably, Pitzwas also the supervisor of BLMIS’ Anti-Money Laundering Program.4.As Controller, Pitz processed and recorded as revenue a number of paymentsfrom the IA Business to House 5 (collectively, the “IA to House 5 Transfers”). From fiscal year 2002 to 2008, Pitz processed transfers of more than $600 million, constituting approximately
1
For convenience, future reference to SIPA will not include “15 U.S.C.”

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