Baker & Hostetler LLP

45 Rockefeller Plaza
New York, NY 10111
Telephone: (212) 589-4200
Facsimile: (212) 589-4201
David J. Sheehan
Keith R. Murphy
Geraldine E. Ponto
Jonathan B. New
Andrew W. Reich
Essence Liburd

Attorneys for Irving H. Picard, Trustee

for the Substantively Consolidated SIPA Liquidation
of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK
SECURITIES INVESTOR PROTECTION
CORPORATION, Adv. Pro. No. 08-01789 (BRL)

Plaintiff-Applicant, SIPA LIQUIDATION

v. (Substantively Consolidated)
BERNARD L. MADOFF INVESTMENT
SECURITIES LLC,

Defendant.
In re:

BERNARD L. MADOFF,

Debtor.
IRVING H. PICARD, Trustee for the Liquidation
of Bernard L. Madoff Investment Securities LLC,

Plaintiff,
Adv. Pro. No. 10-_______ (BRL)
v.

RICHARD M. GLANTZ, individually, as trustee of

the Richard M. Glantz 1991 Living Trust, the COMPLAINT
Edward R. Glantz Living Trust, the Thelma Glantz
Living Trust, the Jerald Ostrin Trust, the Scott
Ostrin Trust, the Glantz-Ostrin Trust I, and the
Glantz-Ostrin Trust II, and as executor of the Estate
of Edward R. Glantz and the Estate of Thelma
Glantz;

ELAINE OSTRIN, individually and as trustee of

the Edward R. Glantz Living Trust;

JERALD OSTRIN;

SCOTT OSTRIN;

THE RICHARD M. GLANTZ 1991 LIVING

TRUST;

THE EDWARD R. GLANTZ LIVING TRUST;

THE ESTATE OF EDWARD R. GLANTZ;

THE THELMA GLANTZ LIVING TRUST;

THE ESTATE OF THELMA GLANTZ;

THE JERALD OSTRIN TRUST;

THE SCOTT OSTRIN TRUST;

THE GLANTZ-OSTRIN TRUST I;

THE GLANTZ-OSTRIN TRUST II;

ROBERTA COHEN;

TAJ INAYAT a/k/a TAJ INAYAT-KHAN a/k/a

CAROLYN TAJ GLANTZ a/k/a CAROLYN
BUCKMASTER;

RALEIGH DOW BUCKMASTER, SR.;

BARBARA BUCKMASTER,

RALEIGH DOW BUCKMASTER, JR.;

DREW BUCKMASTER;

OWEN BUCKMASTER;

JOELLEN BUCKMASTER;

MIRZA INAYAT KHAN;

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 ZIA INAYAT KHAN;

ZIA’S CHILDREN EDUCATION TRUST;

NATHAN JOHNSON, individually and as trustee

of Zia’s Children Education Trust;

CHRISTOPHER L. DINGMAN;

AMANDA SAVASKY;

AUSTIN BOSARGE;

GRACE & COMPANY;

EJS ASSOCIATES, L.P.;

JELRIS & ASSOCIATES, L.P.;

THE GLANTZ FAMILY FOUNDATION, INC;

MERLIN & ASSOCIATES, LTD.;

ENHANCEMENT GROUP;

LAKEVIEW INVESTMENT, LP;

VISTA MANAGEMENT CO.;

BUCKMASTER FARMS, L.P.;

NTC & CO. LLP, as former custodian for an

Individual Retirement Account for the benefit of
RICHARD M. GLANTZ; and

NTC & CO. LLP, as former custodian for an

Individual Retirement Account for the benefit of
EDWARD R. GLANTZ,

Defendants.

Irving H. Picard, (the “Trustee”), as trustee for the liquidation of the business of Bernard

L. Madoff Investment Securities LLC (“BLMIS”), under the Securities Investor Protection Act,

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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 (the

“Complaint”), states as follows:

NATURE OF PROCEEDING

1. This adversary proceeding arises from the massive Ponzi scheme perpetrated by

Madoff. 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 4,900

open client accounts. These statements purport that clients of BLMIS had invested an aggregate

of approximately $65 billion with BLMIS. In reality, BLMIS had assets on hand worth a small

fraction of that amount. On March 12, 2009, Madoff admitted to engaging in a fraudulent

scheme and pled guilty to 11 felony counts and was sentenced on June 29, 2009 to 150 years in

prison. The defendants received, directly or indirectly, avoidable transfers from BLMIS totaling

more than $113 million, and the purpose of this proceeding is to avoid and recover the transfers

received by these defendants.

2. Richard M. Glantz (“Glantz”) and his father, Edward R. Glantz, now deceased

(“Edward Glantz”), were beneficiaries of this Ponzi scheme for more than 30 years. Since 1992,

they and the other defendants collectively profited from this scheme through the withdrawal of

more than $113 million. The Trustee’s investigation to date has revealed that over $40 million

of this amount was fictitious profits from the Ponzi scheme. In other words, the defendants have

received more than $40 million of other people’s money.

3. Glantz and Edward Glantz knew or should have known that they were profiting

from the fraud because, among other reasons, they had an extensive and special relationship with

BLMIS and Madoff, having created and managed entities that pooled many millions of dollars of

1
For convenience, future reference to SIPA will not include “15 U.S.C.”

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investor funds so that they could be funneled into BLMIS. As a result of their activities, Glantz

and Edward Glantz, and entities they created and managed, were investigated and sued by the

Securities and Exchange Commission (“SEC”) for violations of the federal securities laws. In

1993, Glantz, Edward Glantz and the entities they controlled were permanently enjoined by

federal courts from future securities law violations.

4. In connection with the SEC proceedings, Glantz, Edward Glantz and their entities

were forced to return all money to their investors. Nevertheless, millions of dollars of that

money was almost immediately reinvested directly with BLMIS by the investors. Madoff

rewarded Glantz and Edward Glantz with a fraudulent side payment each year thereafter for

referring investors to BLMIS.

5. In addition, Glantz continued to funnel his own money, his family’s money, and

other people’s money into BLMIS through new entities. Defendants Grace & Company

(“Grace”), EJS Associates, L.P. (“EJS”), Jelris & Associates, L.P. (“Jelris”), The Glantz Family

Foundation, Inc. (“GFF”), Merlin & Associates, Ltd., Enhancement Group (“Enhancement”),

and the Richard M. Glantz 1991 Living Trust (the “RMG Trust”) all had accounts with BLMIS

that, upon information and belief, were managed, controlled, and/or overseen by Glantz. Glantz

has been trustee of the RMG Trust. As detailed below, the general partners of Grace, EJS and

Jelris have included the RMG Trust, the Edward R. Glantz Living Trust (the “ERG Trust”), the

Thelma Glantz Living Trust (the “TG Trust”), the Jerald Ostrin Trust, the Scott Ostrin Trust,

Glantz, Elaine Ostrin, Jerald Ostrin, Scott Ostrin, Roberta Cohen, Taj Inayat, Raleigh Dow

Buckmaster, Sr., Barbara Buckmaster, Raleigh Dow Buckmaster, Jr., Drew Buckmaster, Owen

Buckmaster, JoEllen Buckmaster, Mirza Inayat Khan, Zia Inayat Khan, Zia’s Children Education

Trust, Nathan Johnson, Christopher L. Dingman, and Amanda Savasky. All of the entities

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(including trusts), trustees and general partners identified in this paragraph are collectively

referred to as “Defendants.”

6. NTC & Co. LLP, as former custodian of the Individual Retirement Account for

the benefit of Glantz, is either an initial transferee of avoidable Transfers (as defined below)

from BLMIS, or a conduit of such Transfers for the benefit of Glantz (“FBO Defendant R.

Glantz”).

7. NTC & Co. LLP, as former custodian of the Individual Retirement Account

initially for the benefit of Edward Glantz, and later, upon information and belief, for the benefit

of Thelma Glantz, is either an initial transferee of avoidable Transfers (as defined below) from

BLMIS, or a conduit of such Transfers for the benefit of Edward Glantz and Thelma Glantz.

The Estate of Edward R. Glantz and the executors thereof (collectively, the “Edward Glantz

Estate”) and/or the ERG Trust (and the trustees thereof), as successors-in-interest to Edward

Glantz, are collectively referred to as “FBO Defendant E. Glantz.” The Estate of Thelma Glantz

and the executors thereof (collectively, the “Thelma Glantz Estate”) and/or the TG Trust (and the

trustees thereof), as successors-in-interest to Thelma Glantz, are collectively referred to as “FBO

Defendant T. Glantz.” FBO Defendant E. Glantz and FBO Defendant T. Glantz are collectively

referred to as “FBO Defendants Edward Glantz.”

8. FBO Defendant R. Glantz and FBO Defendants Edward Glantz are collectively

referred to as “FBO Defendants.”

9. NTC & Co. LLP, as former custodian of both Individual Retirement Accounts for

the benefit of FBO Defendants, is referred to herein as “Defendant NTC.” If Defendant NTC is

the initial transferee, then FBO Defendants are the subsequent transferees of such transfers for

purposes of this Complaint. To the extent Defendant NTC served as a conduit for the funds

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withdrawn for the benefit of FBO Defendants, FBO Defendants are the initial transferees of the

transfers for whose benefit such transfers were made for purposes of this Complaint.

10. Defendants, Defendant NTC and/or FBO Defendants were beneficiaries of

Madoff’s Ponzi scheme and received avoidable and recoverable transfers from BLMIS. Since

the opening of their various accounts at BLMIS, Defendants, Defendant NTC and/or FBO

Defendants collectively withdrew the amount of $113,385,537 from BLMIS in respect of such

accounts. Defendants, Defendant NTC and/or FBO Defendants received such funds under

circumstances that should have put Defendants and/or FBO Defendants on notice of the fraud.

11. Upon information and belief, Glantz, Elaine Ostrin, Jerald Ostrin, Scott Ostrin,

the RMG Trust, the ERG Trust, the TG Trust, the Jerald Ostrin Trust, the Scott Ostrin Trust, the

Glantz-Ostrin Trust I, the Glantz-Ostrin Trust II, Roberta Cohen, Taj Inayat, Raleigh Dow

Buckmaster, Sr., Barbara Buckmaster, Raleigh Dow Buckmaster, Jr., Drew Buckmaster, Owen

Buckmaster, JoEllen Buckmaster, Mirza Inayat Khan, Zia Inayat Khan, Zia’s Children Education

Trust, Nathan Johnson, Christopher L. Dingman, Amanda Savasky, Austin Bosarge, Grace, EJS,

Jelris, Lakeview Investment, LP (“Lakeview”), Vista Management Co. (“Vista”), and

Buckmaster Farms, L.P. (collectively, “Subsequent Transferee Defendants”) received subsequent

transfers of the avoidable transfers referenced above. To the extent the funds transferred from

BLMIS were for the benefit of Subsequent Transferee Defendants, the transfers are recoverable

from Subsequent Transferee Defendants pursuant to § 550(a) of title 11 of the United States

Code (the “Bankruptcy Code”), and Subsequent Transferee Defendants are included as

Defendants for purposes of Counts One through Seven herein.

12. This adversary proceeding is brought pursuant to §§ 78fff(b), 78fff-1(a), and

78fff-2(c)(3) of SIPA, §§ 105(a), 502(d), 510(c), 544, 548(a), 550(a) and 551 of the Bankruptcy

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Code, the New York Fraudulent Conveyance Act (New York Debtor & Creditor § 270, et seq.

(McKinney 2001) (“DCL”)), NY CPLR 203(g) and 213(8), and other applicable law, for the

avoidance and recovery of fraudulent conveyances made by BLMIS to or for the benefit of

Defendants, Defendant NTC and/or FBO Defendants, and Subsequent Transferee Defendants.

The Trustee seeks to avoid such transfers and preserve and recover the property for the benefit of

BLMIS’s defrauded customers.

JURISDICTION AND VENUE

13. This is an adversary proceeding brought before the Court in which the main

underlying SIPA proceeding, No. 08-01789 (BRL) (the “SIPA Proceeding”), is pending. The

SIPA Proceeding was originally brought in the United States District Court for the Southern

District of New York (the “District Court”) as Securities Exchange Commission v. Bernard L.

Madoff Investment Securities LLC et al., No. 08 CV 10791 (the “District Court Proceeding”) and

has been referred to this Court. This Court has jurisdiction over this adversary proceeding under

28 U.S.C. § 1334(b) and § 78eee(b)(2)(A) and (b)(4) of SIPA.

14. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), (H) and (O).

15. Venue in this District is proper under 28 U.S.C. § 1409.

16. This Court has personal jurisdiction over all of the above-captioned Defendants

pursuant to Bankruptcy Rule 7004.

DEFENDANTS

Account Holder Defendants

Grace & Company

17. Upon information and belief, and based on documents submitted to the Trustee,

Grace is a general partnership. Grace maintains its principal place of business at 100 Smith

Ranch Road, Suite 116, San Rafael, California 94903.

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 18. Grace holds a BLMIS account, No. 1T0026 (the “Grace Account”), in the name

“Grace & Company,” with the account address reported as 100 Smith Ranch Road, Suite 116,

San Rafael, California 94903. The Grace Account was opened as, and was previously held in the

name, “Taj Family.” For convenience, the terms “Grace” and “Grace Account” will include

reference to any previous title. Grace received avoidable and recoverable transfers from BLMIS

in respect of this account.

19. Upon information and belief, Glantz formed Grace to serve as an investment

vehicle at BLMIS for members of the Buckmaster family, relatives of his then-wife, Taj Inayat

(a/k/a Carolyn Buckmaster). Glantz opened the Grace Account with BLMIS, handled

correspondence with BLMIS on behalf of Grace, and at all times has been the manager of Grace

and the Grace Account.

20. Upon information and belief, and based on documents submitted to the Trustee,

general partners of Grace have included Glantz, Taj Inayat, Raleigh Dow Buckmaster, Sr.,

Barbara Buckmaster, Raleigh Dow Buckmaster, Jr., Drew Buckmaster, Owen Buckmaster,

JoEllen Buckmaster, Mirza Inayat Khan, Zia Inayat Khan, Zia’s Children Education Trust,

Nathan Johnson (individually and as trustee of Zia’s Children Education Trust), Christopher L.

Dingman, and Amanda Savasky. Grace and the general partners of Grace are collectively

referred to as “Grace Defendants.”

21. Upon information and belief, the RMG Trust, EJS, Lakeview, Vista, Buckmaster

Farms, L.P., and Raleigh Buckmaster, as general partner of Buckmaster Farms, L.P.

(collectively, “Grace Subsequent Transferee Defendants”) received subsequent transfers of the

avoidable transfers received by Grace.

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 EJS Associates, L.P.

22. Upon information and belief, EJS was formed on October 15, 1993 as a general

partnership. Upon information and belief, EJS was reorganized as a limited partnership under

the laws of the State of Delaware, effective January 1, 1998. Upon information and belief, EJS

maintains its principal place of business at 100 Smith Ranch Road, Suite 116, San Rafael,

California 94903.

23. EJS holds a BLMIS account, No. 1ZA192 (the “EJS Account”), in the name “EJS

& Associates,” with the account address reported as 100 Smith Ranch Road, Suite 116, San

Rafael, California 94903. EJS received avoidable and recoverable transfers from BLMIS in

respect of this account.

24. Upon information and belief, Glantz formed EJS to serve as an investment vehicle

at BLMIS for Glantz’s own funds, as well as for funds of his close relatives. Glantz opened the

EJS Account with BLMIS, handled correspondence with BLMIS on behalf of EJS, and at all

times has been the managing partner of EJS and the EJS Account. Based on documents

recovered from BLMIS, both Edward Glantz and Glantz’s sister, Elaine Ostrin, were control

persons of EJS and regularly corresponded with BLMIS on behalf of EJS.

25. As a general partnership, EJS’s general partners included Glantz, Elaine Ostrin,

Jerald Ostrin, Scott Ostrin, the RMG Trust, the ERG Trust, the TG Trust, the Jerald Ostrin Trust,

and the Scott Ostrin Trust. Upon information and belief, at all times that EJS has been a limited

partnership, Glantz has been the sole general partner of EJS. EJS and each of these general

partners are collectively referred to herein as “EJS Defendants.”

26. Upon information and belief, during the period of time that EJS has been a limited

partnership, the limited partners of EJS have included Elaine Ostrin, Jerald Ostrin, Scott Ostrin,

Roberta Cohen, the RMG Trust, the ERG Trust, the TG Trust, the Jerald Ostrin Trust, and the

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Scott Ostrin Trust. Upon information and belief, each of these limited partners of EJS received

subsequent transfers of the avoidable transfers received by EJS. In addition, Jelris, Vista, and

Lakeview also received subsequent transfers of the transfers received by EJS. Elaine Ostrin,

Jerald Ostrin, Scott Ostrin, Roberta Cohen, the RMG Trust, the ERG Trust, the TG Trust, the

Jerald Ostrin Trust, the Scott Ostrin Trust, Jelris, Vista, and Lakeview are collectively referred to

herein as “EJS Subsequent Transferee Defendants.”

27. In addition to his individual capacity, Glantz is included in the definition of EJS

Defendants as trustee of the RMG Trust, the TG Trust, the Jerald Ostrin Trust, and the Scott

Ostrin Trust. As trustee of each of these trusts, Glantz is also included in the definition of EJS

Subsequent Transferee Defendants.

Jelris & Associates, L.P.

28. Upon information and belief, Jelris was formed on October 15, 1993 as a general

partnership. It was reorganized as a limited partnership under the laws of the State of Delaware,

effective March 28, 1995. Upon information and belief, Jelris maintains its principal place of

business at 100 Smith Ranch Road, Suite 116, San Rafael, California 94903.

29. Jelris holds a BLMIS account, No. 1ZB143 (the “Jelris Account”), in the name

“Jelris & Associates,” with the account address reported as 100 Smith Ranch Road, Suite 116,

San Rafael, California 94903. Jelris received avoidable and recoverable transfers from BLMIS

in respect of this account.

30. Upon information and belief, Glantz formed Jelris to serve as an investment

vehicle at BLMIS for Glantz’s own funds, as well as for funds of his close relatives. Glantz

opened the Jelris Account with BLMIS, handled correspondence with BLMIS on behalf of Jelris,

and at all times has been the managing partner of Jelris and the Jelris Account. Based on

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documents recovered from BLMIS, Edward Glantz and Elaine Ostrin also were control persons

of Jelris and regularly corresponded with BLMIS on behalf of Jelris.

31. As a general partnership, Jelris’s general partners included Glantz, Elaine Ostrin,

Jerald Ostrin, Scott Ostrin, the RMG Trust, the ERG Trust, and the TG Trust. Upon information

and belief, at all times that Jelris has been a limited partnership, Glantz has been the sole general

partner of Jelris. Jelris and each of these general partners are collectively referred to herein as

“Jelris Defendants.”

32. Upon information and belief, during the time that Jelris has been a limited

partnership, the limited partners of Jelris have included Elaine Ostrin, Jerald Ostrin, Scott Ostrin,

the RMG Trust, the ERG Trust, and the TG Trust. Upon information and belief, each of these

limited partners of Jelris received subsequent transfers of the avoidable transfers received by

Jelris. In addition, the Glantz-Ostrin Trust I, the Glantz-Ostrin Trust II, Austin Bosarge,

Lakeview, and Vista also received subsequent transfers of the transfers received by Jelris. Elaine

Ostrin, Jerald Ostrin, Scott Ostrin, the RMG Trust, the ERG Trust, the TG Trust, the Glantz-

Ostrin Trust I, the Glantz-Ostrin Trust II, Austin Bosarge, Lakeview, and Vista are collectively

referred to herein as “Jelris Subsequent Transferee Defendants.”

33. In addition to his individual capacity, Glantz is included in the definition of Jelris

Defendants as trustee of the RMG Trust, the ERG Trust and the TG Trust. As trustee of each of

these trusts, as well as the Glantz-Ostrin Trust I and the Glantz-Ostrin Trust II, Glantz is also

included in the definition of Jelris Subsequent Transferee Defendants.

The Glantz Family Foundation, Inc.

34. Upon information and belief, GFF is a corporation that was incorporated in 1986

under the laws of the State of Florida. Upon information and belief, GFF maintains its principal

place of business at 100 Smith Ranch Road, Suite 116, San Rafael, California 94903.

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 35. GFF holds a BLMIS account, No. 1ZB010 (the “GFF Account”), in the name

“Glantz Family Foundation c/o Mr. Richard Glantz,” with the account address reported as 100

Smith Ranch Road, Suite 116, San Rafael, California 94903. GFF received avoidable and

recoverable transfers from BLMIS in respect of this account.

36. Upon information and belief, Glantz and Elaine Ostrin have been directors and

officers of GFF at all times relevant hereto. Upon information and belief, Edward Glantz was

president from at least 1995 until his death, and Glantz has been president thereafter. Edward

Glantz and Glantz have been vested with the authority, and have exercised the authority, to act

on behalf of GFF, including making deposits and withdrawals in respect of the GFF Account.

Merlin & Associates, Ltd.

37. Upon information and belief, Merlin & Associates, Ltd. is or was a corporation

incorporated in 1989 under the laws of the State of California. Upon information and belief,

Merlin & Associates, Ltd. was the successor to The Merlin Group, a corporation incorporated in

1984 or 1985 under the laws of the State of Nevada. For purposes of this Complaint, the Merlin

Group and Merlin & Associates, Ltd. are collectively referred to as “Merlin.” Upon information

and belief, Glantz at all times was the sole owner, officer and director of Merlin, and dominated

and controlled Merlin. Glantz is included in the definition of “Merlin.”

38. Merlin holds or held a BLMIS account, No. 1M0057 (the “Merlin Account”), in

the name “Merlin & Associates Ltd c/o Richard Glantz.” Merlin received avoidable and

recoverable transfers from BLMIS in respect of this account.

Enhancement Group

39. Upon information and belief, Enhancement is or was a corporation incorporated

in 1986 under the laws of the State of California. Upon information and belief, Glantz at all

times was an owner and the president of Enhancement, the only officer with an active role in

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Enhancement’s operations, and dominated and controlled Enhancement. Glantz is included in

the definition of “Enhancement.”

40. Enhancement holds or held a BLMIS account, No. 1E0128 (the “Enhancement

Account”), in the name “Enhancement Group c/o Richard Glantz.” Enhancement received

avoidable and recoverable transfers from BLMIS in respect of this account.

The Richard M. Glantz 1991 Living Trust

41. Upon information and belief, the RMG Trust is a trust formed under the laws of

the State of California. The RMG Trust holds a BLMIS account, No. 1ZA169 (the “RMG Trust

Account”), in the name “Richard M. Glantz 1991 Trust,” with the account address reported as

100 Smith Ranch Road, Suite 116, San Rafael, California 94903. The RMG Trust received

avoidable and recoverable transfers from BLMIS in respect of this account.

42. Upon information and belief, Glantz has been trustee of the RMG Trust. The

RMG Trust and Glantz, as trustee, are collectively referred to herein as “RMG Trust

Defendants.”

Richard M. Glantz and FBO Defendant R. Glantz

43. Upon information and belief, Glantz maintained his last known residence in San

Rafael, California. Upon information and belief, he is or was a general partner of Grace, EJS

and Jelris, sole owner of Merlin, part owner and control person of Enhancement, trustee of the

RMG Trust, the ERG Trust, the TG Trust, the Jerald Ostrin Trust, the Scott Ostrin Trust, the

Glantz-Ostrin Trust I and the Glantz-Ostrin Trust II, and executor of the Edward Glantz Estate

and the Thelma Glantz Estate.

44. FBO Defendant R. Glantz holds a BLMIS account, No. 1ZR010 (the “R. Glantz

IRA Account”). Defendant NTC and/or FBO Defendant R. Glantz received avoidable and

recoverable transfers from BLMIS in respect of this account.

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 Edward Glantz (FBO Defendant E. Glantz)

45. Edward Glantz died on or about February 9, 2007. During his lifetime, he was the

beneficiary of the BLMIS account held by Defendant NTC for his benefit, No. 1ZR176 (the “E.

Glantz IRA Account”). Upon information and belief, during his lifetime, Edward Glantz and/or

the ERG Trust directly (or as a subsequent transferee of Defendant NTC) received avoidable and

recoverable transfers from BLMIS in respect of this account. If Edward Glantz received the

avoidable transfers, the Edward Glantz Estate and/or the ERG Trust are successors-in-interest to

those transfers.

46. Upon Edward Glantz’s death, upon information and belief, the beneficial interest

in the E. Glantz IRA Account transferred to his wife, Thelma Glantz, as designated beneficiary

and successor-in-interest to such account. Upon information and belief, after Edward Glantz’s

death, Thelma Glantz and/or the TG Trust directly (or as a subsequent transferee of Defendant

NTC) received transfer(s) from the E. Glantz IRA Account during her lifetime. If Thelma

Glantz received the avoidable transfers, the Thelma Glantz Estate and/or the TG Trust are

successors-in-interest to those transfers.

47. The Trustee seeks recovery of these transfers from FBO Defendant E. Glantz and

FBO Defendant T. Glantz, as transferees of avoidable transfers in respect of the E. Glantz IRA

Account, parties for whose benefit avoidable transfers were made, and/or successors-in-interest

to the same.

NTC & Co. LLP

48. Defendant NTC is a limited liability partnership that was formed under the laws

of the State of Colorado. Its principal place of business is located at 717 17th Street, Suite 2100,

Denver, Colorado 80202.

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Non-Account Holder Defendants

49. Upon information and belief, Elaine Ostrin maintains her residence in San

Francisco, California. She is Glantz’s sister and the daughter of Edward Glantz and Thelma

Glantz. Elaine Ostrin is or was a general partner and a limited partner of both EJS and Jelris and

a trustee of the ERG Trust.

50. Upon information and belief, Jerald Ostrin, a son of Elaine Ostrin, maintains his

residence in San Francisco, California. Jerald Ostrin is or was a general partner and a limited

partner of both EJS and Jelris.

51. Upon information and belief, Scott Ostrin, a son of Elaine Ostrin, maintains his

residence in Broomfield, Colorado. Scott Ostrin is or was a general partner and a limited partner

of both EJS and Jelris.

52. Upon information and belief, the ERG Trust is a trust formed under the laws of

the State of Florida. The ERG Trust is or was a general partner and a limited partner of both EJS

and Jelris. The ERG Trust was formed through a trust agreement dated June 6, 1993 and

subsequently amended, most recently on August 7, 2006. Edward Glantz was settlor and initial

trustee of the ERG Trust. Upon information and belief, the ERG Trust received initial and/or

subsequent transfers of the avoidable transfers referenced above.

53. Upon information and belief, following Edward Glantz’s death, Glantz, Thelma

Glantz and Elaine Ostrin became trustees of the ERG Trust. Upon information and belief,

following Edward Glantz’s death, assets of the Edward Glantz Estate and the ERG Trust,

including the avoidable and recoverable transfers and subsequent transfers referenced herein,

were transferred to beneficiaries of the Edward Glantz Estate and/or beneficiaries of the ERG

Trust. As stated above, upon information and belief, Glantz was executor of the Edward Glantz

Estate.

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 54. Upon information and belief, the TG Trust is a trust formed under the laws of the

State of Florida. The TG Trust is or was a general partner and a limited partner of both EJS and

Jelris. Thelma Glantz (Edward Glantz’s widow and Glantz’s mother) was settlor and initial

trustee of the TG Trust. Upon information and belief, during Thelma Glantz’s lifetime, the TG

Trust received initial and/or subsequent transfers of the avoidable transfers referenced above.

55. Thelma Glantz died on or about July 23, 2010. Upon information and belief,

following Thelma Glantz’s death, assets of the Thelma Glantz Estate and the TG Trust, including

the avoidable and recoverable transfers and subsequent transfers referenced herein, were or will

be transferred to beneficiaries of the Thelma Glantz Estate and/or beneficiaries of the TG Trust.

As stated above, upon information and belief, Glantz is or was executor of the Thelma Glantz

Estate.

56. Upon information and belief, the Jerald Ostrin Trust is a trust formed under the

laws of the State of California. Upon information and belief, Glantz has been trustee of the

Jerald Ostrin Trust. The Jerald Ostrin Trust is or was a general partner and a limited partner of

EJS.

57. Upon information and belief, the Scott Ostrin Trust is a trust formed under the

laws of the State of California. Upon information and belief, Glantz has been trustee of the Scott

Ostrin Trust. The Scott Ostrin Trust is or was a general partner and a limited partner of EJS.

58. Upon information and belief, Taj Inayat maintains her residence in Petaluma,

California. She is a former wife of Glantz, and has also been known as Taj Inayat-Khan,

Carolyn Taj Glantz and Carolyn Buckmaster. Upon information and belief, Taj Inayat is or was

a general partner of Grace. As such, she is included in the definition of Grace Defendants.

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 59. Upon information and belief, Raleigh Dow Buckmaster, Sr. maintains his

residence in Lansing, Nevada. Upon information and belief, Raleigh Dow Buckmaster, Sr. is or

was a general partner of Grace. As such, he is included in the definition of Grace Defendants.

60. Upon information and belief, Barbara Buckmaster maintains her residence in

Asheville, North Carolina. Upon information and belief, Barbara Buckmaster is or was a general

partner of Grace. As such, she is included in the definition of Grace Defendants.

61. Upon information and belief, Raleigh Dow Buckmaster, Jr. maintains his

residence in Big Sky, Montana. Upon information and belief, Raleigh Dow Buckmaster, Jr. is or

was a general partner of Grace. As such, he is included in the definition of Grace Defendants.

62. Upon information and belief, Drew Buckmaster maintains his residence in

Truckee, California. Upon information and belief, Drew Buckmaster is or was a general partner

of Grace. As such, he is included in the definition of Grace Defendants.

63. Upon information and belief, Owen Buckmaster maintains his residence in Tahoe

City, California. Upon information and belief, Owen Buckmaster is or was a general partner of

Grace. As such, he is included in the definition of Grace Defendants.

64. Upon information and belief, JoEllen Buckmaster maintains her residence in

Lansing, Iowa. Upon information and belief, JoEllen Buckmaster is or was a general partner of

Grace. As such, she is included in the definition of Grace Defendants.

65. Upon information and belief, Mirza Inayat Khan maintains his residence in

Fairfax, California. Upon information and belief, Mirza Inayat Khan is or was a general partner

of Grace. As such, he is included in the definition of Grace Defendants.

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 66. Upon information and belief, Zia Inayat Khan maintains his residence in New

Lebanon, New York. Upon information and belief, Zia Inayat Khan is or was a general partner

of Grace. As such, he is included in the definition of Grace Defendants.

67. Upon information and belief, Zia’s Children Education Trust is a trust formed

under the laws of the State of California. Upon information and belief, Zia’s Children Education

Trust is or was a general partner of Grace. As such, it is included in the definition of Grace

Defendants. Upon information and belief, Nathan Johnson has been trustee of Zia’s Children

Education Trust.

68. Upon information and belief, Nathan Johnson maintains his residence in Fairfax,

California. Upon information and belief, Nathan Johnson is or was a general partner of Grace.

As such, he is included in the definition of Grace Defendants. He is also included in the

definition of Grace Defendants as trustee of Zia’s Children Education Trust.

69. Upon information and belief, Christopher L. Dingman maintains his residence in

Aptos, California. Upon information and belief, Christopher L. Dingman is or was a general

partner of Grace. As such, he is included in the definition of Grace Defendants.

70. Upon information and belief, Amanda Savasky maintains her residence in Aptos,

California. Upon information and belief, Amanda Savasky is or was a general partner of Grace.

As such, she is included in the definition of Grace Defendants.

71. Upon information and belief, the Glantz-Ostrin Trust I is a trust formed under the

laws of the State of California. Upon information and belief, Glantz has been trustee of the

Glantz-Ostrin Trust I, and its principal place of business is located at 100 Smith Ranch Road,

Suite 116, San Rafael, California 94903. It has received subsequent transfers of the avoidable

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transfers received by Jelris, and is included in the definition of Jelris Subsequent Transferee

Defendants.

72. Upon information and belief, the Glantz-Ostrin Trust II is a trust formed under the

laws of the State of California. Upon information and belief, Glantz has been trustee of the

Glantz-Ostrin Trust II, and its principal place of business is located at 100 Smith Ranch Road,

Suite 116, San Rafael, California 94903. It has received subsequent transfers of the avoidable

transfers received by Jelris, and is included in the definition of Jelris Subsequent Transferee

Defendants.

73. Upon information and belief, Roberta Cohen maintains her residence in San

Diego, California. Roberta Cohen is or was a limited partner of EJS. She has received

subsequent transfers of the avoidable transfers referenced above, and is included in the definition

of EJS Subsequent Transferee Defendants.

74. Upon information and belief, Austin Bosarge maintains his residence in Petaluma,

California. He has received subsequent transfers of the avoidable transfers received by Jelris,

and is included in the definition of Jelris Subsequent Transferee Defendants.

75. Upon information and belief, Lakeview is a limited partnership formed in 2006

under the laws of the State of Delaware. Its principal place of business is located at 100 Smith

Ranch Road, Suite 116, San Rafael, California 94903. It has received subsequent transfers from

Grace, EJS, and Jelris of the avoidable transfers referenced above, and is included in the

definition of Grace Subsequent Transferee Defendants, EJS Subsequent Transferee Defendants,

and Jelris Subsequent Transferee Defendants.

76. Upon information and belief, Vista is a corporation incorporated in 2004 under

the laws of the State of California. Its principal place of business is located at 100 Smith Ranch

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Road, Suite 116, San Rafael, California 94903. As discussed below, Vista is the general partner

of Lakeview and other limited partnerships. Upon information and belief, Glantz at all times has

solely owned and controlled Vista, and been its president. Austin Bosarge has been Vista’s Vice

President. Vista has received subsequent transfers from Grace, EJS, and Jelris of the avoidable

transfers referenced above, and is included in the definition of Grace Subsequent Transferee

Defendants, EJS Subsequent Transferee Defendants, and Jelris Subsequent Transferee

Defendants.

77. Upon information and belief, Buckmaster Farms, L.P. is a limited partnership

formed in 1994 under the laws of the State of Iowa. Upon information and belief, Raleigh Dow

Buckmaster, Sr. has been general partner of Buckmaster Farms, L.P. Its principal place of

business is located in Lansing, Iowa. It has received subsequent transfers from Grace of the

avoidable transfers referenced above, and is included in the definition of Grace Subsequent

Transferee Defendants.

BACKGROUND, THE TRUSTEE AND STANDING

78. On December 11, 2008 (the “Filing Date”),2 Madoff was arrested by federal

agents for violation of the criminal securities laws, including, inter alia, securities fraud,

investment adviser fraud, and mail and wire fraud. Contemporaneously, the SEC filed a

complaint in the District Court, which commenced the District Court Proceeding against Madoff

and BLMIS. The District Court Proceeding remains pending in the District Court. The SEC

2
Section 78lll(7)(B) of SIPA states that the filing date is “the date on which an application for a protective decree is
filed under section 78eee(a)(3),” except, where the debtor is the subject of a proceeding pending before a United
States court “in which a receiver, trustee, or liquidator for such debtor has been appointed and such proceeding was
commenced before the date on which such application was filed, the term ‘filing date’ means the date on which such
proceeding was commenced.” § 78lll(7)(B). Thus, even though the application for a protective decree was filed on
December 15, 2008, the Filing Date in this action is December 11, 2008.

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complaint alleged that Madoff and BLMIS engaged in fraud through the investment advisor

activities of BLMIS.

79. On December 12, 2008, The Honorable Louis L. Stanton of the District Court

entered an order appointing Lee S. Richards, Esq. as receiver (“Receiver”) for the assets of

BLMIS.

80. On December 15, 2008, pursuant to § 78eee(a)(4)(A) of SIPA, the SEC consented

to a combination of its own action with an application of the Securities Investor Protection

Corporation (“SIPC”). Thereafter, pursuant to § 78eee(a)(4)(B) of SIPA, SIPC filed an

application in the District Court alleging, inter alia, that BLMIS was not able to meet its

obligations to securities customers as they came due and, accordingly, its customers needed the

protections afforded by SIPA.

81. Also on December 15, 2008, Judge Stanton granted the SIPC application and

entered an order pursuant to SIPA (the “Protective Decree”), which, in pertinent part:

a. appointed the Trustee for the liquidation of the business of BLMIS

pursuant to § 78eee(b)(3) of SIPA;

b. appointed Baker & Hostetler LLP as counsel to the Trustee pursuant to §

78eee(b)(3) of SIPA;

c. removed the case to this Bankruptcy Court pursuant to § 78eee(b)(4) of

SIPA; and

d. released the Receiver as Receiver for BLMIS.

82. By orders dated December 23, 2008 and February 4, 2009, respectively, the

Bankruptcy Court approved the Trustee’s bond and found that the Trustee was a disinterested

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person. Accordingly, the Trustee is duly qualified to serve and act on behalf of the estate of

BLMIS.

83. At a plea hearing on March 12, 2009 in the case captioned United States v.

Madoff, Case No. 09-CR-213 (DC), Madoff pled guilty to an eleven-count criminal information

filed against him by the United States Attorney’s Office for the Southern District of New York.

At the plea hearing, Madoff admitted that he “operated a Ponzi scheme through the investment

advisory side of [BLMIS].” See Plea Allocution of Bernard L. Madoff at 23, United States v.

Madoff, No. 09-CR-213 (DC) (S.D.N.Y. March 12, 2009) (Docket No. 50). Additionally,

Madoff asserted, “[a]s I engaged in my fraud, I knew what I was doing [was] wrong, indeed

criminal.” (Id. at 23:20-21.) On June 29, 2009, Madoff was sentenced to 150 years in prison.

84. On August 11, 2009, a former BLMIS employee, Frank DiPascali, pled guilty to

participating and conspiring to perpetuate the Ponzi scheme. At a plea hearing on August 11,

2009 in the case captioned United States v. DiPascali, Case No. 09-CR-764 (RJS), DiPascali

pled guilty to a ten-count criminal information. Among other things, DiPascali admitted that the

Ponzi scheme had begun at BLMIS since at least the 1980s. See Plea Allocution of Frank

DiPascali at 46, United States v. DiPascali, No. 09-CR-764 (RJS) (S.D.N.Y. August 11, 2009)

(Docket No. 11).

85. As the Trustee appointed under SIPA, the Trustee has the statutory responsibility

of, among other duties, investigating the acts, conduct, property, liabilities and financial

condition of BLMIS, recovering and paying out customer property to BLMIS’s customers,

assessing claims, and liquidating any other assets of the firm for the benefit of the estate and its

creditors. The Trustee is in the process of marshalling BLMIS’s assets, and the liquidation of

BLMIS’s assets is well underway. However, such assets will not be sufficient to reimburse the

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customers of BLMIS for the billions of dollars that they invested with BLMIS over the years.

Consequently, the Trustee must use his authority under SIPA and the Bankruptcy Code to pursue

recovery from BLMIS account holders who received preferences and/or payouts of fictitious

profits to the detriment of other defrauded customers whose money was consumed by the Ponzi

scheme. Absent this or other recovery actions, the Trustee will be unable to satisfy the claims

described in subparagraphs (A) through (D) of § 78fff-2(c)(1) of SIPA.

86. Pursuant to § 78fff-1(a) of SIPA, the Trustee has the general powers of a

bankruptcy trustee in a case under the Bankruptcy Code in addition to the powers granted by

SIPA pursuant to § 78fff-1(b). Pursuant to SIPA § 78fff(b), “chapters 1, 3, 5 and subchapters I

and II of Chapter 7 of the Bankruptcy Code” are applicable to this case, “to the extent consistent

with SIPA.”

87. Pursuant to §§ 78fff-(b) and 78lll (7)(B) of SIPA, the Filing Date is deemed to be

the date of the filing of the petition within the meanings of § 548 of the Bankruptcy Code and the

date of the commencement of the case within the meaning of § 544 of the Bankruptcy Code.

88. The Trustee has standing to bring these claims pursuant to § 78fff-1 of SIPA and

the Bankruptcy Code, including §§ 323(b) and 704(a)(1), because, among other reasons:

a. Defendants, Defendant NTC and/or FBO Defendants received

“customer property” as defined in § 78lll(4) of SIPA;

b. BLMIS incurred losses as a result of the claims set forth herein;

c. BLMIS’s customers were injured as a result of the conduct detailed

herein;

d. SIPC cannot by statute advance funds to the Trustee to fully reimburse

all customers for all of their losses;

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 e. the Trustee will not be able to fully satisfy all claims;

f. the Trustee, as bailee of customer property, can sue on behalf of

customer bailors;

g. the Trustee is the assignee of claims paid, and to be paid, to customers of

BLMIS who have filed claims in the liquidation proceeding (such claim-filing customers,

collectively, “Accountholders”). As of the date hereof, the Trustee has received multiple express

unconditional assignments of the applicable Accountholders’ causes of action, which actions

could have been asserted against Defendants, Defendant NTC and/or FBO Defendants and

Subsequent Transferee Defendants. As assignee, the Trustee stands in the shoes of persons who

have suffered injury in fact, and a distinct and palpable loss for which the Trustee is entitled to

reimbursement in the form of monetary damages;

h. SIPC is the subrogee of claims paid, and to be paid, to customers of

BLMIS who have filed claims in the liquidation proceeding. SIPC has expressly conferred upon

the Trustee enforcement of its rights of subrogation with respect to payments it has made and is

making to customers of BLMIS from SIPC funds; and

i. the Trustee has the power and authority to avoid and recover transfers

pursuant to §§ 544, 548, 550(a) and 551 of the Bankruptcy Code and § 78fff-2(c)(3) of SIPA.

THE FRAUDULENT PONZI SCHEME

89. BLMIS was founded in 1959 by Madoff and, for most of its existence, operated

from its principal place of business at 885 Third Avenue, New York, New York. Madoff, as

founder, chairman, chief executive officer, and sole owner, operated BLMIS together with

several of his friends and family members. BLMIS was registered with the SEC as a securities

broker-dealer under § 15(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o(b). By

virtue of that registration, BLMIS is a member of SIPC. BLMIS had three business units: the

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investment advisory (“IA”) business (the “IA Business”), market-making, and proprietary

trading.

90. Outwardly, Madoff ascribed the consistent success of the IA Business to his so-

called “split-strike conversion” strategy (“SSC Strategy”). Pursuant to that strategy, Madoff

purported to invest BLMIS customers’ funds in a basket of common stocks within the S&P 100

Index – a collection of the 100 largest publicly traded companies. He asserted that he would

carefully time purchases and sales to maximize value, and correspondingly, BLMIS customers’

funds would, intermittently, be out of the equity markets. While out of the market, those funds

were purportedly invested in United States Treasury bills or in mutual funds holding Treasury

bills. The second part of the SSC Strategy was the hedge of Madoff’s stock purchases with S&P

100 Index option contracts. Those option contracts functioned as a “collar,” limiting both the

potential gains and the potential losses. Madoff purported to use proceeds from the sale of S&P

100 Index call options to finance the cost of purchasing S&P 100 Index put options. Madoff also

told IA Business customers that he would enter and exit the market between six and ten times

each year.

91. BLMIS’s IA Business customers received fabricated monthly or quarterly

statements showing that securities were held in, or had been traded through, their accounts. The

securities purchases and sales shown in such account statements never occurred and the profits

reported were entirely fictitious. At the plea hearing, Madoff admitted that he never purchased

any of the securities he claimed to have purchased for the IA Business’s customer accounts. In

fact, there is no record of BLMIS having cleared a single purchase or sale of securities in

connection with the SSC Strategy. Madoff’s SSC Strategy was entirely fictitious.

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 92. At times prior to his arrest, Madoff generally assured customers and regulators

that he purchased and sold the put and call options over-the-counter (“OTC”) rather than through

an exchange. Yet, like the underlying securities, the Trustee has yet to uncover any evidence

that Madoff ever purchased or sold any of the options described in customer statements related to

the SSC Strategy. The Options Clearing Corporation, which clears all option contracts based

upon the stocks of S&P 100 companies, has no record of the IA Business having bought or sold

any exchange-listed options on behalf of any of the IA Business customers.

93. Additionally, Madoff periodically wired hundreds of millions of dollars to

BLMIS’s affiliate, Madoff Securities International Ltd. (“MSIL”), a London-based entity

substantially owned by Madoff and his family. There are no records that MSIL ever used the

wired funds to purchase securities for the accounts of the IA Business clients. In fact, MSIL

wired hundreds of millions of dollars back into the bank accounts of BLMIS’s proprietary

trading and market making businesses in an attempt to create a record of revenues purportedly

related to trades in Europe.

94. For all periods relevant hereto, the IA Business was operated as a Ponzi scheme.

The money received from investors was not invested in stocks and options. Rather, BLMIS used

its IA Business customers’ deposits to pay redemptions by other customers, and to make other

transfers, which are avoidable by the Trustee. Many of these transfers were to enrich Madoff,

his associates, and his family.

95. The falsified monthly account statements reported that the accounts of IA

Business customers had made substantial gains, but, in reality, because it was a Ponzi scheme,

BLMIS did not have the funds to pay investors. BLMIS was only able to survive for as long as it

did by using the stolen principal invested by some customers to pay other customers.

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 96. The payments to investors constituted an intentional misrepresentation of fact

regarding the underlying accounts and were an integral and essential part of the fraud. The

payments were necessary to validate the false account statements and were made to avoid

detection of the fraud, to retain existing investors, and to lure other investors into the Ponzi

scheme.

97. Madoff’s scheme continued until December 2008, when the requests for

redemptions overwhelmed the flow of new investments and caused the inevitable collapse of the

Ponzi scheme.

98. During the scheme, certain investors requested and received distributions of the

“profits” listed for their accounts, which were nothing more than fictitious profits. Other

investors, from time to time, redeemed or closed their accounts, or removed portions of the

purportedly available funds, and were paid consistently with the statements they had been

receiving.

99. When payments were made to or on behalf of these investors, including

Defendants, Defendant NTC and/or FBO Defendants, the falsified monthly statements of

accounts reported that the accounts of such investors included substantial gains. In reality,

BLMIS had not invested the investors’ principal as reflected on customer statements. To conceal

the ongoing fraud and thereby hinder, delay or defraud other current and prospective investors,

BLMIS paid to or on behalf of certain investors, such as Defendants, Defendant NTC and/or

FBO Defendants, the inflated amounts reflected in the falsified financial statements, including

principal and/or fictitious profits.

100. BLMIS used the funds deposited from new investments to continue operations

and pay withdrawals to or on behalf of other investors and to make other transfers. Due to the

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siphoning and diversion of new investments to fund payments requested by other investors,

BLMIS did not have the funds to pay investors. BLMIS was able to stay afloat only by using the

principal invested by some clients to pay other investors or their designees.

101. In an effort to hinder, delay or defraud authorities from detecting the fraud,

BLMIS did not register as an Investment Adviser until August 2006.

102. In or about January 2008, BLMIS filed with the SEC an Amended Uniform

Application for Investment Adviser Registration. The application represented, inter alia, that

BLMIS had 23 customer accounts and assets under management of approximately $17.1 billion.

In fact, in January 2008, BLMIS had approximately 4,900 active client accounts with a purported

value of approximately $68 billion under management.

103. Not only did Madoff seek to evade regulators, Madoff also had false audit reports

“prepared” by Friehling & Horowitz, a three-person accounting firm located in a strip mall in

Rockland County, New York. Of the two accountants at the firm, one was semi-retired and

living in Florida for many years prior to the Filing Date and who has since deceased.

104. At all times relevant hereto, the liabilities of BLMIS were billions of dollars

greater than the assets of BLMIS. At all relevant times, BLMIS was insolvent in that (i) its

assets were worth less than the value of its liabilities; (ii) it could not meet its obligations as they

came due; and (iii) at the time of the transfers, BLMIS was left with insufficient capital.

105. To the extent that any of the avoidance and/or recovery counts may be

inconsistent with each other, they are to be treated as being pled in the alternative.

THE WRONGFUL ACTIVITIES

106. Defendants and FBO Defendants knew or should have known that Madoff’s IA

Business was predicated on fraud, that they were benefitting from fraudulent transactions in their

accounts, and that purported activity in their accounts was inconsistent with legitimate trading

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activity and credible returns. Defendants, Defendant NTC and/or FBO Defendants were

beneficiaries of the Ponzi scheme, receiving $40,954,338 of other people’s money since these

accounts opened.

107. Both Glantz and Edward Glantz had backgrounds and experiences that should

have made them particularly aware of the fraudulent activity at BLMIS. Glantz has been a

practicing attorney since 1971. Glantz’s legal expertise includes securities matters, including

work as an attorney at the SEC. Upon information and belief, Glantz “invested” his own funds

and/or his family’s funds directly or indirectly with BLMIS since at least 1972.

108. Edward Glantz was a Certified Public Accountant and, upon information and

belief, a principal at the accounting firm Glantz & Levey for over forty years. Upon information

and belief, Glantz & Levey had ties to Madoff. Upon information and belief, Edward Glantz

“invested” his own funds and/or his family’s funds directly or indirectly with BLMIS since at

least 1968.

109. Defendants and FBO Defendants willfully turned a blind eye to indicia of

BLMIS’s fraud based upon the information available to them. They knew of, and/or were on

inquiry notice of, irregularities and problems concerning the trades reported by BLMIS, and

strategically chose to ignore these concerns to enrich themselves through their relationship with

Madoff and BLMIS. On the basis of their backgrounds and extensive experience with BLMIS,

as discussed more fully below, Glantz and Edward Glantz knew or should have known of the

fraudulent nature of Madoff’s operation. Moreover, Glantz’s and Edward Glantz’s knowledge

and notice should be imputed to all Defendants and FBO Defendants on the basis of Glantz’s and

Edward Glantz’s domination and control over Defendants and FBO Defendants, Glantz’s and

Edward Glantz’s direct, equitable and/or beneficial ownership of Defendants and FBO

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Defendants, and Glantz’s and Edward Glantz’s control over Defendants’ and FBO Defendants’

BLMIS accounts.

A. Glantz and Edward Glantz Acted as Feeders to the BLMIS Ponzi

Scheme Until the SEC Shut Down Their Illegal Operations

110. Upon information and belief, Glantz and Edward Glantz modeled their initial

activities as “feeders” to BLMIS on similar activity already engaged in by the accounting firm

Avellino & Bienes (“A&B”), which was owned and operated by Frank Avellino (“Avellino”)

and Michael Bienes (“Bienes”).3 Indeed, both Glantz and Edward Glantz funneled investor

money that they pooled in their own entities into A&B, which, in turn, gave it to Madoff.

111. Avellino and Bienes were accountants who had joined the accounting firm of

Alpern & Heller in approximately 1958 and 1968, respectively. Saul Alpern, one of the name

partners of Alpern & Heller, was the father of Madoff’s wife Ruth, and Alpern & Heller had

extensive ties with Madoff and BLMIS. Avellino and Bienes became partners in Alpern &

Heller, and eventually became the leaders of the firm, re-naming it Avellino & Bienes in

approximately 1974.

112. A&B, including its prior incarnation as Alpern & Heller, operated as a significant

feeder fund for BLMIS from the early 1960s through the early 1990s. A&B achieved great

success in raising hundreds of millions of dollars for investment with BLMIS while retaining

tens of millions of dollars in profits for placing money into the Ponzi scheme.

113. To attract new investors, A&B collected money from individuals and entities by

promising a guaranteed rate of return that ranged from 13% - 18% of the original investment. So

3
The Trustee has filed or will file suit against Avellino, Bienes, certain of their family members and certain entities
they owned and controlled, to avoid initial and subsequent transfers of customer property to them.

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as to avoid scrutiny from regulators, A&B termed these investments “loans” and provided letters

with the specified rate of return for the particular investor. A&B successfully raised hundreds of

millions of dollars using this methodology, and deposited this money for investment with

BLMIS and the Ponzi scheme.

114. As the operators of one of Madoff’s first and oldest sources of funds for his Ponzi

scheme, Avellino and Bienes enjoyed special access and privileges, such as higher rates of

return, that were not available to other BLMIS investors. As an incentive to increase cash inflow

and maintain the Ponzi scheme operations, Madoff guaranteed significant returns to A&B. In

turn, A&B retained the difference between the returns promised by Madoff and the returns

promised to the underlying A&B investors. For example, there were certain periods where

Madoff promised A&B annual returns of 20%. A&B in turn promised 18% or less to its

investors, retaining the difference as profits in order to enrich themselves.

Glantz’s Illicit Feeder Fund Activities

115. Upon information and belief, Glantz modeled his scheme of funneling money to

BLMIS for profit on the activity by A&B. From 1976 to 1992, he operated various BLMIS

feeder entities he whimsically named Frodo & Co. (“Frodo”), the Merlin Group, Merlin &

Associates, Ltd. (collectively, “Merlin,” as defined above) and Enhancement Group

(“Enhancement,” defined above). Glantz followed the A&B model, in that instead of treating the

money received by his clients as an investment, he characterized the funds received from his

investors as “loans” from “lenders.” Frodo, Merlin and Enhancement then channeled the money

“loaned” by investors to A&B, which, in turn, gave it to Madoff.

116. Upon information and belief, Glantz formed the first of his feeder fund entities,

Frodo, in 1976 and used it to funnel money to BLMIS through A&B. In approximately 1985,

Glantz shut down Frodo and created Merlin. In approximately 1986, Glantz created

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Enhancement, yet another entity created to pool investors’ money to be funneled to BLMIS

through A&B.

117. Upon information and belief, Frodo and Merlin were wholly owned by Glantz,

and Enhancement was partly owned by Glantz. Upon information and belief, Glantz was

responsible for soliciting investors, depositing investors’ money with A&B, communicating

investors’ requests to have parts of their “loans” repaid, and dealing directly with investors to

address their various inquiries. Upon information and belief, Glantz earned as much as $100,000

or more annually in profit through Merlin and Enhancement merely for placing investors’ money

with A&B.

Edward Glantz’s Illicit Feeder Fund Activities

118. Edward Glantz likewise operated his own, similar, BLMIS feeder fund operation.

In 1989, Edward Glantz, along with Steven Mendelow (“Mendelow”), started Telfran Associates

Ltd. Telfran Associates Ltd.’s general partner was Telfran Associates Corp., an entity they

owned and formed in 1982. (Telfran Associates Ltd. and Telfran Associates Corp. are

collectively referred to as “Telfran.”). Using a similar model as used by Glantz with his feeder

fund entities, Edward Glantz and Mendelow, through Telfran, funneled money to A&B, which,

in turn, provided it to Madoff.

119. From at least 1989 to 1992, Telfran operated as an unregistered investment

company selling unregistered securities to the public. Telfran solicited approximately 800

clients to invest through Telfran, promising them a guaranteed rate of return on their original

investment. As done by the other entities, Edward Glantz and Telfran called these investments

“loans” and promised investors a fixed rate of return. Telfran had two accounts with A&B. In

the “payout account,” investors received their interest quarterly, while in the “rollover account,”

investors compounded their interest. Telfran was able to guarantee the rate of return to its

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investors by simply turning around and making similar arrangements with A&B, with a higher

guaranteed rate of return. Telfran profited by the spread in the guaranteed rates of return.

In 1992 and 1993, the SEC’s Actions Resulted In Injunctions and Fines
Against Glantz, Edward Glantz and Others For Violating the Federal
Securities Laws Through Their Illicit BLMIS Feeder Fund Activities

120. On or about November 18, 1992, the SEC filed a complaint in the United States

District Court for the Southern District of New York (“SDNY”), against A&B and Avellino and

Bienes individually (the “SEC A&B Defendants”), alleging that, from at least 1984 to 1992, the

SEC A&B Defendants operated A&B as an unregistered investment company and engaged in the

unlawful sale of unregistered securities. See Securities and Exchange Commission v. Avellino &

Bienes, Frank J. Avellino and Michael S. Bienes, 92 Civ. 8314 (JES).

121. On or about November 25, 1992, the United States District Court for the SDNY

entered a preliminary injunction order, on consent of the SEC A&B Defendants, appointing a

trustee to, among other things, take control of the brokerage accounts under A&B’s control and

distribute the proceeds from the accounts to the noteholders.

122. On or about November 25, 1992, in Securities and Exchange Commission v.

Telfran Associates, Ltd., Telfran Associates Corp., Steven Mendelow and Edward Glantz, 92

Civ. 8564 (JES), the SEC brought a nearly identical action against Telfran, Mendelow and

Edward Glantz (the “SEC Telfran Defendants”), as it had against A&B, Avellino and Bienes.

The SEC’s complaint against the SEC Telfran Defendants alleged that, from 1989 to 1992, the

SEC Telfran Defendants sold unregistered securities to the public in the form of notes, accepted

funds from customers, guaranteed those customers fixed interest rates, usually 15%, and used the

funds to purchase notes from A&B paying a fixed interest rate of between 15 and 19%. The

complaint alleged that the SEC Telfran Defendants operated or aided and abetted the operation

of Telfran as an unregistered investment company. The complaint alleged that, as of November

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16, 1992, Telfran had raised approximately $89 million through the sale of unregistered notes to

more than 800 investors.

123. Likewise, on or about November 29, 1993, in Securities and Exchange

Commission v. Merlin & Associates, Ltd., the Enhancement Group, and Richard M. Glantz, 93

Civ. 7171 (LEW), the SEC brought an action in the United States District Court for the Central

District of California against Glantz, Merlin and Enhancement (the “SEC Glantz Defendants”).

In this complaint, the SEC alleged that, from 1985 to 1992, Glantz and these entities solicited

and raised $30 million from about 345 investors across the United States. The complaint

detailed that Merlin had raised about $26 million from about 300 investors, and Enhancement

had raised about $4 million from about 45 investors. Merlin and Enhancement promised to pay

investors, who invested in securities in the form of notes, interest at fixed annual rates ranging

from 14 to 19%. The funds raised were pooled and almost exclusively invested with A&B,

which in turn invested the funds at “a New York-based registered broker-dealer” (a reference to

BLMIS). Merlin and Enhancement had profited by retaining the difference between the interest

they obtained from A&B and the interest they paid to investors. The SEC Glantz Defendants

were charged with operating as unregistered investment companies and engaging in the unlawful

sale of unregistered securities.

124. Pursuant to final judgments issued on consent in 1993, the SEC A&B Defendants,

SEC Telfran Defendants and SEC Glantz Defendants were all permanently enjoined from

violating §§ 5(a) and 5(c) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a) and (c)] and § 7 of

the Investment Company Act of 1940 [15 U.S.C. § 80a-7]. The SEC A&B Defendants were

fined a total of $350,000 in penalties, with A&B ordered to pay a $250,000 civil penalty, and

Avellino and Bienes each ordered to pay a $50,000 civil penalty. The SEC Telfran Defendants

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were fined a total of $350,000 in penalties, with Telfran ordered to pay a $250,000 civil penalty,

and Mendelow and Edward Glantz each ordered to pay a $50,000 civil penalty. The SEC Glantz

Defendants were fined a total of $300,000 in penalties, with Merlin and Enhancement each

ordered to pay a $125,000 civil penalty, and Glantz ordered to pay a $50,000 civil penalty.

125. As a result of the SEC investigations, and in an effort to avoid possible exposure

to regulators of his own fraudulent operation, Madoff agreed to “return” money to A&B and/or

the Court-appointed receiver for A&B, which was distributed to its investors, including those

invested through Telfran. In or about November 1992, Telfran received approximately $89

million dollars from A&B, which corresponds to the approximate amount of money Telfran had

invested with A&B for investment in BLMIS, and returned such funds to Telfran’s investors.

Similarly, Merlin and Enhancement returned to their investors approximately $30 million

dollars, which corresponds to the approximate amount of money Merlin and Enhancement had

invested with A&B for investment in BLMIS.

126. Upon information and belief, Madoff recorded fraudulent trading activity in

customer statements to create the appearance of sufficient value in their accounts to cover the

A&B and Telfran investors. In or about June 1992, at Madoff’s direction, BLMIS employees

scrambled to create a fictitious and backdated IA account with Account No. 1A0053 in the name

of A&B. Unlike the six existing A&B accounts which had been in existence for more than a

decade, BLMIS records indicate this account did not exist until in or around June 23, 1992.

BLMIS generated fictitious and backdated account statements for this account going back to at

least November 1989.

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B. Even After the SEC Actions, Glantz and Edward Glantz
Continued to Reap Extraordinary Profits from the Ponzi
Scheme in the Form of Fraudulent Side Payments from BLMIS

127. Even after the SEC investigations and court actions involving Glantz and Edward

Glantz and the other individuals and entities discussed above, Glantz and Edward Glantz

continued to profit from the Ponzi scheme. For one thing, as detailed below, the BLMIS

accounts that Glantz and Edward Glantz owned and controlled showed apparent sizable gains

that Glantz, Edward Glantz and their family members withdrew over time for their benefit, at the

expense of other BLMIS customers. Further, Glantz and Edward Glantz received additional

fraudulent side payments (the “Fraudulent Side Payments”) on account of investor funds they

were credited with having funneled to BLMIS.

128. Upon information and belief, following the 1992 and 1993 SEC actions, to keep

the Ponzi scheme afloat, Madoff provided inducements or rewards to individuals who had

solicited or pooled investor funds for the Ponzi scheme. Among other means, BLMIS provided

annual Fraudulent Side Payments to various accounts owned or controlled by individuals who

helped fund the Ponzi scheme, including accounts owned or controlled by Glantz and Edward

Glantz.

129. Upon information and belief, by March 31, 1993, approximately $372 million of

the $441 million that had been returned to the original A&B investors by Madoff (including

those who invested through Telfran) was reinvested directly with BLMIS. Of this $372 million,

$62 million was attributable to Telfran investors. Similarly, a substantial portion of the funds

returned to former Merlin and Enhancement clients was reinvested directly with BLMIS.

130. Upon information and belief, Glantz received Fraudulent Side Payments from

Madoff based on the amount of money former Merlin and Enhancement clients reinvested

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directly with BLMIS after A&B, Telfran, Merlin and Enhancement were shut down by the SEC.

Similarly, upon information and belief, Edward Glantz received Fraudulent Side Payments from

Madoff based on the amount of money former Telfran clients reinvested directly with BLMIS.

131. Upon information and belief, Glantz received a 2% Fraudulent Side Payment

based on approximately $10 million reinvested by former Merlin and Enhancement investors that

BLMIS attributed specifically to him. Based on this calculation, Glantz received approximately

$196,000 per year in Fraudulent Side Payments.

132. Similarly, upon information and belief, Edward Glantz and his Telfran business

associates received a combined 1% Fraudulent Side Payment primarily based on reinvested

amounts attributable to them. Of the 1%, 37.5% of those fees went to Edward Glantz. Based on

this calculation, Edward Glantz received approximately $232,500 per year. Also, based on

documents recovered at BLMIS, Edward Glantz received an additional side payment of

approximately $100,000 from BLMIS for 1993.

133. Based on documents recovered at BLMIS, the calculation of Fraudulent Side

Payments for Glantz and Edward Glantz changed in 2002, with their percentages cut in half.

This change resulted in payments to Glantz of approximately $98,000 per year from 2002

through 2007, and to Edward Glantz of approximately $116,000 per year from 2002 through

2007.

134. To identify, track and reconcile accounts of dozens of different BLMIS customers

who had been promised Fraudulent Side Payments, BLMIS employees created handwritten

schedules indicating the amounts to be paid in Fraudulent Side Payments. The schedule used to

determine the amounts owed to these customers was referred to internally at BLMIS as either

“Shupt” or “Schupt” (hereinafter “Schupt”).

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 135. To provide the Fraudulent Side Payments for the accounts, as set forth in the

Schupt schedules, additional value was added to those accounts through fictitious options

transactions that would deliver the amount of the Fraudulent Side Payments.

136. In addition to calculating the amount owed, the handwritten Schupt schedules also

indicated the number of options contracts that would be “purchased” or “sold” to create the

predetermined gain. An account statement was generated to reflect these purported transactions

and the associated gains generated. The balance within these accounts, including the Fraudulent

Side Payments, was then available for withdrawal by the accountholder.

137. Documents recovered from BLMIS indicate that, from 1994 through 1995, the

Fraudulent Side Payments for Glantz were allocated to the Grace Account, Account No. 1T0026,

of which Glantz was a general partner. Glantz evidently wanted to make it clear to Madoff that

gains placed in the Grace Account would be for his benefit. In a letter to BLMIS regarding the

Grace Account dated November 23, 1992, Glantz pointedly requested, “Would you please alert

Bernard that this is my personal account.” Upon information and belief, starting in 1996, and

continuing through 2007, the Fraudulent Side Payments for Glantz were allocated to the R.

Glantz IRA account, Account No. 1ZR010. From 1994 through 2007, the Grace Account and

the R. Glantz IRA account received Fraudulent Side Payments totaling approximately

$2,305,811.

138. Documents recovered from BLMIS indicate that, in 1993, and from 1996 through

2007, the Fraudulent Side Payments for Edward Glantz were allocated to the Jelris Account,

Account No. 1ZB143. In 1994 and 1995, the Fraudulent Side Payments for Edward Glantz were

allocated to the EJS Account, Account No. 1ZA192. From 1993 through 2007, the Jelris

Account and the EJS Account received Fraudulent Side Payments totaling approximately

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$2,487,010. As stated above, the ERG Trust has been a general partner and a limited partner of

both Jelris and EJS.

139. Their receipt of these Fraudulent Side Payments, and the magnitude of such

payments, placed Glantz and Edward Glantz on inquiry notice of fraudulent activity at BLMIS.

Further, the manner of payment of the Fraudulent Side Payments should have been a significant

red flag for Glantz and Edward Glantz. The Fraudulent Side Payments were effected in Glantz’s

and Edward Glantz’s accounts not by having BLMIS deposit a check or place an identifiable

credit in the accounts. Rather, BLMIS effected the payments by making entries of purported

options transactions in the accounts.

140. These purported options transactions were noticeably different from the purported

options transactions typically represented as occurring in BLMIS IA accounts. Consistent with

Madoff’s claimed implementation of his so-called SSC Strategy, the purported options

transactions typically represented as occurring in BLMIS IA accounts were represented as

occurring at such times and in such volumes so as to operate as a hedge against purported

contemporaneous holdings of equities in those accounts. The options transactions that

purportedly occurred in the accounts controlled by Glantz and Edward Glantz to yield the

Fraudulent Side Payments, in contrast, did not purport to operate as a hedge against

contemporaneous holdings of equities in those accounts. Glantz and Edward Glantz, who were

well familiar with Madoff’s purported investment methods, were thus further placed on inquiry

notice of fraudulent activity at BLMIS in connection with these purported transactions.

141. Further, based on documents recovered at BLMIS, the Fraudulent Side Payments

for both Glantz and Edward Glantz were effected through fictitious options transactions

predominantly entered in December of each year, with the result that the purported rates of

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returns of those accounts appeared to spike most Decembers. This consistent spike in purported

returns occurring in December, apparent on the face of the customer statements for the Grace

Account, the R. Glantz IRA Account, the EJS Account, and the Jelris Account, further placed

Glantz and Edward Glantz on inquiry notice of Madoff’s fraudulent activities.

142. Finally, upon information and belief, the ability to create gains each year that

matched the fixed annual Fraudulent Side Payment further placed Glantz and Edward Glantz on

inquiry notice that BLMIS was engaged in illegitimate purported trading activity.

C. Starting in Approximately 2004, Glantz Created New

Entities and Developed New Methods to Reap Even Further
Profit from the Madoff Ponzi Scheme

143. As discussed supra, Glantz formed various entities and managed various pooled

BLMIS accounts, through which he and his family members “invested” with BLMIS. Glantz

and these family members and entities thereby profited handsomely from the Ponzi scheme. For

example, from 1993 to 2008, Jelris withdrew fictitious profits of almost $17 million; from 1992

to 2008, EJS withdrew fictitious profits of almost $10 million; and from 1992 to 2008, Grace

withdrew fictitious profits of over $7 million.

144. Starting in approximately 2004, Glantz undertook a series of activities and formed

a number of entities through which he could provide additional funds to support the Ponzi

scheme and further profit from the fraud being perpetrated at BLMIS.

145. In 2004, Glantz formed Vista. Upon information and belief, at all times Glantz

has been the sole owner of Vista. Glantz thereafter established Vista as the general partner

and/or purported unregistered investment advisor of a number of limited partnerships.

146. For example, in 2004, Glantz formed Fern Creek Limited Partnership (“Fern

Creek”) as a vehicle through which investors unrelated to Glantz could invest with BLMIS,

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through a BLMIS account in the name of “Ostrin Family Partnership,” BLMIS Account No.

1ZB511.

147. Glantz established Vista as Fern Creek’s general partner. REDACTED

Rather, Glantz and Vista merely served as the

gateway through which Fern Creek’s investors could invest with BLMIS, and Glantz could

further support the Ponzi scheme.

150. As another example, in 2006, Glantz formed Lakeview as a vehicle through which

investors, including investors unrelated to Glantz, could invest directly or indirectly with

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BLMIS. Upon information and belief, Glantz arranged for Lakeview funds to be invested with

BLMIS through BLMIS accounts held by (i) Rye Select Broad Market Fund (one of the BLMIS

feeder funds associated with Rye Investment Management, a division of Tremont Group

Holdings, Inc.), BLMIS Account No. 1T0027 and (ii) Senator Fund SPC (one of the BLMIS

feeder funds associated with Bank Medici), BLMIS Account No. 1FR128.

151. Glantz established Vista as Lakeview’s general partner. REDACTED

153. As another example, in 2007, Glantz created Glantz Family Partners, LP (“GFP”)

as a vehicle through which investors unrelated to Glantz could invest with BLMIS through a

BLMIS account in the name of “Glantz Family Partners,” BLMIS Account No. 1G0387, so that

Glantz could direct yet more funds to support the Ponzi scheme.

154. Upon information and belief, Glantz arranged for GFP’s partnership agreement to

hold Vista out as the “investment advisor” to GFP. As with Lakeview, upon information and

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belief, Glantz arranged for GFP’s partnership agreement to provide (i) that Vista would receive

both a monthly “management fee” as “compensation to [Vista] for [Vista]’s services in

managing the investments of the Partnership,” and a quarterly “special profit allocation”; and (ii)

that such “management fees” and “special profit allocations” would be deducted from the capital

account of each GFP limited partner.

155. Glantz, however, upon information and belief, never registered Vista with the

SEC as an investment adviser. Nor did Vista ever perform any actual investment management

services on behalf of GFP. Rather, Glantz and Vista merely served as the gateway through

which GFP and its investors could gain access to BLMIS. REDACTED

D. Additional Indicia of Fraud

156. Glantz and Edward Glantz ignored numerous other indicia of irregularity and

fraud from the general manner in which BLMIS operated. Among other things, Defendants and

FBO Defendants were on notice of the following additional indicia of irregularity and fraud but

failed to make sufficient inquiry.

Madoff’s Veil of Secrecy

157. Madoff maintained a veil of secrecy regarding the details of his operations and

supposed investment methods, flatly refusing to allow potential investors the ability to conduct

standard due diligence. REDACTED

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REDACTED

-45-
 BLMIS’s Purported Auditors

161. As stated above, BLMIS, which reputedly ran the world’s largest hedge fund, was

purportedly audited by Friehling & Horowitz (“F&H”), an accounting firm that had three

employees, one of whom was semi-retired, with offices located in a strip mall.

162. Glantz and Edward Glantz knew or should have known that all accounting firms

that perform audit work must enroll in the American Institute of Certified Public Accountants’

(“AICPA”) peer review program. This program involves having experienced auditors assess a

firm’s audit quality each year. F&H, while a member of the AICPA, had not been peer reviewed

since 1993. The results of these peer reviews are on public file with the AICPA. F&H never

appeared on the public peer review list because F&H had notified the AICPA that it did not

perform audits. F&H’s absence on the list was another major red flag of possible fraud at

BLMIS.

163. No sophisticated investor, especially individuals as knowledgeable about the

securities industry and accounting as Glantz and Edward Glantz, could reasonably have believed

it possible for any firm such as F&H to have competently audited an entity the size of BLMIS.

This is particularly true for Edward Glantz, a Certified Public Accountant and principal of an

established accounting firm where, upon information and belief, he worked for more than forty

years.

Other Indicia of Fraud

164. Financial industry press reports, including a May 27, 2001 article in Barron’s

entitled “Don’t Ask, Don’t Tell: Bernie Madoff is so secretive, he even asks investors to keep

mum,” and a May, 2001 article in MAR/Hedge, a widely read industry newsletter, entitled

“Madoff Tops Charts; Skeptics Ask How,” raised serious questions about the legitimacy of

BLMIS and Madoff and their ability to achieve the IA Business returns they purportedly had

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achieved using the investment strategy Madoff claimed to employ for most clients. Defendants

and FBO Defendants were invested with BLMIS when these reports were issued.

165. BLMIS purportedly functioned as investment manager, executing broker and

custodian of securities. This arrangement eliminated another frequently utilized check and

balance in investment management by excluding an independent custodian of securities from the

process, and thereby furthering the lack of transparency of BLMIS to other investors, regulators

and outside parties.

166. Despite its immense size in terms of assets under management, BLMIS was

substantially a family-run operation, employing many of Madoff’s relatives and virtually no

outside professionals.

167. Notably, when questioned under oath about his involvement in pooling funds for

the Madoff Ponzi scheme up to 1992, his various manners of involvement with Madoff after the

1992 and 1993 SEC actions, and his overall knowledge of and participation in Madoff’s fraud,

Glantz invoked his Fifth Amendment Rights and refused to answer any questions on these or any

related topics.

THE TRANSFERS

168. According to BLMIS’s records, multiple accounts (Nos. 1E0128, 1M0057,

1T0026, 1ZA169, 1ZA192, 1ZB010, 1ZB143, 1ZR010, and 1ZR176) were maintained with

BLMIS on behalf of Defendants, Defendant NTC and/or FBO Defendants, as set forth on Exhibit

A (collectively, the “Accounts”). Upon information and belief, for each Account, a

Customer Agreement, an Option Agreement, and/or a Trading Authorization Limited to

Purchases and Sales of Securities and Options (collectively, the “Account Agreements”) was

executed and delivered to BLMIS at BLMIS’s headquarters at 885 Third Avenue, New York,

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New York. At all times relevant hereto, Defendant NTC was the custodian of FBO Defendants’

Accounts.

169. The Account Agreements were to be performed in New York, New York,

through securities trading activities that would take place in New York, New York. The

Accounts were held in New York, New York, and Defendants, Defendant NTC and/or FBO

Defendants sent funds to BLMIS and/or to BLMIS’s account at JPMorgan Chase & Co.,

Account #XXXXXXXXXXXX1703 (the “BLMIS Bank Account”) in New York, New York for

application to the Accounts and the purported conducting of trading activities. Defendants,

Defendant NTC and/or FBO Defendants made deposits to BLMIS through checks and/or wire

transfers into bank accounts controlled by BLMIS, including the BLMIS Bank Account, and/or

received inter-account transfers from other BLMIS accounts.

170. Prior to the Filing Date, BLMIS made payments or other transfers

(collectively, the “Transfers”) directly or indirectly to Defendants, Defendant NTC and/or FBO

Defendants totaling $113,385,537.

171. Of the Transfers, $40,954,338 constituted non-existent profits supposedly

earned in the Accounts (“Fictitious Profits”), and $72,431,199 constituted the return of principal.

The Fictitious Profits received by Defendants, Defendant NTC and/or FBO Defendants came

from other people’s money. The Transfers were directly or indirectly made to Defendants,

Defendant NTC and/or FBO Defendants and include, but are not limited to, the Transfers listed

on Exhibit B.

172. The Transfers are avoidable and recoverable under §§ 544, 548, 550(a) and

551 of the Bankruptcy Code, applicable provisions of SIPA, particularly § 78fff-2(c)(3), and

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applicable provisions of N.Y. CPLR 203(g) and 213(8) (McKinney 2001) and DCL §§ 273-279

(McKinney 2001).

173. Prior to the Filing Date, BLMIS made payments to Grace in the total amount of

$27,966,431 in connection with the Grace Account, No. 1T0026 (the “Grace Transfers”). Of the

Grace Transfers, $7,374,165 constituted Fictitious Profits. The Grace Transfers are set forth in

Columns 12 and 13 on Exhibit B annexed hereto.

174. Of the Grace Transfers, BLMIS made payments to Grace of $12,720,000 (the

“Grace Six Year Transfers”) during the six years prior to the Filing Date, which are avoidable

and recoverable under §§ 544(b), 550(a)(1) and 551 of the Bankruptcy Code, applicable

provisions of SIPA, particularly § 78fff-2(c)(3), and applicable provisions of N.Y. CPLR 203(g)

and 213(g) (McKinney 2001) and DCL §§ 273 – 279 (McKinney 2001). Of the Grace Six Year

Transfers, $7,374,165 represented Fictitious Profits from the Ponzi scheme, which constitutes

other people’s money. See Exhibit B, Columns 9 and 10.

175. Of the Grace Six Year Transfers, BLMIS made payments to Grace of

$6,750,000 (the “Grace Two Year Transfers”) during the two years prior to the Filing Date,

which are avoidable and recoverable under §§ 548(a), 550(a)(1) and 551 of the Bankruptcy Code

and applicable provisions of SIPA, particularly § 78fff-2(c)(3). All of the Grace Two Year

Transfers represented Fictitious Profits from the Ponzi scheme, which constitutes other people’s

money. See Exhibit B, Column 7.

176. Prior to the Filing Date, BLMIS made payments to EJS in the total amount of

$16,924,380 in connection with the EJS Account, No. 1ZA192 (the “EJS Transfers”). Of the

EJS Transfers, $9,947,031 constituted Fictitious Profits. The EJS Transfers are set forth in

Columns 12 and 13 on Exhibit B annexed hereto.

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 177. Of the EJS Transfers, BLMIS made payments to EJS of $11,150,000 (the

“EJS Six Year Transfers”) during the six years prior to the Filing Date, which are avoidable and

recoverable under §§ 544(b), 550(a)(1) and 551 of the Bankruptcy Code, applicable provisions

of SIPA, particularly § 78fff-2(c)(3), and applicable provisions of N.Y. CPLR 203(g) and 213(g)

(McKinney 2001) and DCL §§ 273 – 279 (McKinney 2001). Of the EJS Six Year Transfers,

$9,947,031 represented Fictitious Profits from the Ponzi scheme, which constitutes other

people’s money. See Exhibit B, Column 10.

178. Of the EJS Six Year Transfers, BLMIS made payments to EJS of $7,700,000

(the “EJS Two Year Transfers”) during the two years prior to the Filing Date, which are

avoidable and recoverable under §§ 548(a), 550(a)(1) and 551 of the Bankruptcy Code and

applicable provisions of SIPA, particularly § 78fff-2(c)(3). All of the EJS Two Year Transfers

represented Fictitious Profits from the Ponzi scheme, which constitutes other people’s money.

See Exhibit B, Column 6.

179. Prior to the Filing Date, BLMIS made payments to Jelris in the total amount of

$22,088,220 (the “Jelris Transfers”) in connection with the Jelris Account, No. 1ZB143. Of the

Jelris Transfers, $16,954,688 constituted Fictitious Profits. The Jelris Transfers are set forth in

Columns 12 and 13 on Exhibit B annexed hereto.

180. Of the Jelris Transfers, BLMIS made payments to Jelris of $15,325,000 (the

“Jelris Six Year Transfers”) during the six years prior to the Filing Date, which are avoidable and

recoverable under §§ 544(b), 550(a)(1) and 551 of the Bankruptcy Code, applicable provisions

of SIPA, particularly § 78fff-2(c)(3), and applicable provisions of N.Y. CPLR 203(g) (McKinney

2001) and DCL §§ 273 – 279 (McKinney 2001). All of the Jelris Six Year Transfers represented

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Fictitious Profits from the Ponzi scheme, which constitutes other people’s money. See

Exhibit B, Columns 9 and 10.

181. Of the Jelris Six Year Transfers, BLMIS made payments to Jelris of

$11,500,000 (the “Jelris Two Year Transfers”) during the two years prior to the Filing Date,

which are avoidable and recoverable under §§ 548(a), 550(a)(1) and 551 of the Bankruptcy Code

and applicable provisions of SIPA, particularly § 78fff-2(c)(3). All of the Jelris Two Year

Transfers represented Fictitious Profits from the Ponzi scheme, which constitutes other people’s

money. See Exhibit B, Columns 6 and 7.

182. Prior to the Filing Date, BLMIS made payments to GFF in the total amount of

$1,527,500 (the “GFF Transfers”) in connection with the GFF Account, No. 1ZB010. Of the

GFF Transfers, $507,500 constituted Fictitious Profits. The GFF Transfers are set forth in

Columns 12 and 13 on Exhibit B annexed hereto.

183. Of the GFF Transfers, BLMIS made payments to GFF of $785,000 (the “GFF

Six Year Transfers”) during the six years prior to the Filing Date, which are avoidable and

recoverable under §§ 544(b), 550(a)(1) and 551 of the Bankruptcy Code, applicable provisions

of SIPA, particularly § 78fff-2(c)(3), and applicable provisions of N.Y. CPLR 203(g) (McKinney

2001) and DCL §§ 273 – 279 (McKinney 2001). Of the GFF Six Year Transfers, $507,500

represented Fictitious Profits from the Ponzi scheme, which constitutes other people’s money.

See Exhibit B, Columns 9 and 10.

184. Of the GFF Six Year Transfers, BLMIS made payments to GFF of $385,000

(the “GFF Two Year Transfers”) during the two years prior to the Filing Date, which are

avoidable and recoverable under §§ 548(a), 550(a)(1) and 551 of the Bankruptcy Code and

applicable provisions of SIPA, particularly § 78fff-2(c)(3). All of the GFF Two Year Transfers

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represented Fictitious Profits from the Ponzi scheme, which constitutes other people’s money.

See Exhibit B, Columns 6 and 7.

185. Prior to the Filing Date, BLMIS made payments to Defendant NTC and/or

FBO Defendant R. Glantz in the total amount of $9,307,173 (the “FBO R. Glantz Transfers”) in

connection with the R. Glantz IRA Account, No. 1ZR010. Of the FBO R. Glantz Transfers,

$3,327,989 constituted Fictitious Profits. The FBO R. Glantz Transfers are set forth in Columns

12 and 13 on Exhibit B annexed hereto.

186. Of the FBO R. Glantz Transfers, BLMIS made payments to Defendant NTC

and/or FBO Defendant R. Glantz of $7,100,000 (the “FBO R. Glantz Six Year Transfers”)

during the six years prior to the Filing Date, which are avoidable and recoverable under

§§ 544(b), 550(a)(1) and 551 of the Bankruptcy Code, applicable provisions of SIPA,

particularly § 78fff-2(c)(3), and applicable provisions of N.Y. CPLR 203(g) (McKinney 2001)

and DCL §§ 273 – 279 (McKinney 2001). Of the FBO R. Glantz Six Year Transfers, $3,327,989

represented Fictitious Profits from the Ponzi scheme, which constitutes other people’s money.

See Exhibit B, Columns 9 and 10.

187. Of the FBO R. Glantz Six Year Transfers, BLMIS made payments to

Defendant NTC and/or FBO Defendant R. Glantz of $6,000,000 (the “FBO R. Glantz Two Year

Transfers”) during the two years prior to the Filing Date, which are avoidable and recoverable

under §§ 548(a), 550(a)(1) and 551 of the Bankruptcy Code and applicable provisions of SIPA,

particularly § 78fff-2(c)(3). Of the FBO R. Glantz Two Year Transfers, $3,327,989 represented

Fictitious Profits from the Ponzi scheme, which constitutes other people’s money. See

Exhibit B, Columns 6 and 7.

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 188. Prior to the Filing Date, BLMIS made payments to Defendant NTC and/or

FBO Defendants Edward Glantz and/or their predecessors-in-interest in the total amount of

$4,867,979 (the “FBO Edward Glantz Transfers”) in connection with the E. Glantz IRA

Account, No. 1ZR176. Of the FBO Edward Glantz Transfers, $2,817,965 constituted Fictitious

Profits. The FBO Edward Glantz Transfers are set forth in Columns 12 and 13 on Exhibit B

annexed hereto.

189. Of the FBO Edward Glantz Transfers, BLMIS made payments to Defendant

NTC and/or FBO Defendants Edward Glantz and/or their predecessors-in-interest of $2,275,000

(the “FBO Edward Glantz Six Year Transfers”) during the six years prior to the Filing Date,

which are avoidable and recoverable under §§ 544(b), 550(a)(1) and 551 of the Bankruptcy

Code, applicable provisions of SIPA, particularly § 78fff-2(c)(3), and applicable provisions of

N.Y. CPLR 203(g) (McKinney 2001) and DCL §§ 273 – 279 (McKinney 2001). All of the FBO

Edward Glantz Six Year Transfers represented Fictitious Profits from the Ponzi scheme, which

constitutes other people’s money. See Exhibit B, Columns 9 and 10.

190. Of the FBO Edward Glantz Six Year Transfers, BLMIS made payments to

Defendant NTC and/or FBO Defendants Edward Glantz and/or their predecessors-in-interest of

$765,000 (the “FBO Edward Glantz Two Year Transfers”) during the two years prior to the

Filing Date, which are avoidable and recoverable under §§ 548(a), 550(a)(1) and 551 of the

Bankruptcy Code and applicable provisions of SIPA, particularly § 78fff-2(c)(3). All of the FBO

Edward Glantz Two Year Transfers represented Fictitious Profits from the Ponzi scheme, which

constitutes other people’s money. See Exhibit B, Columns 6 and 7.

191. Prior to the Filing Date, BLMIS made payments to the RMG Trust in the

amount of $525,000 (the “RMG Trust Transfers”) in connection with the RMG Trust Account,

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No. 1ZA169. Of the RMG Trust Transfers, $25,000 constituted Fictitious Profits. The RMG

Trust Transfers are set forth in Columns 12 and 13 on Exhibit B annexed hereto.

192. Prior to the Filing Date, BLMIS made payments to Merlin in the amount of

$26,981,338 (the “Merlin Transfers”) in connection with the Merlin Account, No. 1M0057. The

Merlin Transfers are set forth in Column 13 on Exhibit B annexed hereto. All of the Merlin

Transfers were a return of principal. See Exhibit B Column 11.

193. Prior to the Filing Date, BLMIS made payments to Enhancement in the amount

of $3,197,516 (the “Enhancement Transfers”) in connection with the Enhancement Account, No.

1E0128. The Enhancement Transfers are set forth in Column 13 on Exhibit B annexed hereto.

All of the Enhancement Transfers were a return of principal. See Exhibit B Column 11.

194. Upon information and belief, some or all of the Transfers were subsequently

transferred by Defendants, directly or indirectly, to Subsequent Transferee Defendants

(collectively, the “Subsequent Transfers”).

195. The Subsequent Transfers are recoverable from Subsequent Transferee

Defendants pursuant to § 550(a) of the Bankruptcy Code.

196. Upon information and belief, all of the Transfers received by Defendant NTC

were subsequently transferred by Defendant NTC to FBO Defendants and/or their predecessors-

in-interest (collectively, the “NTC Subsequent Transfers”).

197. The NTC Subsequent Transfers are recoverable from FBO Defendants

pursuant to § 550(a) of the Bankruptcy Code.

198. The Trustee’s investigation is ongoing and the Trustee reserves the right to (i)

supplement the information regarding the Transfers, Subsequent Transfers, and any additional

transfers and (ii) seek recovery of such additional transfers.

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 199. To the extent that any of the avoidance and/or recovery counts may be

inconsistent with each other, they are to be treated as being pled in the alternative.

CUSTOMER CLAIMS

Claims by Account Holder Defendants

200. On or about February 27, 2009, FBO Defendant R. Glantz filed a customer

claim with the Trustee related to the R. Glantz IRA Account, which the Trustee has designated as

Claim # 4163. This claim was withdrawn by FBO Defendant R. Glantz on or about June 12,

2009. On or about June 30, 2009 FBO Defendant R. Glantz re-filed a customer claim with the

Trustee related to the R. Glantz IRA Account, which the Trustee has designated as Claim #

13423 (the “FBO R. Glantz Customer Claim”).

201. On or about October 19, 2009, the Trustee issued a Notice of Trustee’s

Determination of Claim to FBO Defendant R. Glantz (the “FBO R. Glantz Determination”),

denying the FBO R. Glantz Customer Claim.

202. FBO Defendant Glantz did not file an objection to the FBO R. Glantz

Determination with the Court.

203. On or about February 27, 2009, Thelma Glantz, as beneficiary of the account at

NTC that held the BLMIS account of FBO Defendant E. Glantz, filed a customer claim with the

Trustee related to the E. Glantz IRA Account, which the Trustee has designated as Claim # 4164

(the “FBO E. Glantz Customer Claim”).

204. On or about October 19, 2009, the Trustee issued a Notice of Trustee’s

Determination of Claim to FBO Defendant E. Glantz c/o Glantz (the “FBO E. Glantz

Determination”), denying the FBO E. Glantz Customer Claim.

205. Neither Thelma Glantz, nor any successor in interest, filed an objection to the

FBO E. Glantz Determination with the Court.

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 206. On or about March 3, 2009, Grace filed a customer claim with the Trustee

related to the Grace Account, which the Trustee has designated as Claim # 5118 (the “Grace

Customer Claim”).

207. On or about October 19, 2009, the Trustee issued a Notice of Trustee’s

Determination of Claim to Grace (the “Grace Determination”), denying the Grace Customer

Claim.

208. Grace did not file an objection to the Grace Determination with the Court.

209. On or about June 30, 2009, GFF filed a customer claim with the Trustee related

to GFF Account, which the Trustee has designated as Claim # 13321 (the “GFF Customer

Claim”).

210. On or about March 9, 2010, the Trustee issued a Notice of Trustee’s

Determination of Claim to GFF (the “GFF Determination”), denying the GFF Customer Claim.

211. GFF did not file an objection to the GFF Determination with the Court.

212. No objections having been filed to the Trustee's denials of the FBO R. Glantz

Customer Claim, the FBO E. Glantz Customer Claim, the Grace Customer Claim, and the GFF

Customer Claim, pursuant to the Claims Procedures Order, the respective Determinations are

final, and these claims are disallowed for all purposes.

Related Claim

213. Ostrin Family Partnership (“OFP”) holds a BLMIS account in the name

“Ostrin Family Partnership,” designated as BLMIS Account No. 1ZB511 (the “Related

Account”).

214. On or about March 3, 2009, a customer claim was filed with the Trustee in

respect of OFP and the Related Account, which the Trustee has designated as Claim # 5120 (the

“Related Account Customer Claim”). The Trustee has yet to issue a determination with respect

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to the Related Account Customer Claim and/or make distributions on the Related Account

Customer Claim.

215. OFP is either a limited partnership or a general partnership. The business form

of OFP is unclear because there appear to be both a limited partnership agreement and a general

partnership agreement, each purporting to establish an entity named Ostrin Family Partnership.

According to the purported limited partnership agreement, the general partners of OFP are or

were Glantz and Jerald Ostrin and/or Elaine Ostrin. According to the purported general

partnership agreement, the partners of OFP are or were Fern Creek and Vista.

216. Upon information and belief, Glantz is the sole owner of Vista, and Vista is the

general partner of Fern Creek. Thus, if the purported limited partnership agreement of OFP

applies, Glantz, as well as Jerald Ostrin and/or Elaine Ostrin, are general partners. If the

purported general partnership agreement of OFP applies, Glantz is the sole owner of one general

partner (Vista), and the sole owner of the general partner (Vista) of the other general partner

(Fern Creek). In either event, Glantz is a control person of OFP. According to documents

recovered from BLMIS, Glantz has acted as manager of the OFP Account. In the event that the

limited partnership agreement of OFP applies, Jerald Ostrin and/or Elaine Ostrin are also control

persons of OFP.

217. Upon information and belief, Glantz, Jerald Ostrin, Elaine Ostrin, Roberta

Cohen, Mirza Inayat Khan, Pir Zia Inayat Khan and/or Austin Bosarge have beneficial or

equitable interests in the Related Account. In the alternative, Glantz, Jerald Ostrin, Elaine

Ostrin, Mirza Inayat Khan, Pir Zia Inayat Khan and/or Austin Bosarge are subsequent transferees

of transfers from BLMIS to the Related Account.

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 218. On December 23, 2008, this Court entered an Order on Application for Entry

of an Order Approving Form and Manner of Publication and Mailing of Notices, Specifying

Procedures for Filing, Determination and Adjudication of Claims, and Providing Other Relief

(“Claims Procedures Order”; Docket No. 12). The Claims Procedures Order includes a process

for determination and allowance of claims under which the Trustee has been operating. The

Trustee intends to resolve the Related Account Customer Claim through a separate hearing as

contemplated by the Claims Procedures Order.

COUNT ONE
FRAUDULENT TRANSFER – 11 U.S.C. §§ 548(a)(1)(A), 550 AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants)

219. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

220. Each of the Two Year Transfers was made on or within two years before the

Filing Date.

221. Each of the Two Year Transfers constituted a transfer of an interest of BLMIS in

property within the meaning of §§ 101(54) and 548(a) of the Bankruptcy Code and pursuant to §

78fff-2(c)(3) of SIPA.

222. Each of the Two Year Transfers was made by BLMIS with the actual intent to

hinder, delay or defraud some or all of BLMIS’s then existing or future creditors.

223. Each of the Two Year Transfers constitutes a fraudulent transfer avoidable by the

Trustee pursuant to § 548(a)(1)(A) of the Bankruptcy Code and recoverable from Grace

Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants

pursuant to § 550(a) of the Bankruptcy Code and § 78fff-(2)(c)(3) of SIPA.

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 224. As a result of the foregoing, pursuant to §§ 548(a)(1)(A), 550(a), and 551 of the

Bankruptcy Code, the Trustee is entitled to a judgment against Grace Defendants, EJS

Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants: (a) avoiding and

preserving the Two Year Transfers, (b) directing that the Two Year Transfers be set aside, and

(c) recovering the Two Year Transfers, or the value thereof, for the benefit of the estate of

BLMIS.

COUNT TWO
FRAUDULENT TRANSFER – 11 U.S.C. §§ 548(a)(1)(B), 550 AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants)

225. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

226. Each of the Two Year Transfers was made on or within two years before the

Filing Date.

227. Each of the Two Year Transfers constitutes a transfer of an interest of BLMIS in

property within the meaning of §§ 101(54) and 548(a) of the Bankruptcy Code and pursuant to §

78fff-2(c)(3) of SIPA.

228. BLMIS received less than a reasonably equivalent value in exchange for each of

the Two Year Transfers.

229. At the time of each of the Two Year Transfers, BLMIS was insolvent, or became

insolvent as a result of the Two Year Transfer in question.

230. At the time of each of the Two Year Transfers, BLMIS was engaged in a business

or a transaction, or was about to engage in a business or a transaction, for which any property

remaining with BLMIS was an unreasonably small capital.

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 231. At the time of each of the Two Year Transfers, BLMIS intended to incur, or

believed that it would incur, debts that would be beyond BLMIS’s ability to pay as such debts

matured.

232. Each of the Two Year Transfers constitutes fraudulent transfers avoidable by the

Trustee pursuant to § 548(a)(1)(B) of the Bankruptcy Code and recoverable from Grace

Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants

pursuant to § 550(a) of the Bankruptcy Code and § 78fff-(2)(c)(3) of SIPA.

233. As a result of the foregoing, pursuant to §§ 548(a)(1)(B), 550(a), and 551 of the

Bankruptcy Code, the Trustee is entitled to a judgment against Grace Defendants, EJS

Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants: (a) avoiding and

preserving the Two Year Transfers, (b) directing that the Two Year Transfers be set aside, and

(c) recovering the Two Year Transfers, or the value thereof, for the benefit of the estate of

BLMIS.

COUNT THREE
FRAUDULENT TRANSFER – NEW YORK DEBTOR AND CREDITOR LAW
§§ 276, 276-a, 278 AND/OR 279, AND 11 U.S.C. §§ 544(b), 550(a) AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants)

234. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

235. At all times relevant to the Six Year Transfers, there have been and are one or

more creditors who have held and still hold matured or unmatured unsecured claims against

BLMIS that were and are allowable under § 502 of the Bankruptcy Code or that were and are not

allowable only under § 502(e) of the Bankruptcy Code.

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 236. Each of the Six Year Transfers constitutes a conveyance by BLMIS as defined

under DCL § 270.

237. Each of the Six Year Transfers was made by BLMIS with the actual intent to

hinder, delay or defraud the creditors of BLMIS. BLMIS made the Six Year Transfers to or for

the benefit of Grace Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC

and/or FBO Defendants and/or their predecessors-in-interest in furtherance of a fraudulent

investment scheme.

238. Each of the Six Year Transfers was received by Grace Defendants, EJS

Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants and/or their

predecessors-in-interest with the actual intent to hinder, delay or defraud the creditors of BLMIS

at the time of each of the Transfers, and/or future creditors of BLMIS.

239. As a result of the foregoing, pursuant to DCL §§ 276, 276-a, 278 and/or 279, §§

544(b), 550(a), and 551 of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA, the Trustee is

entitled to a judgment against Grace Defendants, EJS Defendants, Jelris Defendants, GFF,

Defendant NTC and/or FBO Defendants: (a) avoiding and preserving the Six Year Transfers, (b)

directing that the Six Year Transfers be set aside, (c) recovering the Six Year Transfers, or the

value thereof, for the benefit of the estate of BLMIS, and (d) recovering attorneys’ fees, except

from Defendant NTC.

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 COUNT FOUR
FRAUDULENT TRANSFER – NEW YORK DEBTOR AND CREDITOR LAW
§§ 273, 278 AND/OR 279, AND 11 U.S.C. §§ 544(b), 550(a) AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants)

240. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

241. At all times relevant to the Six Year Transfers, there have been and are one or

more creditors who have held and still hold matured or unmatured unsecured claims against

BLMIS that were and are allowable under § 502 of the Bankruptcy Code or that were and are not

allowable only under § 502(e) of the Bankruptcy Code.

242. Each of the Six Year Transfers constitutes a conveyance by BLMIS as defined

under DCL § 270.

243. BLMIS did not receive fair consideration for the Six Year Transfers.

244. BLMIS was insolvent at the time it made each of the Six Year Transfers or, in the

alternative, BLMIS became insolvent as a result of each of the Six Year Transfers.

245. As a result of the foregoing, pursuant to DCL §§ 273, 278 and/or 279, §§ 544(b),

550(a), and 551 of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA, the Trustee is entitled to a

judgment against Grace Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC

and/or FBO Defendants: (a) avoiding and preserving the Six Year Transfers, (b) directing that

the Six Year Transfers be set aside, and (c) recovering the Six Year Transfers, or the value

thereof, for the benefit of the estate of BLMIS.

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 COUNT FIVE
FRAUDULENT TRANSFER – NEW YORK DEBTOR AND CREDITOR LAW
§§ 274, 278 AND/OR 279, AND 11 U.S.C. §§ 544(b), 550(a) AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants)

246. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

247. At all times relevant to the Six Year Transfers, there have been and are one or

more creditors who have held and still hold matured or unmatured unsecured claims against

BLMIS that were and are allowable under § 502 of the Bankruptcy Code or that were and are not

allowable only under § 502(e) of the Bankruptcy Code.

248. Each of the Six Year Transfers constitutes a conveyance by BLMIS as defined

under DCL § 270.

249. BLMIS did not receive fair consideration for the Six Year Transfers.

250. At the time BLMIS made each of the Six Year Transfers, BLMIS was engaged or

was about to engage in a business or a transaction for which the property remaining in its hands

after each of the Six Year Transfers was an unreasonably small capital.

251. As a result of the foregoing, pursuant to DCL §§ 274, 278 and/or 279, §§ 544(b),

550(a), and 551 of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA, the Trustee is entitled to a

judgment against Grace Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC

and/or FBO Defendants: (a) avoiding and preserving the Six Year Transfers, (b) directing that

the Six Year Transfers be set aside, and (c) recovering the Six Year Transfers, or the value

thereof, for the benefit of the estate of BLMIS.

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 COUNT SIX
FRAUDULENT TRANSFER – NEW YORK DEBTOR AND CREDITOR LAW
§§ 275, 278 AND/OR 279, AND 11 U.S.C. §§ 544(b), 550(a) AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants)

252. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

253. At all times relevant to the Six Year Transfers, there have been and are one or

more creditors who have held and still hold matured or unmatured unsecured claims against

BLMIS that were and are allowable under § 502 of the Bankruptcy Code or that were and are not

allowable only under § 502(e) of the Bankruptcy Code.

254. Each of the Six Year Transfers constitutes a conveyance by BLMIS as defined

under DCL § 270.

255. BLMIS did not receive fair consideration for the Six Year Transfers.

256. At the time BLMIS made each of the Six Year Transfers, BLMIS had incurred,

was intending to incur, or believed that it would incur, debts beyond its ability to pay them as the

debts matured.

257. As a result of the foregoing, pursuant to DCL §§ 275, 278 and/or 279, §§ 544(b),

550(a), and 551 of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA, the Trustee is entitled to a

judgment against Grace Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC

and/or FBO Defendants: (a) avoiding and preserving the Six Year Transfers, (b) directing that

the Six Year Transfers be set aside, and (c) recovering the Six Year Transfers, or the value

thereof, for the benefit of the estate of BLMIS.

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 COUNT SEVEN
RECOVERY OF ALL FRAUDULENT TRANSFERS – NEW YORK
CIVIL PROCEDURE LAW AND RULES §§ 203(g) AND 213(8) AND NEW
YORK DEBTOR AND CREDITOR LAW§§ 276, 276-a, 278 AND/OR 279,
AND 11 U.S.C. §§ 544(b), 550(a) AND 551
(Grace Defendants, EJS Defendants, Jelris Defendants, GFF,
Defendant NTC and/or FBO Defendants,
RMG Trust Defendants, Merlin and Enhancement)

258. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

259. At all times relevant to the Transfers, the fraudulent scheme perpetrated by

BLMIS was not reasonably discoverable by at least one unsecured creditor of BLMIS.

260. At all times relevant to the Transfers, there have been and are one or more

creditors who have held and still hold matured or unmatured unsecured claims against BLMIS

that were and are allowable under § 502 of the Bankruptcy Code or that were and are not

allowable only under § 502(e) of the Bankruptcy Code.

261. Each of the Transfers prior to the six years before the Filing Date constitutes a

conveyance by BLMIS as defined under DCL § 270.

262. Each of the Transfers was made by BLMIS with the actual intent to hinder, delay

or defraud the creditors of BLMIS. BLMIS made the Transfers to or for the benefit of Grace

Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants

and/or their predecessors-in-interest, RMG Trust Defendants, Merlin and Enhancement in

furtherance of a fraudulent investment scheme.

263. Each of the Transfers was received by Grace Defendants, EJS Defendants, Jelris

Defendants, GFF, Defendant NTC and/or FBO Defendants and/or their predecessors-in-interest,

RMG Trust Defendants, Merlin and Enhancement with the actual intent to hinder, delay or

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defraud the creditors of BLMIS at the time of each of the Transfers, and/or future creditors of

BLMIS.

264. As a result of the foregoing, pursuant to NY CPLR §§ 203(g) and 213(8), DCL §§

276, 276-a, 278 and/or 279, §§ 544(b), 550(a), and 551 of the Bankruptcy Code, and SIPA §

78fff-2(c)(3), the Trustee is entitled to a judgment against Grace Defendants, EJS Defendants,

Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants, RMG Trust Defendants,

Merlin and Enhancement: (a) avoiding and preserving the Transfers, (b) directing that the

Transfers be set aside, (c) recovering the Transfers, or the value thereof, for the benefit of the

estate of BLMIS, and (d) recovering attorneys’ fees, except from Defendant NTC.

COUNT EIGHT
RECOVERY OF SUBSEQUENT TRANSFERS – NEW YORK DEBTOR AND
CREDITOR LAW §§ 273-279 AND 11 U.S.C. §§ 544, 548, 550(a) AND 551
(FBO Defendants)

265. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

266. Each of the Transfers to Defendant NTC is avoidable under §§ 544 and 548 of the

Bankruptcy Code, DCL §§ 273-279 and § 78fff-2(c)(3) of SIPA.

267. Upon information and belief, the NTC Subsequent Transfers were transferred by

Defendant NTC to FBO Defendants and/or their predecessors-in-interest.

268. FBO Defendants and/or their predecessors-in-interest are immediate or mediate

transferees of the NTC Subsequent Transfers from Defendant NTC.

269. Each of the NTC Subsequent Transfers was made directly or indirectly to or for

the benefit of FBO Defendants and/or their predecessors-in-interest.

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 270. Each of the NTC Subsequent Transfers was received by FBO Defendants and/or

their predecessors-in-interest with the actual intent to hinder, delay or defraud creditors of

BLMIS at the time of each of the NTC Subsequent Transfers, and/or future creditors of BLMIS.

271. As a result of the foregoing, pursuant to DCL §§ 273-279, §§ 544(b), 548(a),

550(a) and 551 of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA, the Trustee is entitled to a

judgment against FBO Defendants: (a) recovering the NTC Subsequent Transfers, or the value

thereof, from FBO Defendants to or for the benefit of the estate of BLMIS and (b) recovering

attorneys’ fees from FBO Defendants.

COUNT NINE
RECOVERY OF SUBSEQUENT TRANSFERS – NEW YORK DEBTOR AND
CREDITOR LAW §§ 273-279 AND 11 U.S.C. §§ 544, 548, AND 550(a)
(Subsequent Transferee Defendants)

272. To the extent applicable, the Trustee incorporates by reference the allegations

contained in the previous paragraphs of this Complaint as if fully rewritten herein.

273. Each of the Transfers is avoidable under §§ 544 and 548 of the Bankruptcy Code,

DCL §§ 273-279 and § 78fff-2(c)(3) of SIPA.

274. Upon information and belief, the Subsequent Transfers were transferred by

Defendants to Subsequent Transferee Defendants.

275. Each of the Subsequent Transfers by Defendants was made directly or indirectly

to or for the benefit of Subsequent Transferee Defendants.

276. Each of the Subsequent Transfers was received by Subsequent Transferee

Defendants with the actual intent to hinder, delay or defraud creditors of BLMIS at the time of

each of the Subsequent Transfers, and/or future creditors of BLMIS.

277. Subsequent Transferee Defendants are immediate or mediate transferees of the

Transfers.

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 278. As a result of the foregoing and the avoidance of the within Transfers, pursuant to

DCL §§ 273- 279, §§ 544(b), 548(a), and 550(a) of the Bankruptcy Code, and § 78fff-2(c)(3) of

SIPA, the Trustee is entitled to a judgment against Subsequent Transferee Defendants: (a)

recovering the Subsequent Transfers, or the value thereof, for the benefit of the estate of BLMIS,

and (b) recovering attorneys’ fees from Subsequent Transferee Defendants.

COUNT TEN
DISALLOWANCE OF RELATED ACCOUNT CUSTOMER CLAIM

279. To the extent applicable, the Trustee incorporates by reference the allegations

contained in the previous paragraphs of this Complaint as if fully rewritten herein.

280. OFP filed the Related Account Customer Claim, which has not yet been

determined.

281. The Related Account Customer Claim should not be allowed pursuant to § 502(d)

of the Bankruptcy Code. Upon information and belief, Glantz, Jerald Ostrin, Elaine Ostrin,

Roberta Cohen, Mirza Inayat Khan, Pir Zia Inayat Khan and/or Austin Bosarge have beneficial

or equitable interests in the Related Account and/or are subsequent transferees of transfers of

BLMIS’s property which are avoidable and recoverable under §§ 544, 547, 548 and/or 550(a) of

the Bankruptcy Code, DCL §§ 273, 274, 275 and 276 and § 78fff-2(c)(3). As set forth above,

Glantz, Jerald Ostrin, Elaine Ostrin, Roberta Cohen, Mirza Inayat Khan, Pir Zia Inayat Khan

and/or Austin Bosarge have not returned the transfers to the Trustee.

282. The Claims Procedures Order includes a process for determination and allowance

of claims under which the Trustee has been operating. As a result of the foregoing, the Trustee

intends to resolve the Related Account Customer Claim and any related objections through the

mechanisms contemplated by the Claims Procedures Order.

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 COUNT ELEVEN
EQUITABLE SUBORDINATION OF THE OSTRIN
FAMILY PARTNERSHIP CUSTOMER CLAIM

283. The Trustee incorporates by reference the allegations contained in the previous

paragraphs of this Complaint as if fully rewritten herein.

284. As stated above, Glantz is either a general partner of OFP or, if the partners of

OFP are Fern Creek and Vista, Glantz is the sole owner of one general partner (Vista), and the

sole owner of the general partner (Vista) of the other general partner (Fern Creek). In either

event, Glantz is a control person of OFP and has acted as manager of the OFP Account. In

addition, upon information and belief, Glantz has a beneficial or equitable interest in the Related

Account or is a subsequent transferee of transfers from BLMIS to the Related Account.

285. Glantz engaged in inequitable conduct, including behavior described in this

Complaint, that has resulted in injury to the customers and creditors of the estate and has

conferred an unfair advantage on Glantz.

286. Based on Glantz’s inequitable conduct as described above, the customers of

BLMIS have been misled as to BLMIS’s true financial condition, customers have been induced

to invest without knowledge of the actual facts regarding BLMIS’s financial condition, and/or

customers and creditors are less likely to recover the full amounts due to them.

287. The Court should exercise the full extent of its equitable powers to ensure that the

Related Account Customer Claim, and any other claims, payments, or benefits, of whatever kind

or nature, which are asserted or sought by OFP directly or indirectly against the estate – and only

to the extent such claims are allowed – are subordinated for distribution purposes pursuant to §§

510(c)(1) and 105(a) of the Bankruptcy Code.

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 288. Equitable subordination as requested herein is consistent with the provisions and

purposes of the Bankruptcy Code.

WHEREFORE, the Trustee respectfully requests that this Court enter judgment in favor

of the Trustee and against Defendants, NTC Defendants and/or FBO Defendants, and

Subsequent Transferee Defendants as follows:

i. On the First Claim for Relief, pursuant to §§ 548(a)(1)(A), 550(a) and 551 of the

Bankruptcy Code and § 78fff-2(c)(3) of SIPA: (a) avoiding and preserving the Two Year

Transfers, (b) directing that the Two Year Transfers be set aside, and (c) recovering the Two

Year Transfers, or the value thereof, from Grace Defendants, EJS Defendants, Jelris Defendants,

GFF, Defendant NTC and/or FBO Defendants for the benefit of the estate of BLMIS;

ii. On the Second Claim for Relief, pursuant to §§ 548(a)(1)(B), 550(a) and 551 of

the Bankruptcy Code: (a) avoiding and preserving the Two Year Transfers, (b) directing that the

Two Year Transfers be set aside, and (c) recovering the Two Year Transfers, or the value

thereof, from Grace Defendants, EJS Defendants, Jelris Defendants, GFF, Defendant NTC

and/or FBO Defendants for the benefit of the estate of BLMIS;

iii. On the Third Claim for Relief, pursuant to DCL §§ 276, 276-a, 278 and/or 279,

§§ 544(b), 550(a) and 551 of the Bankruptcy Code and § 78fff-2(c)(3) of SIPA: (a) avoiding and

preserving the Six Year Transfers, (b) directing that the Six Year Transfers be set aside, (c)

recovering the Six Year Transfers, or the value thereof, from Grace Defendants, EJS Defendants,

Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants for the benefit of the estate of

BLMIS, and (d) recovering attorneys’ fees, except from Defendant NTC;

iv. On the Fourth Claim for Relief, pursuant to DCL §§ 273, 278 and/or 279, §§

544(b), 550 and 551 of the Bankruptcy Code and § 78fff-2(c)(3) of SIPA: (a) avoiding and

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preserving the Six Year Transfers, (b) directing that the Six Year Transfers be set aside, and (c)

recovering the Six Year Transfers, or the value thereof, from Grace Defendants, EJS Defendants,

Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants for the benefit of the estate of

BLMIS;

v. On the Fifth Claim for Relief, pursuant to DCL §§ 274, 278 and/or 279, §§

544(b), 550 and 551 of the Bankruptcy Code and § 78fff-2(c)(3) of SIPA: (a) avoiding and

preserving the Six Year Fraudulent Transfers, (b) directing the Six Year Transfers be set aside,

and (c) recovering the Six Year Transfers, or the value thereof, from Grace Defendants, EJS

Defendants, Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants for the benefit of

the estate of BLMIS;

vi. On the Sixth Claim for Relief, pursuant to DCL §§ 275, 278 and/or 279, §§

544(b), 550 and 551 of the Bankruptcy Code and § 78fff-2(c)(3) of SIPA: (a) avoiding and

preserving the Six Year Transfers, (b) directing that the Six Year Transfers be set aside, and (c)

recovering the Six Year Transfers, or the value thereof, from Grace Defendants, EJS Defendants,

Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants for the benefit of the estate of

BLMIS;

vii. On the Seventh Claim for Relief, pursuant to NY CPLR 203(g) and 213(8) DCL

§§ 276, 276-a, 278 and/or 279, §§ 544(b), 550(a), and 551 of the Bankruptcy Code and § 78fff-

2(c)(3) of SIPA: (a) avoiding and preserving the Transfers, (b) directing that the Transfers be set

aside, (c) recovering the Transfers, or the value thereof, from Grace Defendants, EJS Defendants,

Jelris Defendants, GFF, Defendant NTC and/or FBO Defendants, RMG Trust Defendants,

Merlin and Enhancement for the benefit of the estate of BLMIS, and (d) recovering attorneys’

fees, except from Defendant NTC;

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 viii. On the Eighth Claim for Relief, pursuant to DCL §§ 273-279, §§ 544, 548, 550(a)

and 551 of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA: (a) recovering the Subsequent

Transfers made by Defendant NTC, or the value thereof, from FBO Defendants, and (b)

recovering attorneys’ fees from FBO Defendants;

ix. On the Ninth Claim for Relief, pursuant to DCL §§ 273-279, §§ 544(b), 548 and

550(a) of the Bankruptcy Code, and § 78fff-2(c)(3) of SIPA: (a) recovering the Subsequent

Transfers made by Defendants, or the value thereof, from Subsequent Transferee Defendants,

and (b) recovering attorneys’ fees from Subsequent Transferee Defendants;

x. On the Tenth Claim for Relief, pursuant to § 502(d) of the Bankruptcy Code,

disallowing the Related Account Customer Claim unless and until the transfers that were

received by OFP are returned;

xi. On the Eleventh Claim for Relief, pursuant to §§ 105(a) and 510(c) of the

Bankruptcy Code, equitably subordinating the Related Account Customer Claim and any other

claims, payments or benefits, of whatever kind or nature, which are asserted or sought by OFP

directly or indirectly against the estate, to the extent such claims are allowed;

xii. On all Claims for Relief, pursuant to federal common law and N.Y. CPLR 5001

and 5004, awarding the Trustee prejudgment interest from the date on which the Transfers were

received;

xiii. On all Claims for Relief, establishment of a constructive trust over the proceeds of

the transfers in favor of the Trustee for the benefit of BLMIS’s estate;

xiv. On all Claims for Relief, assignment of all Defendants’, FBO Defendants’, and

Subsequent Transferee Defendants’ income tax refunds from the United States, state, and local

governments for taxes paid on fictitious profits during the course of the scheme;

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 xv. Awarding the Trustee all applicable interest, costs, and disbursements of this

action; and

xvi. Granting Plaintiff such other, further, and different relief as the Court deems just,

proper, and equitable.

Date: December 9, 2010

New York, New York
By: /s/ David J. Sheehan
/s/ Keith R. Murphy
/s/ Geraldine E. Ponto
/s/ Jonathan B. New
/s/ Andrew W. Reich
/s/ Essence Liburd
BAKER & HOSTETLER LLP
45 Rockefeller Plaza
New York, New York 10111
Telephone: (212) 589-4200
Facsimile: (212) 589-4201
David J. Sheehan
Email: dsheehan@bakerlaw.com
Keith R. Murphy
Email: kmurphy@bakerlaw.com
Geraldine E. Ponto
Email: gponto@bakerlaw.com
Jonathan B. New
Email: jnew@bakerlaw.com
Andrew W. Reich
Email: areich@bakerlaw.com
Essence Liburd
Email: eliburd@bakerlaw.com

Attorneys for Irving H. Picard, Trustee for the

Substantively Consolidated SIPA Liquidation
of Bernard L. Madoff Investment Securities
LLC and Bernard L. Madoff

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