Samuels Jewelers Inc., a Texas-based chain that was controlled by Mehul Chinubhai Choksi, the uncle of fugitive jewelry designer Nirav Modi, has filed for chapter 11 protection, the Wall Street Journal reported. Choksi and Modi are both wanted by Indian authorities, who are investigating an alleged multibillion-dollar bank fraud. Modi’s U.S. jewelry businesses have been in bankruptcy since February and largely have been sold off. Samuels, which operates more than 120 jewelry stores in the U.S., has called in liquidators to start selling off inventory to pay off debts of more than $100 million, according to papers filed yesterday in the U.S. Bankruptcy Court in Wilmington, Del. Court papers also say that there are plans to close more than 100 stores. Samuels owes $84 million to banks led by Wells Fargo Bank N.A., $10 million to GB Credit Partners LLC, and has debt to suppliers of goods and services of more than $28 million, according to court papers.
Scores of Bernard Madoff’s former customers are pushing for access to a massive database of trading records and other documents seized from the con man’s now-defunct securities firm to advance a fringe theory about the fraud: It wasn’t a Ponzi scheme, Bloomberg News reported. The reasoning behind why they’re advancing the claim: If it wasn’t a Ponzi scheme, they needn’t surrender more than $100 million in what the trustee of Madoff’s firm calls false trading profits. The customers say that they can prove that Madoff used cash from his investment advisory customers to buy billions of dollars in Treasuries and held Fortune 100 stocks that appeared on their statements. That, they argue, would defeat the trustee’s claim that it was all a Ponzi scheme in which no real trading took place — a theory the trustee calls pure fiction. "The standard for a Ponzi scheme is that there is no legitimate business, but Madoff was the single largest market maker in the world," said lawyer Helen Davis Chaitman, who represents about 70 customers. "I believe I can prove that securities were purchased for some of my customers."
A federal appeals court yesterday blocked new litigation against the estate of a Florida investor accused of helping Bernard Madoff commit fraud, after the estate had reached a $7.2 billion settlement to benefit Madoff’s customers, Reuters reported. The decision by the U.S. Court of Appeals for the 2nd Circuit is a victory for Irving Picard, the court-appointed trustee liquidating Bernard L. Madoff Investment Securities LLC after its December 2008 implosion. Picard has said that allowing the $11 billion lawsuit by A&G Goldman Partnership and Pamela Goldman against Jeffry Picower’s estate would undermine his authority to obtain settlements, while assuring settling parties they would not be sued again.
