Saturday, April 24, 2010

Family Swindled By Madoff Fights $61 Million IRS Bill


First the family of Norman F. Levy, the late New York City real estate tycoon, was swindled out of hundreds of millions of dollars by close friend Bernard L. Madoff, forcing the closing of two Levy charities. Then Levy heirs coughed up $220 million to the Madoff bankruptcy trustee to repay personal withdrawals made before Madoff's Ponzi fraud collapsed in 2008.

Now, adding insult to injury, the unlucky clan is fighting a $61 million estate tax bill from the Internal Revenue Service.

In a previously unreported U.S. Tax Court lawsuit against the IRS, Levy's estate and his two grown children, Francis N. Levy and Jeanne Levy-Church, contend they don't owe the $61 million. Instead, they claim the feds actually owe the estate a $19 million refund for losses from Madoff's thievery of certain assets after their father's death in 2005 at age 93.

Madoff, along with the Levy children, was initially named an executor of the estate. He has since resigned as an executor and is now serving a 150-year federal prison sentence after admitting he defrauded hundreds of investors out of an estimated $60 billion.

According to Tax Court and probate filings, Levy's gross estate was valued at $1.09 billion in 2005. Although some of that likely represented nonexistent wealth already looted by Madoff, Levy during his lifetime probably should have been on the Forbes list of the 400 Richest People in America, which he never made.

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