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Judge culls Madoff feeder-fund investors

Bernard Madoff arrives at Federal Court where he is expected to plead guilty to securities fraud charges on March 12, 2009 in New York. Victims will also be in court to testify against the disgraced financier who is accused of masterminding a $50 billion Ponzi scheme. UPI/Monika Graff
Bernard Madoff arrives at Federal Court where he is expected to plead guilty to securities fraud charges on March 12, 2009 in New York. Victims will also be in court to testify against the disgraced financier who is accused of masterminding a $50 billion Ponzi scheme. UPI/Monika Graff | License Photo

NEW YORK, Jan. 5 (UPI) -- A judge in New York ruled that feeder-fund investors who funneled money to Ponzi scheme operator Bernard Madoff should not be granted the status of customer.

US District Judge Denise Cote in Manhattan said the law, "simply does not protect against all cases of alleged dishonesty and fraud," the New York Post reported Thursday.

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Cote upheld a June 2011 decision by U.S. Bankruptcy Judge Burton Lifland, who sided with court-appointed trustee Irving Picard, who is charged with recovering funds for Madoff's victims.

Picard contends that investors with no account at Madoff Investment Securities LLC, but invested indirectly, were not entitled to compensation for their losses.

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