By Jonathan Stempel
NEW YORK, Nov 22 (Reuters) - A federal bankruptcy judge onTuesday dismissed lawsuits by the trustee liquidating BernardMadoff's firm to recoup funds from Koch Industries Inc, thecompany controlled by billionaire brothers Charles and DavidKoch, and dozens of other defendants.
U.S. Bankruptcy Judge Stuart Bernstein in Manhattan saiddefendants in most of the 88 lawsuits could keep money thatIrving Picard, who is liquidating Bernard L. Madoff InvestmentSecurities LLC, traced to the swindler but was sent outside theUnited States.
Picard had sought to recover hundreds of millions of dollarsfrom foreign entities that had received Madoff-linked money fromother foreign transferees, including "feeder funds" operated byFairfield Greenwich Group and Tremont Group Holdings, as well asthe Kingate feeder funds.
But in an 87-page decision, Bernstein dismissed a majorityof Picard's claims against the "subsequent foreign transferees"because of international comity, the need to let other countriesenforce their own laws.
He also dismissed dozens of claims, including againstaffiliates of HSBC Holdings Plc and UBS Group AG, based on "extraterritoriality," because the defendantshad insufficient ties with the United States.
Bernstein cited a 2014 ruling by U.S. District Judge JedRakoff in Manhattan that Picard could not recoup "purely foreignsubsequent transfers" because of a presumption that U.S. laws,including in bankruptcy, apply only within the United States.
The bankruptcy judge let Picard pursue several other claims.
Amanda Remus, a spokeswoman for Picard, said the trustee andhis lawyers are reviewing the decision, and pending a thoroughreview are unable to discuss their next steps.
Picard sued Koch to recoup $21.53 million allegedly sent byMadoff to Fairfield Sentry, a British Virgin Islands-basedfeeder fund, and then to a Koch entity in Great Britain.
The trustee did not accuse Koch of wrongdoing, but said U.S.law entitled him to recoup sums that helped Madoff further hisPonzi scheme, even if recipients did not know about the fraud.
Bernstein dismissed claims against Koch on comity grounds.
Koch is a privately-held industrial conglomerate based inWichita, Kansas. A spokesman, Rob Carlton, declined to comment.
Charles and David Koch are each worth $42.7 billion, andtied as the world's ninth-richest people, Forbes magazine said.
Picard has recouped $11.2 billion for Madoff customers, whomhe has said lost $17.5 billion, in the nearly eight years sincethe swindler's December 2008 arrest.
Madoff, 78, pleaded guilty to fraud in March 2009 and isserving a 150-year prison term.
The case is Picard v. Bureau of Labor Insurance, U.S.Bankruptcy Court, Southern District of New York, No.11-ap-02732. The main Madoff bankruptcy case is SecuritiesInvestor Protection Corp v. Bernard L. Madoff InvestmentSecurities LLC in the same court, No. 08-01789. (Reporting by Jonathan Stempel in New York; Editing by AlanCrosby)