UPDATE 1-Madoff trustee dealt fresh legal setback
(Adds details from decision, comments, byline)
By Jonathan Stempel
NEW YORK, July 7 (Reuters) - A federal judge has limited the ability of the trustee seeking money for victims of Bernard Madoff's Ponzi scheme to recoup sums allegedly transferred fraudulently outside the United States.
In a decision on Sunday, U.S. District Judge Jed Rakoff in Manhattan said Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, cannot invoke U.S. bankruptcy law to recover transfers abroad between foreign entities, including Madoff "feeder funds" and banks.
Rakoff cited a presumption that the law did not apply to conduct outside the country, pointing to a 2010 U.S. Supreme Court decision that limited the reach of domestic laws.
According to court records, the decision affects several dozen lawsuits that Picard has pursued, against defendants such as Spain's Banco Bilbao Vizcaya Argentaria SA, Bank Austria AG, Bank of America Corp's Merrill Lynch International unit and Royal Bank of Scotland Group Plc.
It came six days after the Supreme Court let stand the dismissal of Picard's claims against banks he accused of enabling Madoff's fraud.
Amanda Remus, a spokeswoman for Picard, said the trustee is reviewing Rakoff's decision, which sent the lawsuits to the Manhattan bankruptcy court for further proceedings.
Picard has recovered about $9.82 billion for former Madoff customers who lost roughly $17.5 billion of principal. Continuación...