On May 4, 2012, the bankruptcy trustee assigned to liquidate Bernard L. Madoff Investment Securities Inc. to repay the victims of Bernie Madoff's Ponzi scheme filed a complaint with the U.S. bankruptcy court to have the spouses of Madoff's children added to the list of defendants. Irving Picard won court approval to add the spouses to lawsuit fighting for money for the victims, arguing that the spouses were unlawfully benefitted by the scheme through their marriages to Madoff children. The judge ruled last month that Picard could make some claims against the spouses for money that they received from other family members, namely, Madoff's sons, Andrew and Mark. Picard believes victims deserve $20 billion overall, and argues that the defendants should forfeit any money gained through the scheme.

While Madoff has allegedly claimed to be enjoying his 150 year prison sentence, his family continues to undergo public shame, suspicion, and harassment for their patriarch's illegal activity. The defendants now include Madoff's close family members and some of their spouses. The family defendants are Madoff's son Andrew (co-director of trading), the estate of his late son Mark (co-director of trading), his brother, Peter (chief compliance officer), and his niece, Shana (a compliance officer). The spouse defendants are Deborah Madoff, who filed for divorce from Andrew in 2008, Mark's widow, Stephanie Mack, and Susan Elkin, who was divorced from Mark in 2000.

The family argues that Picard waited too long to bring many of his claims before the court, and they maintain that they were unaware of the patriarch's illegal activities. Following their father's arrest, Andrew and Mark broke off communication with Madoff, stating that they felt utterly shocked and betrayed by their father's behavior. The men were furious and stunned when their father admitted to them that the firm was a lie, and they turned him in to U.S. authorities the next day. The sons were scrutinized and questioned, but no federal charges were ever filed. Picard filed a civil lawsuit against the sons and their uncle, Peter, and cousin, Shana, in October of 2009.

Two years to the day that his father was arrested, Mark Madoff committed suicide in his Soho home while his wife, Stephanie Mack, was in Florida with their daughter. Mack and Andrew have both stated that the overwhelming pressure and shame of what his father did led Mark into a deep depression from which he could not escape. Mark left a note in which he told his father that his deceit had destroyed the lives of his sons, before hanging himself as his two year old son slept in the next room. Adding to the grief and pain suffered by Mack, Picard now claims that she should forfeit $27.5 million, in addition to the $81.3 he wants from Mark's estate.

Picard says the family was negligent to allow these unlawful schemes to continue, while the defendants have long held that their employment activities at the firm were legitimate, and they were completely betrayed by Madoff's actions. Picard aims to hold all entities that knew or should have known about the fraud responsible as well, just as he believes that the family and spouses should have caught on to Madoff's elaborate scheme and are liable for their ignorance.

The trustee has managed to recover $9.1 million, but only $1.1 billion has been distributed due to litigation. Many of Picard's largest claims, mainly those against banks that worked with Madoff, have been dismissed by several court decisions. The trustee is appealing those dismissals and continues to seek that the Madoff's family members turn over their assets to the victims of the patriarch's scheme.