Irving Picard at Center of Post-Madoff Storm

Irving Picard at Center of Post-Madoff Storm

Bernie Madoff bankruptcy trustee, Irving H. Picard, may be the hardest
working man in the collections business — and maybe one day the richest.

Picard, the New York-based lawyer who could have easily doubled for actor
Frederic March in film Inherit the Wind, is at the turbulent center of the
post-Madoff world, a world that includes multi-billion dollar feeder fund
lawsuits, multi-million dollar deals with international banks, and, less
grand, the issuing of multi-hundred thousand dollar checks to the nearly
7,000 direct account holders caught up in Madoff’s massive Ponzi scheme.
Picard, in his late 60s, is a rare bird in the quiet world of bankruptcy
trustees, a blend of a traditional Chapter 7
bankruptcy panel trustee and
Securities Investment Protection Act trustee.

A SIPA trustee handles bankruptcies when the Securities Investor Protection
Corp. steps in to take charge of fallen brokerage houses. Picard is
considered the superstar of SIPA trustees, having handled the largest cases
SIPC has managed, and other large non-SIPC cases, such as portions of
airline TWA’s bankruptcy. He has participated in at least 38 major
bankruptcy decisions. According to Stephen Harbeck, president of the Securities
Investors Protection Corporation, Picard has served as trustee in more
brokerage firm liquidations than anyone else in the U.S.

A SIPA trustee’s job, not unlike a Chapter 7 trustee, is to recover
property, assess claims and liquidate any other assets of a bankrupt firm
for the benefit of the estate and its creditors. Consequently, Picard is
using his authority to collect from customers who received preferences,
non-existent principal, and/or payouts of fictitious profits to the
detriment of other defrauded customers whose money was consumed by Madoff’s
global Ponzi scheme.

All the money gathered up will not only help compensate Madoff’s victims,
it will also put a fair penny in Picard’s pockets. SIPA trustees are paid
well, receiving personally 3% of anything over $1 million they recover for
victims. For example, if $2 billion is ultimately recovered in the Madoff
case, Picard stands to make personally $60 million in fees, provided the New
York federal judge overseeing the case, the Hon. Louis Stanton agrees to it.

And the money is rolling in.

This week, the Spanish bank Banco Santandar agreed to hand over $235 million; it had been liable to pay up to $275 million, the total amount its
Optimal funds subsidiary had withdrawn in the 90 days leading up to the
December 11, 2008, collapse of Madoff’s decades-long crime. Santander, the most exposed of the European banks involved with Madoff, with $3
billion lost, is still facing a class-action lawsuit.

So far Picard has collected $1.2 billion from banks, personal
property, and funds around the world. Monies found in Madoff’s accounts
were just over $900 million, a far cry from the estimated $20 billion or so
that Madoff swindled from investors.

In the last 30 days, Picard has filed six major lawsuits, many against
Madoff’s largest feeder funds. The combined suits ask for the return of
over $10 billion in fraudulent profits. Picard’s complaints allege the
people running the funds “knew or should have known” Madoff was a fake,
simply based on the exorbitant, non-stop returns they received. Suits have
been filed against Walter Noel’s Fairfield-Greenwich Group, which withdrew
$3.2 billion since 1995, Jeffrey Picower’s funds, totaling $6.7 billion
withdrawn, and against Stanley Chais, whose funds took out over $1 billion
since 1995.

Last month, Picard also completed the auctioning off of Madoff’s market
maker business for $25 million to Castor Pollux Securities LLC of Medfield,
Massachusetts, which paid $1 million at closing and up to $24.5 million in
deferred compensation through December 2013.

To date, SIPC and Picard have committed $116 million to satisfy claims from
237 Madoff victims, each receiving up to the limit of $500,000. Picard has
even created a “Hardship Case” program, in an effort to help those that have
been completely wiped out by their Madoff investments.

“This is the kind of case any bankruptcy trustee would love to have,” said
Robert C. Furr, president, National Association of Bankruptcy Trustees.
“It’s a high profile case, you can make a lot of money, but you have to be
able to hold on; it takes a long time, maybe four or five years before [the
bankruptcy trustee] gets paid.”

Robert Chew is a former investor with Madoff via a feeder fund. He lives in Colorado.

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