| NEW YORK, July 26
NEW YORK, July 26 The trustee seeking money for
Bernard Madoff's former clients has asked a bankruptcy judge to
release roughly $1.49 billion to $2.43 billion in recovered
funds to compensate victims, several times more than they have
received so far.
Irving Picard, the trustee, said on Thursday that the payout
would cover more than 1,220 customer accounts, and bring total
payments so far to as much as 50 percent of the claims currently
This would be the second payout to victims of the Ponzi
scheme, which unraveled in late 2008. Picard said he was making
the request to the court now because two legal obstacles were
While the trustee has recovered about $9.14 billion, just
$336 million has been distributed so far. A large chunk of the
recoveries have been put in reserve because of litigation with
victims who contend they are owed more.
The requested payout requires approval by U.S. Bankruptcy
Judge Burton Lifland in Manhattan.
Picard said part of the money included in the distribution
request comes from the $5 billion forfeited by the estate of
Madoff investor Jeffry Picower. A deadline to appeal the Picower
forfeiture order expired on July 16.
Also, the U.S. Supreme Court last month let stand a lower
court decision upholding Picard's "net equity" method for
calculating losses of former customers at Madoff's defunct firm,
Bernard L. Madoff Investment Securities LLC.
Picard had measured losses as the difference between the
amounts that customers deposited and the amounts they withdrew
from the Madoff firm before the fraud was uncovered. Some
customers wanted recoveries based on their final account
statements, even if the amounts shown were made up.
David Sheehan, a lawyer for Picard, said in a statement that
some of the remaining objections are "specious at best." He
nonetheless said the trustee must hold some money back to
account for the objections, at least until a final court order
is in place to allow for larger distributions.
Picard has estimated that Madoff victims lost about $20
billion from the fraud.
The trustee has also been appealing decisions by federal
judges in New York that rejected his claims against large banks
that did business with Madoff and "feeder funds" that funneled
customer money to Madoff.
Madoff, 74, pleaded guilty in March 2009 and is serving a
150-year sentence in a North Carolina federal prison.
The case is Securities Investor Protection Corp. v. Bernard
L. Madoff Investment Securities LLC, U.S. Bankruptcy Court,
Southern District of New York, No. 08-ap-01789.