By David Thomas
(Reuters) – Lengthy earlier than cryptocurrency and Sam Bankman-Fried, the largest identify in company fraud was Bernie Madoff.
Fifteen years after the FBI arrested Madoff on Dec. 11, 2008 for working an enormous Ponzi scheme — and two years after his demise in a federal jail — legal professionals are nonetheless sifting by way of the fallout of his almost $65 billion fraud.
Greater than $14.6 billion has been recovered for Madoff’s victims to this point by Irving Picard, the court-appointed trustee overseeing the liquidation of Madoff’s agency, and his authorized group. Picard has estimated that Madoff’s fraud value his clients $17.5 billion.
One other restoration got here Friday, when Picard introduced he was poised to distribute $45 million extra to Madoff traders.
The case has been a windfall for Picard, 82, and his regulation agency, 1,000-lawyer Baker & Hostetler. Since Picard’s appointment 15 years in the past, they’ve been awarded greater than $1.5 billion in charges, courtroom information present.
The charges by way of November 2022 have amounted to just about 17% of Baker & Hostetler’s revenues in that point, based on a Reuters evaluation of courtroom information and regulation agency knowledge from the American Lawyer — an unusually massive proportion from one case for a agency its measurement.
Picard and Baker & Hostetler declined to remark. Their newest request for charges to the U.S. chapter courtroom in Manhattan seeks $37.9 million for greater than 68,000 hours of labor by 190 legal professionals and professionals from April by way of July.
Picard determined early on to convey instances towards “feeder funds” that funneled investor cash to Madoff, and “internet winners” — traders who took extra money out of Madoff’s agency than they put in.
About half of his recoveries got here from a 2010 settlement with the property of Madoff’s longtime good friend Jeremy Picower, which forfeited $7.2 billion. Lately, Picard’s consideration has turned to recovering cash that was transferred abroad.
Marc Litt, who helped convict Madoff as a Manhattan federal prosecutor and is now at regulation agency Wachtel Missry, referred to as Picard’s recoveries “a exceptional end result.” Normally, he stated, victims’ cash in a significant fraud is spent in methods that may’t be clawed again.
100 CASES TO GO
Picard’s and Baker & Hostetler’s charges are paid by the Securities Investor Safety Company, a nonprofit that Congress created in 1970 to help traders with accounts at failed brokerage corporations.
The charges come from assessments paid by SIPC’s member broker-dealers, not from Picard’s recoveries, stated Josephine Wang, SIPC’s president and CEO.
It is not unusual for regulation corporations to reap huge charges from advanced company collapses involving fraud. The legal professionals that represented traders in Enron Corp obtained about $688 million in charges in 2008 for recovering $7.2 billion from its lenders, auditors and administrators over seven years.
U.S. regulation agency Sullivan & Cromwell has already obtained a choose’s approval to gather greater than $77 million in charges for its work since final 12 months overseeing the chapter property of cryptocurrency change FTX, courtroom information present.
Just like the Madoff case, the FTX chapter will seemingly stretch for years. The change collapsed in November 2022, and its CEO Bankman-Fried was convicted final month of stealing $8 billion from FTX clients.
In the meantime, Picard’s work goes on. Wang stated the trustee continues to be waging about 100 restoration lawsuits, down from 1,000 in the beginning of the Madoff liquidation.
“Sure, the trustee and SIPC are working onerous to convey a near the liquidation, however that may occur solely after the utmost restoration has been realized for patrons,” Wang stated.
(Reporting by David Thomas; Modifying by David Bario and Lisa Shumaker)
