Updating Madoff Ponzi scheme case, one year later

A large antique print owned by former Bernard

A large antique print owned by former Bernard Madoff finance chief Frank DiPascali is auctioned by the U.S. Marshals Service in New Jersey. (June 24, 2010) (Credit: AP)

A year ago Tuesday, Ponzi schemer Bernard Madoff was sentenced to 150 years in prison for operating history's biggest fraud and was sent to spend the rest of his life with the likes of Colombo crime family boss Carmine Persico at Butner Federal Correctional Complex in North Carolina.

These days Madoff, 72, spends his time making a new class of friends and is said to have taken up boccie ball and other pursuits to pass the time.

"He is doing fine, as fine as can be," Madoff's attorney, Ira Sorkin, told Newsday Monday. "He cares deeply about his wife."

But in the coming weeks and months some of Madoff's former clients, who lost their investments when the multibillion-dollar fraud was uncovered in December 2008, will have more reason to curse him. Perhaps 250 so-called avoidance litigation lawsuits are expected to be filed by bankruptcy court trustee Irving Picard to recoup about $12 billion withdrawn from accounts at Bernard L. Madoff Investment Securities Llc.

"He is going to go after the big ones, at least start with the big ones," said Garden City investor attorney Jerry Reisman. "Certainly anyone who received money in excess of what they put in has this liability to the Madoff trustee."

Picard said he has until Dec. 11 to file the lawsuits. He wouldn't say how many cases that might include, but a lawyer familiar with the litigation said about 250 suits would be filed in federal bankruptcy court in Manhattan targeting "net winners," investors who took out more money than they put into their accounts - by at least $500,000.

Picard has sued Madoff's wife, Ruth, for $44 million and other relatives for about $200 million. Additional lawsuits seek to recover $14.8 billion in principal and fictitious profits.

Picard has so far recovered $220 million in settlement from the family of the late Norman F. Levy, a Manhattan real estate broker. The biggest recovery may very well come from the estate of the late entrepreneur and philanthropist Jeffry Picower, who Picard alleged in court filings took $7.2 billion in fictitious profits from Madoff accounts. A settlement has been rumored for months, and Monday Picard didn't want to predict when it might happen. Some lawyers put the amount as high as $5 billion.

Picard said he has $1.5 billion of customer assets in hand and plans to begin distribution on a pro-rata basis this summer. While he insists that the percentage of recovery should be based on a $21-billion figure - the amount of actual cash he said was invested - others believe the true amount should be $65 billion, the amount Madoff said investors had in their accounts when the scheme unraveled.

Investors could recover 30 percent to 40 percent of their investments. Because the true account value is being hotly contested in the courts, to play it safe, Picard said, he will start paying out a percentage based on the $65-billion figure.

Key figures in the Bernard Madoff Ponzi scheme, as of June 18

 

Fictitious value of customer accounts: $65 billion

Estimated actual value of accounts: $21 billion

Assets recovered: $1.5 billion

Customer accounts open on Dec. 11, 2008: 4,903

Claims filed with SIPC: 12,922

Claims allowed by SIPC: 2,135

Total value of allowed claims: $5.5 billion

Claims denied by SIPC: 10,787

Payments approved by SIPC: $700 million

SOURCES: SIPC, Manhattan bankruptcy court filings

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