Madoff trustee: Recovery of stolen money grinds on

  • Business
  • Wednesday, 09 Mar 2011

NEW YORK (AP) - A court-appointed trustee who's recovered US$10 billion in losses so far for Bernard Madoff's legion of victims is predicting the pot will grow in the coming months - with no thanks to the disgraced financier.

Madoff, in a recently published jailhouse interview, claimed to have given the trustee's team inside information to help them go after ill-gotten gains.

"We thought it was appropriate to interview Mr. Madoff and we did," David Sheehan, a lawyer for trustee Irving Picard, said Tuesday about meetings last summer at a North Carolina prison that didn't involve Picard himself. However, Sheehan added, "Nothing that transpired in our conversations with him altered our view of the case or the allegations."

Sheehan said Madoff stuck by his story that his Ponzi scheme dates only to the early 1990s - something Picard disputes.

"We are very comfortable that this fraud began as early as 1983 and we're prepared to prove it in court," the lawyer said.

The remarks came during a conference call by Picard and Sheehan that offered reporters an update on the trustee's two-year campaign to identify and recover assets in the largest investment fraud in U.S. history.

Madoff, 72, is serving a 150-year prison sentence after admitting that for years he used his investment advisory service to cheat wealthy individuals, charities, celebrities and institutional investors.

Burned investors were left holding statements saying they had $64 billion. But Picard has put the actual loss at about $20 billion.

Picard said Tuesday he expects to win court approval before the end of the year to begin distrusting about $2.6 billion of the $10 billion already in the recovery pipeline to thousands of burned investors. He called it "an unprecedented undertaking."

More funds will come from pending lawsuits - known as clawbacks - against big investors who made a killing in phantom profits by taking out more money from their Madoff accounts than they put in, Picard said.

One of the pending suits names New York Mets owner Fred Wilpon, team president Saul Katz and chief operating officer Jeff Wilpon, the owner's son. It seeks return of $300 million it says were phony profits, plus up to an additional $700 million as penalty for the defendants' alleged willful blindness to steady double-digit returns that defied down markets - allegations they deny.

A bankruptcy court has sided with Picard by finding that the victims are only entitled to their principal, since Madoff never made any real investments. A decision is pending on an appeal by the Wilpons and others who insist they were kept in the dark about the scheme and argue that laws protecting investors say they're owed whatever amounts were reflected on investment statements from late 2008.

Picard and Sheehan refused to discuss any pending litigation. But Sheehan reasserted, "Those who didn't get their money back are entitled to get it back from those who have it."

In a story published last month in The New York Times, Madoff pointed a finger at banks and hedge funds. He told the newspaper in an e-mail that he had given Picard "information I knew would be instrumental in recovering assets from those people complicit in the mess I put myself into."

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