Unwinding the biggest Ponzi scheme in U.S. history isn’t cheap.
Six years after Bernard Madoff’s fraud collapsed, the cost of liquidating his defunct investment advisory firm to repay thousands of victims has topped $1 billion, though the con man’s former customers aren’t footing the bill.
The fees, paid by the industry-backed Securities Investor Protection Corp., which is managing the case, have financed a team of lawyers who this week surpassed $10 billion in recoveries for victims, or almost 60 percent of the principal that vanished after Madoff’s arrest in December 2008.
Irving Picard, the bankruptcy lawyer who’s leading the effort as trustee for Madoff’s company, included the new fee total in an interim report posted today on his website. A bankruptcy judge in Manhattan regularly approves the fees, sometimes over the objections of victims’ groups.
The victims, who believed their investments were used to buy securities, have been paid almost $6 billion by Picard since he started distributing the recovered funds. The last distribution, about $349 million, was in May.
Amanda Remus, a spokeswoman for Picard, had no immediate comment on the fee report.
Picard, of Baker & Hostetler LLP in New York, recouped the cash through hundreds of lawsuits and settlements with Madoff’s customers and banks who benefited from the scheme, even if they weren’t aware of it.
Many of the cases have triggered appeals, some to the U.S. Supreme Court. While $6 billion has been paid out, billions more are being held in reserve until lawsuits are resolved that will determine who gets what.
The legal team passed the $10 billion recovery mark on Nov. 17 after reaching a deal with two funds that funneled money to the fraud, Primeo Fund and Herald Fund, both based in the Cayman Islands. The funds agreed to pay a total of $497 million to end lawsuits over their withdrawals from Madoff’s firm.