Saturday, 27 August 2016
Last updated 12 hours ago
May 4 2011 | 3:39pm ET
Irving Picard wants to start returning some of the money recovered from Bernard Madoff’s Ponzi scheme to its rightful owners.
The trustee for the liquidation of Bernard L. Madoff Investment Securities filed a motion Wednesday in the U.S. Bankruptcy Court for the Southern District of New York for permission to allocate $2.6 billion to the BLMIS Customer Fund and to make initial, interim payments of about $272 million to Madoff investors whose claims he’s approved.
“This initial distribution represents a significant milestone in the trustee’s recovery efforts on behalf of BLMIS customers,” said David J. Sheehan, counsel to the trustee and a partner at Baker & Hostetler. “We can now begin to return stolen funds to their rightful owners. Our aggressive, global recovery effort has yielded great success and we have laid the groundwork for significant future recoveries, which we intend to distribute as quickly as possible.”
Since his appointment 29 months ago, the trustee has recovered over $7.6 billion, or 44% of the roughly $17.3 billion in principal lost in the Ponzi scheme by customers who had filed claims as of July 2, 2009. The motion says, however, that “significant amounts” of this total are “unavailable” at this time because of appeals. In particular, two claimants have appealed Picard’s $5 billion settlement with the estate of Jeffry Picower.
Of the $2.6 billion Picard wants to allocate to the Customer Fund, a certain amount will be held in reserve until appeals are resolved (including the $220 million settlement with the Levy family and $80 million in other settlements related to the net equity appeal.)
Another $1.6 billion cannot be distributed until the net equity is appealed and $424 million cannot be distributed at this time due to pending litigation and settlement discussions.
That leaves $272 million, which equals an average payment of $222,551 on claims related to 1,224 accounts, or 4% of losses incurred by customers with net equity claims.
The trustee expressed regret that settlements, particularly the Picower deal, were being appealed, saying that had the Picower settlement stood unchallenged, the payout would be almost 13% higher.
The $2.6 billion to be allocated to the Customer Fund includes transfers from BLMIS bank accounts, the sale of assets, and refunds; the $550 million settlement with Carl Shapiro, Robert Jaffe, and related entities; the $470 million settlement with the Swiss bank, Union Bancaire Privée; the $45 million settlement with Hadassah; and approximately $45 million in preference payments and other settlements.