Madoff Never Invested A Dime, Trustee Says

Feb 23 2009 | 12:35am ET

A week after Friday the 13th, Bernard Madoff’s victims got some more bad news: The accused hedge fund fraudster hadn’t invested a dime of their money for at least 13 years.

“We have no evidence to indicate securities were purchased for customer accounts” over the past 13 years, Irving Picard, the court-appointed trustee, told Madoff investors on Friday. “This is a case where we’re going to be looking at cash in and cash out.”

The insult to injury came at a meeting for investors of the alleged $50 billion Ponzi scheme at U.S. Bankruptcy Court in New York. Picard said that the monthly statements Madoff sent to clients had nothing in common with what was going on at Madoff’s midtown Mahattan headquarters.

Madoff’s scheme “took place on the 17th floor” of the landmark “Lipstick Building” on Third Avenue, where he ran his investment advisory separately from his other businesses upstairs. “The rooms were under lock and key.”

Now, there are new restrictions.

“We are operating out of a crime scene,” Picard said. “There is a limit to what we can say.”

Picard says his staff, alongside regulators and criminal investigators, are sifting through some 7,000 boxes of records Madoff stored at a warehouse in Queens. He said he’s recovered some $950 million in assets so far.

The trustee also said that about 2,400 people have filed claims with his office. Victims of the Madoff scandal have until July 2 to file, and Picard said he expects the number to his sharply by then. Court filings show more than 10,000 active accounts at Bernard L. Madoff Investment Securities, although many clients had multiple accounts.

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