A decade after Bernard Madoff was arrested for running the world’s biggest Ponzi scheme, the bitter fight to recoup investors’ lost billions has astounded experts and victims alike.
While no one will ever collect the phantom profits Madoff pretended he was earning, the cash deposits by his clients have been the primary objective for Irving Picard, a New York lawyer overseeing liquidation of Madoff’s firm in bankruptcy court. So far he’s recovered $13.3 billion—about 70 percent of approved claims—by suing those who profited from the scheme, knowingly or not. And Picard has billions more in his sights.
“That kind of recovery is extraordinary and atypical,” said Kathy Bazoian Phelps, a bankruptcy lawyer at Diamond McCarthy LLP in Los Angeles who isn’t involved in the case. Recoveries in Ponzi schemes range from 5 percent to 30 percent, and many victims don’t get anything, Phelps said.
The trustee, from Baker & Hostetler LLP, said the root of his success is the massive forensic accounting effort that began a decade ago in the Manhattan skyscraper where Madoff’s offices spanned three floors and later expanded to a large warehouse full of documents.
“A substantial amount of money” remains to be collected through pending court claims, Picard said in an interview.