Bad News for Madoff Victims: Too Many Claims, Not Enough Money

July 10, 2009— -- Many of the victims of Ponzi scammer Bernard Madoff's $65 billion fraud are in dire straits, and there may not be enough money to go around, according to a report filed in U.S. Bankruptcy Court in the Southern District of New York yesterday.

The filing, from court-appointed trustee Irving Picard, who is tasked with liquidating Madoff's assets, reports that at least 15,400 claims have been filed by victims. There was a flurry of filings just before the July 2 deadline.

The fund's hardship program, which applies to Madoff victims "facing severe hardship," includes those who can no longer pay their medical bills or afford basic living expenses, those who are 65 or older and must return to work, or those who have declared bankruptcy. So far, 258 such claims have been received and 152 have been approved.

The hardship program was initiated in May to expedite claims for "customers who have been hardest hit" by Madoff's Ponzi scheme.

In the report, Picard also says he doesn't currently believe "there will be sufficient funds in the debtor's estate" to make monetary distributions to "priority, non-priority general creditors and/or broker dealers" – a group made up largely of vendors, employees, taxing authorities, and customers filing claims on non-customer proof of claim forms.