Victims of Bernard Madoff may get less than $10 million in proceeds when the businesses of the $65 billion Ponzi-scheme operator are sold, according to analyst estimates.
The Madoffs valued their net worth on Dec. 31 at $826 million, including $700 million for Madoff's ownership in Bernard L. Madoff Investment Securities, according to a court filing Friday.
The firm's brokerage has since been valued at no more than $10 million, according to Larry Tabb, founder of TABB Group, a financial-market research and advisory firm. The firm's money-management unit is likely to be unsalable, analysts said.
"The $700 million number is probably a figment of Madoff's imagination," said Stephen Harbeck, president of Securities Investors Protection, which is overseeing the liquidation of Madoff's New York-based brokerage. "He put that value on the business while he was still conducting the fraud."
The U.S. government said in a court filing Sunday that it will seize personal assets, valued by the Madoffs in December at more than $100 million, including homes in Manhattan; Montauk, N.Y.; Palm Beach, Fla.; and France. The trustee liquidating Madoff's brokerage on behalf of SIP, Irving Picard, said Feb. 4 that he had recovered about $946 million in cash and securities for customers of the bankrupt company. Today, Picard said he hired a law firm to seek recovery of Madoff assets in Gibraltar.
Madoff, 70, pleaded guilty Thursday in Manhattan federal court to defrauding investors of as much as $65 billion. He faces a 150-year sentence for using money from new investors to pay off old ones in a global fraud that ran from at least the early 1990s.
The brokerage, which is being marketed to potential bidders, had earnings of $1.12 million last year from its market-making and proprietary trading businesses, according to documents drawn up by investment bank Lazard.
"The brand has no value, because no one in his right mind would want to open a brokerage named Madoff," Tabb said. "You're buying trading desks, computers, back-office software and routing systems — and every day the business isn't sold the value goes down and down."
As for Madoff's money-management business, "It is highly unlikely there will be anything of consequence to sell," said Daniel Seivert, chief executive officer of Echelon Partners, an investment bank for money-management firms in Manhattan Beach, Calif.