Dec. 8, 2010 -- The lawyer charged with recovering money for victims of Bernie Madoff's Ponzi scheme filed suit Wednesday against Madoff's brother and sons and the London branch of Madoff's investment firm.
The suit is one of a flurry worth more than $21 billion that Irving Picard has filed in recent weeks as the deadline for recovering Madoff money looms, and more claims could be coming.
Saturday, Dec. 11, is both the two-year anniversary of Madoff's arrest and also the last day the bankruptcy trustee can file claims against companies and individuals believed to have benefitted from Madoff's fraud.
In recent weeks, Picard has filed suits against hundreds of individual investors and big companies like JP Morgan, HSBC and UBS, which bring the total amount sought by Picard in the so-called "clawback" to at least $36.9 billion.
Today's suit against Madoff Securities International Ltd. (MSIL) asks for $80 million, names Peter, Andrew and Mark Madoff, Bernie's brother and sons, as respondents, and claims that officers of MSIL used fraudulently obtained funds to pay for a yacht, the Madoff home in the South of France and an Aston Martin car.
Through the end of September, Picard had filed 19 lawsuits worth $15.5 billion against members of Madoff's immediate family, longtime individual investors like Jeffry Picower, and major feeder funds, including those operated by the Fairfield Greenwich Group and J. Ezra Merkin, a prominent Wall Street investment manager.
Picard Sues HSBC For $9 Billion
Picard followed by suing hundreds of individual investors believed to have profited from Madoff's multi-billion-dollar investment scheme by receiving more from Madoff than they paid in. Those suits ask for amounts ranging from $500,000 to $60 million, and total $3.5 billion.
The big bank lawsuits started with UBS AG, which Picard and his team of lawyers sued the day before Thanksgiving for $2 billion, an amount later increased to $2.55 billion. JP Morgan was next, sued for $6.4 billion on Dec 2, followed by HSBC, sued for $9 billion on Dec 5. The banks have all denied wrongdoing and have pledged to fight the suits.
On Tuesday, Picard sued New York Mets principal owner Fred Wilpon and his real-estate investment firm, Sterling Equities Associates. Picard alleged a partnership associated with the baseball team, Mets LP, gained a net $48 million through its investments with Madoff.
Picard was appointed by the court in 2008 to unravel the fraud and help victims recover losses. As of December 8, Picard and his law firm, Baker & Hostetler, have approved around 2,000 victim claims totaling $5.8 billion out of the more than 15,000 claims filed. The firm says they will continue to allow claims after the clawback deadline and by the end of the year, the value of the approved claims should soar to $18 billion.
When the fraud was discovered, there were $65 billion in profits on Madoff's books, but Picard estimates total investor losses to be closer $20 billion. The lawsuits filed to date ask for far more than that, but they include demands for punitive damages, and the expectation that not all suits will be successful.
Picard Has Recovered $1.5 Billion To Date
So far Picard has recovered about $1.5 billion through asset sales and out-of-court settlements.
On Monday, Geneva-based bank Union Bancaire Privee agreed to pay up to $500 million to the victims restitution fund. On Tuesday, Carl Shapiro, an early Madoff investor who made $1 billion from Madoff, and family members agreed to forfeit $625 million to the victims.
Picard is currently negotiating with the estate of the late Florida investor Jeffry Picower. Picower, who died in 2009, allegedly reaped $7.2 billion from Madoff's fraud.
Picard has also sued California money manager Stanley Chais, who died in September, for $1.1 billion. Chais, Picower and Shapiro have previously denied wrongdoing.
Picard will use whatever money is recovered to compensate the victims, but also to pay Madoff's creditors, which include major corporations.
Baker & Hostetler's legal fees are rumored to have reached about $2 million per week as the clawback deadline looms. The legal fees are paid by the Securities Investor Protection Corporation (SIPC), a congressionally mandated corporation funded by SEC-registered stock brokerage firms.