“We now have $11,079,000,000,” said Irving Picard, who heads the team of bankruptcy lawyers appointed by the court to sort out the financial mess left when Madoff was arrested and his firm collapsed in 2008.
Based on the $17.5 billion that investors originally put into Madoff’s hands, victims would recover about 63 cents on the dollar for every approved claim of their principle investment.
“We’re hoping that we can collect another $3 to $4 billion so we could be in the $14 or $15 billion range,” Picard told ABC News.
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At the time of Madoff’s arrest, his clients thought they had a total of some $64 billion based on profits over the years. The victims will be compensated only for the amount of money they originally invested, not the fictitious profits that Madoff created.
Some victims have already cashed in their claims by selling them to financial traders who initially offered to pay about $.30 for every dollar of their claims. The amount being offered went up substantially after some of Picard’s biggest recoveries.
But the biggest winner could be Picard’s law firm, BakerHostetler, which will earn fees estimated to be almost $1 billion.
“As a number it’s high, but in the context of what’s going on in this case, I don’t think so,” said Picard. So far, the BakerHostetler firm said it has received $715.6 million for more than seven years of work and that the hundreds of millions of additional fees have gone to special counsel, consultants, other professionals and general administrative costs.
The legal fees are being paid by the Securities Investment Protection Corporation (SIPC) which is funded by Wall Street firms.
“The results are a billion dollars in administrative expenses and $11 billion dollars in returns,” said Stephen P. Harbeck, the president of SIPC. “That is the measure of whether spending a billion dollars was wise.”
Picard and his firm have filed more than 900 lawsuits to get money from some investors who took out more over the years than they originally put in, creating a separate controversy.
“I would say he has been very cruel in what he has done,” said Helen Chaitman, a lawyer who lost her life savings to Madoff and also represents investors who Picard has targeted for what are called “claw backs” of the money took out of the Madoff account over the course of the investment.
Ironically, in her efforts to fight against Picard, Chaitman has enlisted the help of Madoff, who communicates with her from his prison cell in Butner, N.C.
“In a lot of ways, Madoff is more honest than Irving Picard,” Chaitman told ABC News. Chaitman claimed Picard has padded his legal bills. The court has rejected her claim.
She says she overlooks the fact that Madoff cost her and her clients their savings.
“I would not say my ally is Bernie Madoff but I am in touch with him and I do ask his assistance, if I can help the victims through what he can tell me,” she said.
Picard says he appreciates the irony that some victims have transferred their anger from Madoff to him.
“I know and I’ve chosen to ignore it and move on and do the job that I was retained to do,” he said.
Picard’s lawyers say they continue to search for any money that could be returned to the victims but have not found any secret accounts set up by Madoff overseas.
“No money hidden overseas,” said David Sheehan, Picard’s partner at BakerHostetler. “There’s money that went to Israel and we’re suing and pursuing that, but there’s been no money that we’ve found where there’s a bank account hidden away for Mr. Madoff or for his wife or for his children."