After Bernard Madoff was exposed as the biggest Ponzi schemer in U.S. history, Irving Picard was named to liquidate the con man’s bankrupt firm and recover some of the $65 billion Madoff told customers was in their accounts. Two years later, Picard is about halfway to recovering the $20 billion customers invested before Madoff added phony profits.
As Picard pursues hundreds of lawsuits seeking $100 billion from banks and others he claims profited from the fraud, he may even be able to give some victims something Madoff never managed to deliver — a legitimate return on their investment, Bloomberg Businessweek reports in its Feb. 14 issue.
His strategy is simple. “We’re looking to collect as much money as possible,” Picard said outside court Jan. 13, after a bankruptcy judge approved a $7.2 billion settlement Picard and U.S. prosecutors reached with the estate of Jeffry Picower, a Madoff investor who died in 2009.
The Picower settlement — the biggest of its kind — underscores the tricky position Picard is in: To return money to Madoff’s victims, he has to first take it from somebody else. Picard’s choices about whom to pay and whom to sue have led some victims to feel wronged again.
“He’s doing what the receiver is supposed to be doing,” says John V. Donnelly III, a partner with the law firm Cozen & O’Connor in Philadelphia, who represented an investor in recovering assets frozen in R. Allen Stanford’s alleged $7 billion fraud.
Picard has made several decisions that paid off, including seeking additional funds from investors he claimed should have known they were profiting from a fraud, says Sandra Mayerson, a bankruptcy lawyer with the firm Squire Sanders in New York.
“He’s consistently taken the most aggressive position possible,” she says, “and that’s been very successful in recovering money for the estate.”
Just days after Madoff told authorities his financial empire was “one big lie” in December 2008, the Securities Investor Protection Corp. named Picard, 69, trustee of Bernard L. Madoff Investment Securities, making him responsible for unwinding the fraud. Madoff, 72, is serving a 150-year sentence in federal prison in North Carolina.
When Picard was named Madoff trustee, the SIPC said he had liquidated more brokerage firms as trustee than anyone. A week later he announced he was leaving his law firm, Newark, New Jersey-based Gibbons PC, for the New York office of Baker Hostetler LLP, a 650-lawyer firm based in Cleveland.
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