Legal News

Baker Hostetler?s Picard Victorious in Madoff Victims Case

By Amir Efrati

Irv Picard, the so-called Madoff trustee who is busy trying to get back as much money as possible for victims of Bernie Madoff’s fraud, is breathing a little easier today.

That’s because down at the southernmost tip of Manhattan, a federal bankruptcy judge has affirmed what Picard, of Baker & Hostetler, has been doing: denying claims made by Madoff investors who profited from the scheme. Here’s the story from WSJ’s Amir Efrati.

Here’s what got us to this point: Since Madoff’s arrest, Picard has done the accounting legwork to find out which investors had a net gain from the fraud — meaning they took out more money from their accounts than they put in — and which ones had a net loss.

Madoff essentially used the net losers’ money to pay the net winners, who included folks like clothing entrepreneur Carl Shapiro, money manager Stanley Chais, the late Jeffry Picower, and the owners of the New York Mets, among more than 2,500 other account holders.

Those net winners believed they too should be entitled to the recoveries by Picard, who believes that he may be able to get back as much as $10 billion. At the very least, the final collected amount will be several billion dollars.

But Picard said allowing net winners to get a piece of the recoveries would again come at the expense of net losers, who also number more than 2,000, and he said the law was on his side.

U.S. Bankruptcy Judge Burton Lifland agreed: “While the Court recognizes that the outcome of this dispute will inevitably be unpalatable to one party or another, notions of fairness and the need for practicality also support” Picard’s method of determining claims, the judge wrote in his decision.

Now that Lifland has ruled, the Law Blog is anxiously awaiting a showdown between Picard and the net winners before the 2nd Circuit Court of Appeals.

Full post as published by Law Blog - WSJ.com on March 01, 2010 (boomark / email).