Exclusive Online Only ContentRecord $534 Million Advanced to Madoff Investors
October 28, 2009
Madoff liquidation trustee Irving Picard said today that the Securities Investor Protection Corp. (SiPC) has advanced $534.25 million to burned investors, topping the combined pay-out of all 321 liquidations that the SiPC has handled since it created by Congress in 1970.
The advances, which mean cash paid or in the process in being paid, were on 1,360 claims that have been approved so far, Picard said. Another 1,303 claims have been denied, Picard added. The SiPC’s purpose is to reimburse investors under statute and with recovered assets when their brokerage firm fails.
Picard, speaking in an update on restitution for Madoff’s victims, said that so far he has determined $21.2 billion in losses based on cash deposits less withdrawals. Stock values and appreciation reflected in the Bernard L. Madoff Investment Services (BLMIS) accounts are not considered valid measures because the purported stocks and other investments are alleged not to have been made, hence, the “money in /money out” formula to determine losses.
In Madoff’s operation, an IBM AS/400 computer system was used to take in historical stock price data and spit out fake reports to customers on trades that were never actually made. Picard is trying to determine how to return money based on actual cash sent to Madoff by investors, less subsequent withdrawals.
The total of claims allowed so far including the advances is $4.43 billion although much of that will be paid on a pro rated basis as Madoff assets are recovered. So far, Picard said he has recovered $1.4 billion in Madoff assets and that the figure should rise to $1.5 billion by the end of the year.
“I expect that there will be further lawsuits [filed by SiPC against big Madoff gainers]. Whether they are large or medium [sized], I would not want to venture a guess at this point,” he said.
The so-called claw back lawsuits seek to recover money from Madoff clients who took out far more than they put in. In the case of Stanley Chais and the late Jeffry Picower, who died Sunday of a heart attack, he is seeking to recover billions. Another $245 million is sought from five Madoff family members.
“I expect these claim statistics will change as we continue to review and evaluate them. For example, we are finding that more than one claim may have been clipped together [and] are being broken apart. We have visibility back to 1983, but think we can go back into the late seventies,” he said, adding that microfilm and microfiche are the principal sources of data that are being examined for that period.
