Irving Picard and other advisers to the Bernard L. Madoff estate received $318.4 million in fees and expenses through March.
Picard, the trustee liquidating the Ponzi scheme mastermind’s firm, has personally been paid $3.6 million in fees since Madoff’s 2008 arrest, according to a filing yesterday in U.S. Bankruptcy Court in Manhattan. His law firm, Baker & Hostetler LLP, received $145.6 million, plus expenses of $3.4 million.
Objections were filed to five of Picard’s fee applications, he said in the filing, a report for the period from Oct. 1 to March 31. Fees tied to the liquidations of Madoff’s firm and the Lehman Brothers Holdings Inc. (LEHMQ) brokerage may deplete the $2.5 billion fund of the Securities Investor Protection Corp., according to a March 30 report by the Office of the Inspector General at the Securities and Exchange Commission.
“We should hope and expect that now that the trustee and his law firm are up to speed, they should incur costs at a lower rate,” said Stephen Lubben, a bankruptcy professor at Seton Hall University School of Law in Newark, New Jersey. “If the creditors get a very high percentage of their claims paid, they won’t care how much the trustee got paid.”
Amanda Remus, a Picard spokeswoman, didn’t immediately respond to an e-mail seeking comment.
SIPC, created to provide protection for brokerage customers, receives funding from the brokerage industry. Just days after Madoff told authorities his business was “one big lie,” SIPC named Picard as 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.
Liquidating the Madoff estate to pay customers, Picard has taken in $2.6 billion in about 27 months, including $47.3 million from October through March. About $1.5 billion came from investors who settled lawsuits.
From March through October, Picard filed more than 1,000 lawsuits to try to recover $90 billion for the Madoff estate, he said. A court challenge is holding up $5 billion promised to Picard by the estate of Jeffry Picower, a Madoff investor who died in 2009.
Separately, banks including JPMorgan Chase & Co. (JPM) and HSBC Holdings Plc (HSBA) are challenging Picard’s right to sue them on behalf of Madoff customers, saying he was hired only to liquidate the estate.
In his lawsuits, Picard accused the banks of aiding Madoff’s fraud. They denied any wrongdoing.
Earlier this month, Picard said he would allocate the $2.6 billion he had raised to a fund for investors who lost money in Madoff’s fraud, paying an initial $272 million to those with approved claims.
Consultants employed by Picard were paid cumulative fees of $147.7 million through March, plus expenses of $4.8 million. Through March, Picard received more than $1.1 billion from SIPC and used 31 percent of the amount for fees, rent and other expenses.
About $346.3 million of the money advanced by SIPC was consumed by administrative expenses, while about $779.3 million was used to pay customer claims, Picard said. Expenses included rent for the con man’s former office in Manhattan, the trustee’s monthly fees and record-keeping, he said.
Office rent in the period was $114,762, while Picard’s personal fees were $134,240 and “hosting expense” totaled $487,128.
The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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