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Madoff Trustee Will Seek Approval to Start Victim Payouts

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March 8 (Bloomberg) -- Irving Picard, the trustee liquidating Bernard Madoff’s investment firm, will seek approval to begin making payouts this year to victims, his chief lawyer told reporters.

Picard likely will ask U.S. Bankruptcy Judge Burton Lifland in Manhattan this month for permission to begin making payments from the $2.6 billion in cash and cash equivalents at his disposal, said David Sheehan, the trustee’s lawyer. A hearing on the matter might be scheduled for April. Sheehan said today during a conference call with reporters.

“Those who didn’t get their money back are entitled to get it from those who have it,” Sheehan said, discussing the trustee’s efforts to recoup money from people and firms that received more from Madoff than they invested.

Picard and Sheehan said they have recovered almost $10 billion of the $20 billion in principal investors are believed to have lost in Madoff’s investment fraud Ponzi scheme.

In January, Lifland approved the trustee’s $7.2 billion settlement with the estate of deceased Madoff investor Jeffry M. Picower. Under that accord, the estate agreed to pay $5 billion to Picard for distribution to Madoff’s creditors. It also agreed to pay the government $2.2 billion, which will be distributed, under Picard’s supervision, to victims.

The settlement terms have been challenged on appeal. That will delay payments involving most of the recovered money until after the appeal is resolved, Picard said.

The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

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