The trustee liquidating Bernard L. Madoff’s defunct investment firm asked a judge to pay him and his law firm $43.2 million for four months’ work, bringing total fees sought in the case to $175.5 million since Madoff’s arrest.
Expenses of $1.1 million were claimed by trustee Irving Picard and Baker & Hostetler LLP from Oct. 1 to Jan. 31, according to a U.S. Bankruptcy Court filing in New York yesterday. The Madoff case took almost 955 hours of Picard’s time during the period, charged at $748 an hour, and 116,399 hours of his firm’s time at $371 an hour, according to the filing.
High fees in the liquidations of the jailed Ponzi-scheme operator’s firm and the Lehman Brothers Holdings Inc. brokerage might deplete the $2.5 billion fund of the Securities Investor Protection Corp., according to a March 30 audit report by the Office of the Inspector General at the Securities and Exchange Commission. The SEC watchdog recommended “systematic” inspections of SIPC by the SEC to ensure cost-effective processing of brokerage customer claims and liquidations.
Amanda Remus, a Picard spokeswoman, declined to comment on the report. In the filing, Picard said he and his lawyers bill the Madoff estate, not tapping the fund of customer property.
“The payment of fees and expenses to the trustee and any of his counsel has absolutely no impact on recoveries” by Madoff investors, he said.
Picard, who has filed more than 1,000 suits seeking money for the con man’s investors, has recovered more than $7.6 billion, out of about $17 billion in principal lost, according to his latest calculations. By next month, the trustee will have determined almost every one of 16,518 claims filed in the case, according to the filing.
Baker & Hostetler said it spent 7,086 hours on investigations at a cost of $3.1 million in the latest four months. Administration consumed 7,033 hours, and cost $2.1 million. The trustee’s case against JPMorgan Chase & Co. took 1,971 hours, while the Mets owners required 1,660 hours and customer claims took 4,837 hours.
The biggest single expense was $248,944 for translation costs in the period. Picard has 81 potential international lawsuits and 232 domestic suits, according to the filing. Online research cost $166,611 and out-of-town travel cost $202,468, the law firm reported.
In addition to current fees, Picard asked the judge for permission to claim about $5.5 million in fees deferred since Madoff’s arrest in December 2008. Total deferred fees for Picard and his firm since exceed $23 million, according to the filing. The trustee asked the judge to reduce deferrals to 10 percent, from 15 percent, citing “results achieved for the victims of Madoff’s fraud.”
Prior applications for fees since 2008 totaled $132.3 million for Picard and his firm, according to the filing.
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).