Today: March 05, 2024
Today: March 05, 2024

Bernie Madoff is long gone. The lawyers are going strong

Share This
Bernie Madoff is long gone. The lawyers are going strong
David Thomas
December 11, 2023

By David Thomas

(Reuters) - Long before cryptocurrency and Sam Bankman-Fried, the biggest name in corporate fraud was Bernie Madoff.

Fifteen years after the FBI arrested Madoff on Dec. 11, 2008 for running a massive Ponzi scheme — and two years after his death in a federal prison — lawyers are still sifting through the fallout of his nearly $65 billion fraud.

More than $14.6 billion has been recovered for Madoff's victims so far by Irving Picard, the court-appointed trustee overseeing the liquidation of Madoff's firm, and his legal team. Picard has estimated that Madoff's fraud cost his customers $17.5 billion.

Another recovery came Friday, when Picard announced he was poised to distribute $45 million more to Madoff investors.

The case has been a windfall for Picard, 82, and his law firm, 1,000-lawyer Baker & Hostetler. Since Picard's appointment 15 years ago, they have been awarded more than $1.5 billion in fees, court records show.

The fees through November 2022 have amounted to nearly 17% of Baker & Hostetler's revenues in that time, according to a Reuters analysis of court records and law firm data from the American Lawyer — an unusually large proportion from one case for a firm its size.

Picard and Baker & Hostetler declined to comment. Their latest request for fees to the U.S. bankruptcy court in Manhattan seeks $37.9 million for more than 68,000 hours of work by 190 lawyers and professionals from April through July.

Picard decided early on to bring cases against "feeder funds" that funneled investor money to Madoff, and "net winners" — investors who took more money out of Madoff's firm than they put in.

About half of his recoveries came from a 2010 settlement with the estate of Madoff's longtime friend Jeremy Picower, which forfeited $7.2 billion. In recent years, Picard's attention has turned to recovering money that was transferred overseas.

Marc Litt, who helped convict Madoff as a Manhattan federal prosecutor and is now at law firm Wachtel Missry, called Picard's recoveries "a remarkable result." Usually, he said, victims' money in a major fraud is spent in ways that can't be clawed back.


Picard's and Baker & Hostetler's fees are paid by the Securities Investor Protection Corporation, a nonprofit that Congress created in 1970 to assist investors with accounts at failed brokerage firms.

The fees come from assessments paid by SIPC's member broker-dealers, not from Picard's recoveries, said Josephine Wang, SIPC's president and CEO.

It's not uncommon for law firms to reap massive fees from complex corporate collapses involving fraud. The lawyers that represented investors in Enron Corp received about $688 million in fees in 2008 for recovering $7.2 billion from its lenders, auditors and directors over seven years.

U.S. law firm Sullivan & Cromwell has already received a judge's approval to collect more than $77 million in fees for its work since last year overseeing the bankruptcy estate of cryptocurrency exchange FTX, court records show.

Like the Madoff case, the FTX bankruptcy will likely stretch for years. The exchange collapsed in November 2022, and its CEO Bankman-Fried was convicted last month of stealing $8 billion from FTX customers.

Meanwhile, Picard's work goes on. Wang said the trustee is still waging about 100 recovery lawsuits, down from 1,000 at the start of the Madoff liquidation.

"Yes, the trustee and SIPC are working hard to bring a close to the liquidation, but that will happen only after the maximum recovery has been realized for customers," Wang said.

(Reporting by David Thomas; Editing by David Bario and Lisa Shumaker)


Stock market today: Asian shares are mixed as China unveils 5% economic growth target for 2024

Shares are mixed in Asia after China's premier said the country's target for economic growth this year is around 5%, in line with expectations

What you should know from the opening of China's legislature

China’s Premier Li Qiang promoted an image of confidence as he announced modest economic growth goals for the country at one of its most important political gatherings

US Navy says USS John Finn conducted routine south-to-north Taiwan Strait transit

BEIJING (Reuters) - The Arleigh-Burke guided missile class destroyer USS John Finn conducted a routine south-to-north Taiwan Strait transit on March 5, the U.S. Navy said in a statement on Tuesday.

Analysis-Chinese developers resume UK commercial property retreat

By Iain Withers and Marc Jones LONDON (Reuters) - Some big Chinese developers are set to offload more real estate in Britain to raise cash, property agents say, making the most of a slowly thawing

Blackrock sees India, Indonesia as promising for investment opportunities

JAKARTA (Reuters) - U.S. investment firm BlackRock sees India and Indonesia as two Asia-Pacific countries offering a lot of investment opportunities, its head of research for the region said on

Cryptoverse: Asian traders give bitcoin blast-off

By Jihoon Lee and Jaspreet Kalra SEOUL/MUMBAI (Reuters) - Bitcoin's runaway rally is being driven by investors in Asia.


Thousands of Korean doctors face license suspensions as Seoul moves to prosecute strike leaders

Thousands of striking junior doctors in South Korea are facing proceedings to suspend their medical licenses Tuesday

AI pervades everyday life with almost no oversight. States scramble to catch up

Lawmakers in at least seven states are taking big legislative swings to regulate bias in artificial intelligence

Alabama lawmakers aim to approve immunity laws for IVF providers

Alabama lawmakers, who face public pressure to get in vitro fertilization services restarted, are nearing approval of immunity legislation for providers

North Korea threatens to take military moves in response to US-South Korean drills

North Korea has called the ongoing South Korean-U.S. military drills a plot to invade the country, as it threatens to take unspecified “responsible” military steps in response

- Advertisement -
Advertisement: Limited Time Offer