Madoff Trustee Passes Milestone as Baker & Hostetler Fees Near $1B
As Irving Picard approaches 10 years on the job as trustee of funds recovered for Bernie Madoff's victims, he and his firm are getting closer to securing $1 billion in fees from the work.
July 05, 2018 at 03:22 PM
4 minute read
Almost a decade into his role as trustee of funds recovered for victims of Bernard Madoff's notorious Ponzi scheme, Irving Picard and his law firm, Baker & Hostetler, have passed another milestone—securing more than $13 billion for Madoff victims in light of a $280 million settlement approved this week. And Picard's firm is still racking up fees from the work, securing an award in April that brought its total to just shy of $1 billion, with another fee award likely to hit next month.
In a statement Thursday, Picard and his team announced the court approval of a settlement with Madoff “feeder funds”—investment funds that funneled money into Madoff's Ponzi scheme—tied to money manager J. Ezra Merkin. Merkin and the funds, Ascot Partners LP, Ascot Fund Ltd. and Gabriel Capital Corp., had agreed in June to pay $280 million in a settlement with Picard, who since late-2008 has served as the Securities Investor Protection Act trustee for Bernard L. Madoff Investment Securities LLC (BLMIS).
With a federal bankruptcy court's approval of the Merkin settlement, Picard has now recovered more than $13.26 billion for Madoff's victims, or about 75 percent of the estimated $17.5 billion in losses from Madoff victims who filed claims, the trustee's team said. Those recovered funds have all gone directly to Madoff customers, while the Securities Investor Protection Corp. has covered administrative costs related to the recovery efforts, as well as trustee, legal and accounting fees.
“At the start of this recovery initiative nearly 10 years ago, we were determined to recover as much as possible for Madoff's victims, but we were not sure how much we could recover,” Picard said in Thursday's statement. “Thanks to the wonderful performance of our teams and the backing of SIPC, we have achieved unprecedented success—recovery of over $13.26 billion—for those whose funds were stolen by Madoff. It's an exceptional outcome for Madoff's victims, many of whom didn't expect to get any of their stolen funds returned.”
As large as the recoveries have been for Madoff's customers, the trustee work has also proved lucrative for Picard and Baker & Hostetler, a firm Picard joined from Gibbons shortly after a court appointed him to the trustee position.
In all, the firm has been awarded a total of $992.72 million in fees, with the latest interim fee approval—for $30.7 million, covering the four months from Aug. 1, 2017, to Nov. 30, 2017—coming in late April.
Picard and the firm have typically filed interim fee applications every four months, and usually, they've been approved by a federal bankruptcy judge in New York about a month after they were submitted. The next fee application is expected in mid-July, meaning that Picard and Baker & Hostetler could see their total fee awards surpass $1 billion by mid-to-late August.
Baker & Hostetler partner David Sheehan, who has served as lead counsel to Picard during the Madoff recovery efforts and had a hand in steering the work to Baker & Hostetler, stated that he expects the work will continue.
In a recent semiannual progress report covering a period through March 31, 2018, Picard and his team wrote that they “continued to litigate hundreds of individual cases” in federal bankruptcy court, district court and appeals courts in the United States, and in dozens of international courts.
Included in the trustee's summary of litigation were 16 feeder fund cases that remained pending as of March 31. At least one of those—the Merkin litigation—has since settled, however.
“Our work is not done,” Sheehan said. “We continue to pursue many avenues on behalf of Madoff's victims, and look forward to returning even more in stolen funds back to Madoff's victims as we pass additional, significant milestones in the future.”
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