Madoff Bankruptcies ConsolidatedJun 10, 2009 | Parker Waichman LLP Bankruptcy cases involving Bernard Madoff will be consolidated in an attempt to save money and increase the chances that stolen assets will be recovered, Bloomberg.com is reporting. The decision means that one trustee will oversee Madoff's personal bankruptcy, as well as another bankruptcy proceeding involving the admitted swindler's business brought by the Securities Investor Protection Corp. (SIPC).
Madoff pleaded guilty to 11 criminal charges last March, including securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission. At the time of his plea, Madoff publicly admitted he had run a Ponzi scheme. Madoff is being detained at the Manhattan Correctional Center in New York City, where he is awaiting sentencing scheduled for later this month. He faces as much as 150 years in prison.
Before his arrest late last year, Madoff told his investors that his fund held more than $64 billion, but in reality, he only had a fraction of that amount. As we reported previously, Madoff never made a single trade on behalf of his investors.
In agreeing to consolidate the Madoff cases, Judge Burton Lifland of U.S. Bankruptcy Court in Manhattan said a common trustee would "maximize" the odds of asset recovery and avoid duplication of efforts, Bloomberg.com said. The judge also said that Madoff's creditors would benefit from the consolidation "because SPIC is underwriting the costs of the recovery."
Following Madoff's arrest, the SIPC appointed Irving Picard as trustee, and charged him with locating and liquidating assets from Madoff's investment business in an attempt to recover some funds for his defrauded investors. In recent months, Picard has filed several claw back lawsuits seeking total of $10.1 billion in profits withdrawn by Madoff investors that he claims should have known of the fraud. Picard also is seeking about $735 million from Madoff customers outside of court.
Picard had backed the consolidation, the Associated Press said. At yesterday's hearing, the trustee's attorney said that Madoff's personal holdings and those of his firm, Bernard L. Madoff Investment Securities, were "hopelessly intertwined."
According to Bloomberg.com, Picard said he expected the total amount of assets recovered for Madoff's victims could increase by $235 million to $1.2 billion by next week. In addition to monies recovered through Picard's liquidation efforts, some Madoff investors could be eligible for up to $500,000 in reimbursement from the SIPC.
So far, Picard has received roughly 9,000 claims from cheated Madoff investors.