Trustee asks NY bankrutpcy judge to define how to calculate investor losses
Trustee asks NY bankrutpcy judge to define how to calculate investor losses
Associated Press
08/27/09 8:50 PM EDT
NEW YORK — The court-appointed trustee liquidating imprisoned financier Bernard Madoff's assets asked a New York bankruptcy judge Thursday to rule whether he is right to deny damaged investors the bogus profits recorded on their phony account statements.
Trustee Irving Picard asked a U.S. bankruptcy judge in Manhattan to schedule a Feb. 2 court hearing to decide how to define the losses.
Some of the thousands of investors who lost billions of dollars in Madoff's fraud have asked that their losses be calculated consistent with statements they received late last year.
Madoff notified his investors in fraudulent statements that their initial deposits of less than $20 billion had grown to about $65 billion shortly before he revealed to his sons and FBI agents in December that his private investment business was actually a gigantic Ponzi scheme.
Picard said in the court papers that he believes losses should consist only of the amount each investor invested, minus withdrawals.
George Brunelle, a lawyer for nine people in Manhattan and Houston who packaged investments together to meet Madoff's minimum investment requirements, said staging a hearing in February will further delay payouts to victims, some of whom are desperate for cash.
But he added: "It might save everybody a lot of time and a lot of money to resolve it once and for all and to not have to litigate it for everybody piecemeal."
Madoff, 71, is serving a 150-year prison term after he pleaded guilty to federal charges, admitting that he carried out the massive fraud for decades.
An investigation is ongoing to determine who else was involved in a fraud that wiped out life savings, drained charities and damaged the reputation of a Wall Street investment community that once considered Madoff among its biggest stars.
Picard was appointed after Madoff's arrest to try to recover remaining business assets and divide the proceeds to victims. About $1.2 billion in assets has been identified so far.
Another $231 million can be covered through the Securities Investors Protection Corp. or SIPC, which is authorized by Congress to guarantee brokerage accounts for a maximum $500,000.
Picard has received more than 10,000 claims from investors seeking payouts from SIPC or the division of assets.
Brunelle said his clients are also damaged by a process that considers them as a single claimant because they invested as a group.
He said Madoff set a minimum investment requirement "as a way of stealing more" so a group of investors like his clients would get their friends involved.
As a result, he said, his clients started with $2.5 million, eventually invested a total of $3.8 million and were told it had grown to more than $6 million by the time Madoff was arrested.
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