Bernie Madoff is long gone. The lawyers are going strong By Reuters

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<span>© Reuters. FILE PHOTO: Bernard Madoff walks back to his apartment in New York in this December 17, 2008 file photo. REUTERS/Shannon Stapleton/File Photo</span><br />
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<p>By David Thomas</p>
<p>(Reuters) – Long before cryptocurrency and Sam Bankman-Fried, the biggest name in corporate fraud was Bernie Madoff. </p>
<p>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. </p>
<p>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.</p>
<p>Another recovery came Friday, when Picard announced he was poised to distribute $45 million more to Madoff investors. </p>
<p>The case has been a windfall for Picard, 82, and his law firm, 1,000-lawyer Baker &amp; Hostetler. Since Picard’s appointment 15 years ago, they have been awarded more than $1.5 billion in fees, court records show. </p>
<p>The fees through November 2022 have amounted to nearly 17% of Baker &amp; 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. </p>
<p>Picard and Baker &amp; 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.</p>
<p>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.</p>
<p>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. </p>
<p>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.</p>
<p>100 CASES TO GO</p>
<p>Picard’s and Baker &amp; 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. </p>
<p>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.</p>
<p>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.</p>
<p>U.S. law firm Sullivan &amp; 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.</p>
<p>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.</p>
<p>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.</p>
<p>“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. </p>
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