Irving Picard, the liquidator for Bernard Madoff's investment-advisory business, asked a judge to approve $22.1 million in fees for him and his team with the law firm Baker & Hostetler, for five months of work.
Irving Picard, the liquidator for Bernard Madoff’s investment-advisory business, asked a judge to approve $22.1 million in fees for him and his team with the law firm Baker & Hostetler, for five months of work.
The fees, which include a 10 percent “public interest discount” from the firm’s normal rates, cover work performed on the liquidation from May 1 through Sept. 30, according to a filing Nov. 20 in U.S. Bankruptcy Court in New York.
Picard, hired by the Securities Investor Protection Corp. (SIPC) to recover assets and repay victims, in August won his first request for $14.7 million in fees for work from Dec. 15 to April 30.
Some victims of Madoff’s Ponzi scheme objected to that request, claiming Picard was burning through cash while approving victims’ claims too slowly.
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Picard has recovered about $1.4 billion in assets for victims who thought they had $65 billion in their accounts. He is also seeking the return of about $15 billion in fake profit through so-called clawback suits against Madoff’s biggest investors and beneficiaries, including Madoff’s wife and sons.
“No single document could comprehensively set forth all of the tasks engaged in by the trustee since his appointment,” Picard said in the filing.
“This task is ongoing and will be engaged in for a number of years in order to fully understand the scope and depth of the fraud perpetrated by Mr. Madoff.”
Picard is seeking a Dec. 17 hearing before U.S. Bankruptcy Judge Burton Lifland, who approved the previous request. Additional fees for international law firms and forensic accountants will also be considered.
The new request averages $4.42 million a month for five months of work, or about $210,476 per business day. That’s more than Picard’s first fee request, which averaged $3.67 million a month for four months, or $175,000 per business day.
“Unfortunately, one of the problems we have in the way these cases are managed is that there’s very little oversight in relation to fees,” said Stephen French, a partner at Legalbill.com, a firm that analyzes legal costs for companies.
“There’s no specific set of expectations that he is placed under that he could then be held accountable to.”
If approved, the fees will be paid by SIPC, which is overseeing the liquidation and is financed by the brokerage industry. Some victims argued after the first fee request that SIPC is low on cash and needs the money to make required payments of as much as $500,000 for each account.
Picard says his fee payments won’t come from money earmarked for victims, and SIPC has repeatedly said it isn’t low on cash. The Washington, D.C.-based entity recently requested an increase in its U.S. Treasury line of credit to $2.5 billion from $1 billion and increased fees it charges member firms, SIPC President Stephen Harbeck said in an interview last week.
One time-consuming dispute in the liquidation, based on a review of court filings, stems from Picard’s method for calculating claims in the case by using victims’ cash deposits minus their withdrawals.
Hundreds of victims argue that years’ worth of fake profit should be included. A judge will decide if Picard’s method is correct at a hearing Feb. 2.
“I don’t begrudge an attorney his fees for work performed, but this is just another kick in the stomach to the victims he continues to make life miserable for,” Helen Chaitman, a lawyer and a Madoff victim who sued Picard over his claim-calculation method, said in an e-mail. “This is a travesty of justice.”
Madoff, 71, pleaded guilty in March and is serving a 150-year sentence.
The global nature of the con man’s fraud has resulted in extensive international legal work for Picard and his team, including lawsuits against “feeder funds” that directed customer money to Madoff.