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Lawyers, Not Victims, Making Most In Madoff Cleanup


You may recall that after Ponzi schemer Bernard Madoff was found out, the Securities Investor Protection Corporation hired lawyer Irving Picard to be the bankruptcy trustee, to recover what he could for Madoff's victims. And for the past four years, Mr. Picard has been doing that. Not surprisingly, he and others involved in the recovery effort have been charging fees.

But what we learn today from New York Times editor and business columnist Andrew Ross Sorkin, is just how much money has been paid out in fees as opposed to how much has been recovered for swindled investors. And let's just say, Mr. Madoff's illicit business is evidently pretty big business for Mr. Picard and for the others.

Andrew Ross Sorkin, welcome to the program.

ANDREW ROSS SORKIN: Thank you for having me.

SIEGEL: And why don't you give us the numbers straight out - how much in fees?

SORKIN: As of today, they've recorded $554 million in fees. That's to Mr. Picard's firm, that's to consultants, that's to other lawyers, and that includes administrative fees. So far, he has delivered through his cases and motions, only $330 million back to victims of Mr. Madoff's crime.

SIEGEL: And these numbers are from official filings that...

SORKIN: These are filings that came out a couple weeks ago. I went through them and, frankly, was astonished.

SIEGEL: Who has paid this money? Where does this half a billion dollars in mostly lawyers' fees come from?

SORKIN: Well, the good news is that this is not coming out of the hides, if you will, of victims of Mr. Madoff's fraud. This comes from SIPC, which is this agency that's supposed to effectively help those who have been burned, if you will, and this fund comes from other broker dealers who pay into a fund that effectively is like an insurance fund. So it comes out of the brokers and you could say, ah, so it doesn't really matter, but of course, where do those funds come from? They come from the customers.

SIEGEL: Now, we should say that Irving Picard has negotiated settlements that are far in excess of 330 million or whatever, but those haven't been paid out yet to the investors who lost money with Madoff.

SORKIN: That's exactly right and we should be fair about this. In total, he has, through settlements - not in court - any time he has gone to court, virtually, to a T, he has lost. The only times he has won money is in a context of settlements and, in this case, he has reached settlements worth $9 billion.

Having said that, virtually all of those settlements are being appealed or challenged in court. And so, it remains unclear how much of that money will ultimately find its way back into the pockets of victims of the Madoff fraud.

SIEGEL: You spoke with a spokeswoman, I gather, for Irving Picard. Was there any embarrassment at all about this colossal over half a billion dollars in fees that have been paid out?

SORKIN: No. Her position and the firm's position is you need to spend this type of money, given the deep pockets on the other side of these cases and that, in her view and in his view, I imagine, they have been quite successful. They point to that $9 billion number. Of course, that $9 billion number has not found its way into the pockets of the victims.

SIEGEL: And, indeed, since it's being contested in lawsuits, we can assume that some of it will yet go to lawyers.

SORKIN: Right. Some of it. At least some of it. I should also say, you know, he started with this $100 billion number and we are talking now, at best, about 9 billion. You know, some estimates would suggest to you that that 9 billion turns into 5 billion. Maybe it turns into 4 billion. We don't know what that number ultimately becomes, so it's a paltry sum on a relative basis, given the fees that his firm has charged.

SIEGEL: I gather some people have wisecracked that Mr. Picard would end up richer than Bernard Madoff. That doesn't seem to be likely here. How much of this money actually goes to him, ultimately?

SORKIN: According to one of the filings, it comes so far to about $5.1 million. Again, in fairness to him, $5.1 million on Wall Street these days may still not sound like a lot, but in the world of lawyers, $5.1 million for one individual is still a lot of money.

SIEGEL: Well, Andrew Ross Sorkin of the New York Times, thanks for talking with us today.

SORKIN: Thank you for having me.

SIEGEL: New York Times editor and business columnist Andrew Ross Sorkin speaking about Irvning Picard. He's the lawyer trying to recover funds for victims of Bernard Madoff's ponzi scheme. Transcript provided by NPR, Copyright NPR.