Most of the conflicts over what's owed to the burned clients have been resolved without a serious fight. But in scores of other cases, the trustee has sued wealthy individuals and institutions, claiming the defendants knew or should have known their returns were fraudulent and asking a judge or bankruptcy judge to force them to return them.
The litigation has resulted in a series of settlements, including a historic $7.2 billion deal with the estate of Jeffry Picower, a close Madoff associate who drowned in 2009.
A lawsuit against the owners of the New York Mets was settled last spring in a deal that called for them to pay up to $162 million after four years. The deal was structured so that the owners will likely pay much less than the maximum depending on what happens to their own claims against Madoff's estate.
Picard is “a very aggressive advocate of the people who were scammed,” said Richard Roth, a Manhattan securities lawyer.
Legal fees mount
Still, Picard has had to fend off accusations that he's dragging out the process because it's a windfall for his firm. He's so far sought more than $600 million in fees for work done between Sept. 15, 2008, and Sept. 30 of this year — money that comes from a federally-authorized nonprofit, not from Madoff victims.
Sheehan said the critics are ignoring the true magnitude of the fraud and the work still needed to get what's recoverable, some of it overseas. The trustee is involved in Madoff-related “litigations, investigations and proceedings” in Great Britain, Spain and Israel and is chasing customer money throughout the Caribbean, Sheehan wrote recently on a Madoff victim-information website.
On balance, Picard “is doing a good job” with a recovery process that usually fails to satisfy fraud victims, said Jeffrey Klink, a former federal prosecutor who runs his own private investigative firm that researches the safety of potential investments and performs fraud probes.