Bloomberg News

Madoff Trustee Wins $43.9 Million Fees for Four Months

June 01, 2011

(Updates with Rakoff’s comment in fifth paragraph.)

June 1 (Bloomberg) -- Irving Picard, who is liquidating con man Bernard L. Madoff’s estate at a cost so far of $318 million, won a bankruptcy judge’s approval of $43.9 million in fees for himself and his firm for four months’ work.

Picard’s law firm, Baker & Hostetler LLP, charged $43.2 million for Oct. 1 to Jan. 31, while the trustee’s bills were $713,799, according to court documents. Arriving late at a Manhattan court hearing after a delayed train, Picard asked U.S. Bankruptcy Judge Burton Lifland to approve the fees, which he said he discounts by 10 percent, because of his “hard work” on behalf of investors in the Ponzi scheme.

The trustee denied that he personally received one-third to one-half of all his firm’s fees in the Madoff case, as a lawyer estimated in a filing. He didn’t say what financial arrangement he had with his firm.

Lifland approved the fees, saying he was required to approve compensation recommended by the Securities Investor Protection Corp., which hired Picard for the liquidation.

Separately, U.S. District Judge Jed Rakoff yesterday questioned Picard’s fees at a hearing over whether Rakoff would rule on a $58.8 billion Picard suit against defendants including UniCredit SpA, which said the case raised issues beyond the jurisdiction of a bankruptcy court.

“I just keep reading in the papers how much is being paid to Picard,” Rakoff said. Asking why Picard’s firm had sent four lawyers to the hearing, he said he was considering whether to take over the subject of fees from bankruptcy court as well.

“I will see whether I need to withdraw the reference on payment of fees,” he said. The process of moving the issues from bankruptcy court to district court is known as withdrawing the reference.

SIPC Called ‘Profligate’

After being told that SIPC paid Picard’s fees, Rakoff referred to the investor protection body as “profligate.” He told an SIPC lawyer attending the hearing, “If you are happy paying for all these lawyers, it needn’t concern the court.”

Rakoff said he’d publish an order tomorrow specifying what issues he would take on in the UniCredit case.

Picard has filed 1,000 suits and is processing more than $17 billion in claims, lawyers told Lifland today. Through March, Picard was personally paid $3.6 million and his law firm was paid $145.6 million, bringing fees for all professionals to $318 million since Madoff’s 2008 arrest, according to court filings.

About $346.3 million of the money advanced by SIPC for use by the Madoff estate was consumed by fees and other administrative expenses, while about $779.3 million was used to pay customer claims, according to court filings.

The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: Peter Blumberg, Glenn Holdcraft

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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