Bloomberg News

Madoff Trustee Loses Bid to Quash Request for Rehearing

September 21, 2011

(Updates with August ruling in second paragraph.)

Sept. 21 (Bloomberg) -- The liquidator of Bernard Madoff’s firm lost a bid to quash investors’ request for a new hearing on how he calculates who gets compensated for losses in Madoff’s Ponzi scheme.

The U.S. Court of Appeals in New York said Aug. 16 that trustee Irving Picard can ignore fictitious profits on money Madoff never invested when calculating losses and who is entitled to be repaid. Some investors who wouldn’t get paid under the formula asked for a “rehearing,” saying the appeals court ruled differently in a previous case.

Picard’s move to strike the request was denied, according to a court filing yesterday.

A group of Madoff investors had urged the court to require Picard to use their final account statements, which included fictitious profits on money Madoff never invested, to determine losses. Picard’s formula limits the number of investors who can claim money, and cuts the size of many claims.

Asking the court earlier this month to refuse to rehear the issue, Picard said in a filing the investors failed to follow the court’s rules. Some investors filed a 24-page petition without asking for permission to file an oversized brief, he said. Told by the court to shorten it, “the petitioners seek to dodge the court’s order,” Picard said.

“They split the arguments into two 15-page petitions, put some of the appellants on one petition and the rest on the other, and ask the court to consider the petitions as one,” Picard said. “The court should strike the newly filed petitions.”

Madoff, 73, is in a federal prison in North Carolina, serving a 150-year sentence for the fraud.

The case is In re Bernard L. Madoff Investment Securities LLC, 10-2378, 2nd U.S. Circuit Court of Appeals (Manhattan).

--Editors: John Pickering

To contact the reporter on this story: Linda Sandler in New York at

To contact the editor responsible for this story: John Pickering at

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