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500 Madoff victims want Irving Picard to resign

Mar 25, 2011, 1:30 PM EDT

SIPA Trustee Picard speaks during a news conference in New York, announcing the return of $7.2 billion from the estate of Madoff insider Picower to settle civil claims for victims of Madoff's ponzi scheme

I missed this yesterday (Wilpon PR people! Where was my head’s up email?!), but the Daily News reports that 500 of Bernie Madoff’s victims wants Irving Picard — the guy who is supposed to be suing to recover money to benefit these victims — to be replaced as trustee.

The reason? According to the lawyer representing these victims, Picard has been dishonest and has withheld information.  The filing specifically cites a settlement Picard reached with a Madoff co-conspirator. I’ve not seen the filing and the Daily News is less than 100% clear about what the victims are alleging, but you would expect to see a filing like this if victims felt that the trustee did not use his best efforts in landing the settlement or did not get enough money out of it.  You would not expect victims to argue that, say, the trustee has overreached and landed too great a recovery.

Yet, despite this, the Daily News then pivots to multiple comments from politicians — most notably Congressmen Peter King and Gene Ackerman — who accuse Picard of being overzealous in going after the Wilpons and the Mets. It seems to me, however, that such claims are not similar to the claims of victims who think that Picard was not zealous enough in recouping their losses. Which is it?

But there is a common thread: dishonesty. The victims claim that Picard withheld information that would have helped them. The Wilpons and their surrogates claimed in their recent motion to dismiss that Picard withheld information that would have harmed his case.  Despite the differences between the victims’ and the Wilpons’ positions, that’s a claim that is worth watching and with which the court will now occupy itself.

One additional note: over at Amazin’ Avenue, Matthew Callan asks why this didn’t get picked up by more people yesterday:

This morning, most of the Mets news centers around Times story that claims the Mets have suffered significant financial losses in the last few years–as much as $50 million in 2010 alone. A big story, definitely, one I’ve heard and seen discussed in multiple media. But the Picard-must-resign story remains curiously unexplored by anyone outside the News.

This gives weight to my conspiracy theory (put forward earlier this week) that the harsh treatment the Wilpons have received from the press in re: Madoff has little to do with justice or financial malfeasance and more to do with raking them over the coals for the team’s performance. Because otherwise, a call for Picard’s resignation would have to be big news. Even if you think the News is totally in the tank for the Wilpons, it’s a story that at least deserves investigation and comment, if only to dismiss it. Doesn’t it? Or am I the only nut who thinks so?

I’ll grant that there is a lot of Mets schadenfreude going on with this story and that — hey — when the story isn’t about something dreadful happening to the Wilpons, some people turn their receptors off.  I’d submit, however, that there is a less conspiratorial reason for this: the Picard-must-go story is only tangentially-related to the Mets.

Rather, it’s about a dispute between Picard and his clients related to a deal that has nothing to do with the Wilpons or the Mets, the grandstanding and irrelevant quotes of Peter King notwithstanding.  While I noted above that there is at least one link — Picard’s alleged disingenuousness — it’s a tenuous link based more on overarching case themes, not the hard news of the day. As a lawyer I find this stuff interesting and relevant, but you can’t look at this story and say, in simple terms, that it affects the Mets in a direct, reportable way. Not yet anyway.

Anyway, that’s my theory.  If the Mets are front-and-center, it gets coverage. If not, it’s simply not a sexy story outside the business and/or legal press.

  1. sdelmonte - Mar 25, 2011 at 1:37 PM

    The whole thing is a grand mess. Everyone trips over themselves in fits of greed or righteous anger (or both), and the one person who is actually responsible for this might actually be glad to be safely in prison.

    Can’t say this guy looks like a Picard, anyway. Too much hair.

  2. iranuke - Mar 25, 2011 at 3:20 PM

    If Picard gets replaced by someone who is going to end up recovering MORE $ for the investors, this could have a HUGE impacts on the Wilpons. The case hal already gone from $300 mil to $1 billion.

  3. ibkent - Mar 26, 2011 at 9:07 AM

    You say that you “would expect to see a filing like this if victims felt that the trustee did not use his best efforts in landing the settlement or did not get enough money out of it.” If you would take the time to read the filing you’d know that the victims are alleging EXACTLY what the victims are alleging. So, rather than assume you know what it’s about, how about doing a little research?

  4. advocateshoutingout - Mar 26, 2011 at 9:48 AM

    A major difference between Picard’s settlement with the Levy estate and the settlement he seeks from the Wilpon’s is:
    We now know that Mr. Levy was complicit and financed Madoff’s Ponzi for years. 100 BILLION DOLLARS (yes, that’s BILLION with a B) was laundered through the Levy accounts and Mr. Picard accepted a mere $220 Million settlement from his estate without letting the courts or victims know of the money laundering.

    As for Mr. Wilpon, only Irving Picard has declared him guilty! Perhaps the courts will agree that he “knew or should have known” but at this point Picard IS NOT the judge and jury and doesn’t have the right to make these declarations as if they’re facts.

    Watch Helen Chaitman in this video, it will explain a lot!!

    • paperlions - Mar 26, 2011 at 10:41 AM

      There are some gaps in your story. Madoff clients suffered only $18 billion in real losses and $65 billion was “missing” from their accounts, most of which were fake profits that never existed. Laundering money does not mean it is given to someone, it is simply a financial transaction designed to hide origin/ownership of money. Typically, the fee for laundering money is a modest percentage, if Levy did move 100s of billions of dollars through accounts for Madoff, a couple hundred million dollars may be all that was given to Levy for that service.

  5. ohcomeonnow - Mar 26, 2011 at 11:03 AM

    @paperlions…..Mr. Picard has claimed that there was only $20billion in principal that was lost. The facts are that the securites on the investors last statements were, in fact, owned by the investors. Those securities were stolen. $65 billion (probably closer to $73 billion) of securities were stolen. Not fake profits. Real profits. And just like with the Levy’s $100 billion worth of transactions, this information might never make it to the light of day. That is the real crime. Let me ask you this……… What are the Levy’s worth? What are the Picowers worth? What about the others complicit. As facts begin to come to out of the darkness of Picards dungeon I am truly believing that the Wilpons knew of no crimes taking place AND had their $500 million stolen from them. Real money. Not fake money that Picard claims it is. By claiming fake profits and hiding under the shield of the archaic bankruptcy laws which makes him king, he is able to protect his cronies at SIPC. What better time to revisit the bankruptcy discovery process than right now. How will the victims ever be able to defend themselves if they are not entitled to the books and records of Madoff that will show beyond a doubt that they did, in fact, own those securities? Why can a biased party simply make a claim of phony profits and that is taken as fact?

    • seeingwhatsticks - Mar 26, 2011 at 12:33 PM

      How can there b e $65-$73 billion in lost profits when there were no profits in the first place because there was no investing? There’s a huge difference between money that people actually had and invested with Madoff and what they thought they had with Madoff based on his phony statements about the returns on their “investments.”

      • seeingwhatsticks - Mar 26, 2011 at 12:34 PM

        Sorry, worded that poorly. Meant to say $65-$73 billion including lost profits.

      • ohcomeonnow - Mar 26, 2011 at 1:03 PM

        Why are you assuming that there were no profits? There absolutely WAS investing. Madoff built his whole business around investing and trading. That is what he is known for. Are you assuming that the securities shown on the customers statements were not real because Picard claims that his evidence shows they weren’t real? That’s a fatal mistake. Picard is proving to withhold important evidence to protect his client’s interests. (SIPC) Just because Picard says it doesn’t make it so. He has yet to prove that no trades were made. To the contrary, all evidence points to the fact that trades WERE made. Madoff has Picard fooled worse than anyone. So again, if you have evidence that no trades were made, I’d love to hear about it. But I don’t want to hear about the records that Picrad can’t find. If Madoff destroyed all records of trading, then of course there won’t be any trading. But the records show that Madoff was an active trader. Those are the facts.

      • seeingwhatsticks - Mar 26, 2011 at 2:04 PM

        Umm, it was a Ponzi scheme not a real investment firm. The “returns” some people realized were other people’s money, not actual investments. If Madoff had been investing the money in a legitimate manner he wouldn’t be in prison. He’s not there for some minor SEC violations, he’s there because he was a con man. The whole thing was a fraud, hence there were no real profits.

  6. ohcomeonnow - Mar 26, 2011 at 2:16 PM

    It was a Ponzi scheme because that’s what Picard has said it was. Oh, and Madoff confessed it was, too. So you have two people who are both lacking in integrity and honesty that profess this was a Ponzi scheme. Do you think if Madoff said where the real profits were his family would be alive today. Oh wait, one of them is dead already.

    Addiionally, let me respectfuly correct you on one poit. Madoff was a real investment firm. Had you gone to his place of business you would have seen hundreds of traders trading real stock every single day. There is a giant PR machine that’s alive that would have you believe that Madoff never traded any securities. It is WELL documented that he was trading securities up until December 11, 2008. It’s amazing how people dispute undisputable facts. Just goes to show you the power of suggestion.

    p.s. it s well known that Madoff traded about 10% of the volume that the NYSE trades each day. There’s no getting around that fact. He also traded NASD issues. He also traded AMEX issues, etc, etc…..

    Did people lose money? You betcha. Did Madoff steal it? My guess is he was a huge beneficiary of the postition he landed himself in. Is the way more to the stiry that meets the eye? ABSOLUTELY !!

    • seeingwhatsticks - Mar 26, 2011 at 2:55 PM

      Wait, are you suggesting Madoff WASN’T running a Ponzi scheme? Because friend, that would kind of be an insane stance to take.

      Ok, so Madoff made some trades to give himself the appearance of credibility, but how do you know any of those trades or investments paid off? Simply investing doesn’t automatically ensure profits as anyone who has invested and lost will tell you. For what I read when Madoff was first arrested he started out as a legitimate broker but quickly turned to the Ponzi scheme because his investments were losing. If he was actually making money on those investments, why would he turn to a Ponzi scheme, and why would he be in jail?

  7. ohcomeonnow - Mar 26, 2011 at 3:16 PM

    I’m not saying that Madoff didn’t steal money. What would be insane, however, is to take the word of Madoff and the word of the dishonest trustee. If we didn’t question things then we would be guilty because of our own stupidity. Please don’t take the crap that is handed to you.

    To say “so Madoff made some trades to give himself the appearance of credibility” would be like saying that WalMart sells “some” products. Madoff was the biggest off market exchange. He traded over $1 Trillion (yes with a T) dollars of securities each year.

    Take a look at Knight Capital Group (Ticker: KCG). They trade in a similar fashion that Madoff traded. They are profitable every year. Are they a Ponzi scheme?

    Believe me, I’m not criticizing you. There are many people who just assume the sensationalism that the news media reports is the truth. Keep in mind that Picard has controlled all information and media for the last two plus years. There is another side that still needs to be heard. Remember, there are always two sides to a story and if you only hear one side then you human nature will leave you apt to believe it.

    The FACTS totally contradict everything that Picard has put forth. Hopefully common sense will prevail and the truth will eventually be told. The entire truth is what the whole world deserves and Picard should be ousted because he is clearly biased in favor of withholding anything that would hurt SIPC’s funding.

    • ohcomeonnow - Mar 26, 2011 at 3:23 PM

      p.s. regarding Knight Capital Group and other similar market participants, Madoff was the master who revolutionized that entire industry of computerized trading and market making. The Knights of the world couldn’t hold a candle to him. So if Knight is consistently profitable in it’s trading it is definitely fair to assume that the master of this domain would be, too.

      • seeingwhatsticks - Mar 26, 2011 at 5:13 PM

        If Madoff was the master of the domain and making all this money off legitimate trades why would he have gone to a Ponzi scheme? If he was making a ton of money he’d have no reason to do anything illegal and he wouldn’t be sitting in prison.

      • seeingwhatsticks - Mar 26, 2011 at 5:23 PM

        Per Wikipedia:

        Mechanics of the fraud
        According to the Securities and Exchange Commission indictment against Annette Bongiorno and Joann Crupi, two back office workers who worked for Madoff, they created false trading reports based on the returns that Madoff ordered for each customer.[96] For example, once Madoff determined a customer’s return, one of the back office workers would enter a false trade from a previous date and then enter a false closing trade in the amount of the required profit, according to the indictment.[97] Prosecutors allege that Bongiorno used a computer program specially designed to backdate trades and manipulate account statements. They quote her as writing to a manager in the early 1990s “I need the ability to give any settlement date I want.”[96] In some cases returns were allegedly determined before the account was even opened.[97]
        Madoff admitted during his March 2009 guilty plea that the essence of his scheme was to deposit client money into a Chase account, rather than invest it and generate steady returns as clients had believed. When clients wanted their money, “I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds,” he told the court.[98]

  8. ohcomeonnow - Mar 26, 2011 at 7:07 PM

    So in between their high level cover ups and their porn surfing the SEC had the time to figure out how to save face and fall in lock step with Picard.

    I wouldn’t doubt that Bongiorno and Crupi created trading reports. That’s because there was improper recordkeeping of the trades that WERE REALLY being executed via Madoff’s exchange. In other words, if Madoff properly documented the trades he made with and angainst his customers he would not have had to create trading reports after the fact. That still doesn’t negate the fact that Madoff DID make the trades.

    At least it appears that seeingwhatsticks confirms that Picard is a liar. As you wrote “so Madoff made some trades to give himself the appearance of credibility”. Picard claims that Madoff made no trades at all. I would think that a few billion dollars worth of trades per day is more than the “no trades” that Picard contends.

    So the trades were made and his backoffice reporting was at the crux of his crimes (they thought they were making documents based upon trades that never ocurred). He had the people who committed those crimes actually thinking they were committing a different crime. Now he has Picard, SIPC and the SEC fooled into thinking that it was only $20 billion that was stolen. It was really $65 billion plus that was stolen, but if Picard only chases after $20 billion (from the wrong people I might add) someone is walking away with the other $45 billion. And Madoff’s customers who were victimized are being victimized again. It’s like they are going to jail for a murder they never committed and the murderers are walking free, laughing to themselves because they know that nobody will even be looking for the other $45 billion because they think it’s phony money.

    Do you think Madoff wanted to plead not guilty and have all of this play out in court. I think it’s more than a little coincidental that he just walked in and took the rap.

    Again, don’t believe all that you read. Think for yourself and discover the facts.

    • seeingwhatsticks - Mar 26, 2011 at 7:15 PM

      What part of “Madoff never invested his clients’ funds” is not clear for you? And where are you getting your information? I’m sure your sources are more credible then the AP and Reuters, the sources of the information I posted above.

  9. ohcomeonnow - Mar 26, 2011 at 7:54 PM

    The part of “Madoff never invested his clients funds” that is not clear to me is the part which has not been proven, which is that entire statement. Again, trades were represented on client account statements. If you look at the trades that Madoff executed you can see that they were executed by his firm on that day. There are reports that are required which show aggregate of trades that each brokerage house had Madoff execute. AP and Reuters never said that Madoff never invested clients funds. Those sources, as well as others “reported” what has been alleged.

    AP and Reuters would have reported that Pluto was a planet up until it was proven that it wasn’t. Would the AP and Reuters been wrong had they reported that scientists believe Pluto was a planet? Were they wrong when they reported that scientists have determined that Pluto is not a planet? No, they just reported. That’s what they do.

    I’m not saying that Madoff’s crimes aren’t exactly what they are reported to be. I’m just stating the facts. As you, yourself even mentioned above, Madoff did “some” trades. If you define billions of dollars per day as “some”, then he did some trades. But by youhaving said that at least we are in agreement on one thing; the trustee is a liar when he says no trades were made. (which is was the AP and Reuters reported). The other thing that simply CANNOT be denied is that Madoff reported to his clients that their funds were used to purchase securities. So 1.) Madoff made the trades that are represented on the clients statements and 2.) Trades that were executed by his firm were reported to his clients.

    Being that the Trustee has proven to be a liar (that, at least we both agree on), it definitely warrants some questioning and investigation and at very least the removal of this man who has incapable of doing anything without creating controversy and the apparence of improprieties. If all of this would come out in the open at least we could see what really took place. Picower didn’t know? Levy didn’t know? Like my name says Oh Come On Now !!

    Thanks for the interesting dialogue.

    • seeingwhatsticks - Mar 26, 2011 at 8:14 PM

      I believe there was a part of Madoff’s company that was legitimate, but those aren’t the clients or funds we’re talking about. And you still haven’t answered my two biggest questions:

      A. Everyone involved, including the women mentioned above and Madoff himself admits that he was a fraud. If he was a legitimate trader making legitimate profits, why did he plead guilty and why is he serving 120 years in prison? Why would he sign up for that if there was even a chance he was innocent?

      B. What are your sources?

  10. ohcomeonnow - Mar 26, 2011 at 9:10 PM

    Madoff’s company was one big, interdependent company. The parts made the whole. The whole comapny was able to abscond with +/- $45 billion. Keep in mind that it has also been reported that the women as well as his “lieutenant” were not of any higher education. I believe Madoff wanted it that way so they would not understand how the entire company, and therefore the theft, was dependent upon all parts of the business firing away.

    You ask a good question……if he were a legitimate trader making legitimate profits why did he plead guilty? Those are questions that should be answered. Here’s a better question……..If he had all of those resources available to him why didn’t he just disappear when he could have? Why are all the people who could have provided information now dead?

    I’m not sure that anyone has admitted he was a fraud aside from two or three people. The others are maintaining their innocence.

    There are many reasons why he would sign up for 120 years in prison. He was definitely part of a criminal enterprise. He was going to jail for a long time anyway. If you watch how this plays out I bet he will never tell anyone the truth for the sake of his family. What choice was he left with.

    My sources are my own intuition based upon the facts. I’m not basing my opinions upon allegations and accusations. I’m just applying the facts and it just doesn’t add up.

    Again, we all know that Madoff traded billions of dollars of stocks every day. There is no disputing that. We also know that he indicated to his customers via trade confirmations and monthly statements that they were the recipients of stocks that they purchased. There is also no disputing that.

    We also know that Picard withheld material information with regards to the Levy family to protect his client, SIPC. It has been reported that the Picowers had an $8 billion outstanding margin loan with Madoff. I believe this is documented. Levy’s kids had a $2 billion margin loan. What’s that all about. Yet Picard made a public statement saying that upon further review of evidence that the Picowers knew nothing of any criminal activity. It’s amazing that that statement was made by Picard at the same time the Picowers agreed to give back more than $7 billion.

    I am just using common sense to determine that there is more here than meets the eye and it Madoff’s customers deserve to know the entire truth while they are being persecuted and prosecuted. That’s all I’m saying. There should be an unbiased trustee put in place to replace the trustee that is there already. You know you have a problem with a trustee when the people whom he supposedly represents would like to have him removed.

    Just stay open minded to the fact that people will lie and twist and distort facts to reach their end. Did the Wilpons advisors tell the Wilpons that Madoff was the most honest and honorable man on Wall Street? I think Picard might have left that out. Why? If he’s supposed to be looking for fairness and truth, why not present things in an unbiased fashion and let the judge decide?

  11. seeingwhatsticks - Mar 26, 2011 at 9:13 PM

    Sorry, stopped reading once you said “my sources are my own intuition based on the facts.”

    • ibkent - Mar 28, 2011 at 8:29 PM

      With all due respect, your “facts” are based on Wikipedia … which does not exactly have a stellar reputation for accuracy. Problem is, the facts as presented by ohcomeonnow don’t match your pre-conceived notions.

  12. ohcomeonnow - Mar 27, 2011 at 2:15 AM

    Fair enough. Lots of people stopped delving in to see what actually took place. If people didn’t stop halfway through they would actually discover the truth. But most people are told that this is what it is and leave it at that. They take the lies and accusations as definitive truth. Thank goodness for the courage of people like Helen Chaitman.

  13. ohcomeonnow - Mar 30, 2011 at 4:06 PM

    I do understand you seeingwhatsticks. It is inconvenient when those pesky little facts get in the way. Most of the time it’s easier just to use the made up lies that can easily corroborate the story that you want to hear. Those darn facts. I wish they wouldn’t keep showing up all the time.

  14. truthfullness - May 25, 2011 at 12:09 PM

    Good arguments between both of you.
    Fact – Madoff was legit until early 1990’s
    Fact – Picard is a dangerous puppet of SIPC collecting a huge fortune.
    Fact – Picard billed out 955 hours for 4 months – that’s over 11 hrs a day plus commuting- don’t buy it and want to see his time sheets.
    Fact – Picard’s formula is inappropriate for the Madoff scheme and is only applied when no real companies are involved – whether traded or not traded.
    Fact – IRS allows for money in + reported earned income – money out.
    Fact – Picard doesn’t – so he can deny claims and have SIPC not be repsonsible for legit claims that should have been paid
    Fact – Taxes based on IRS reported income should go back to early 1990’s and not 5 years and should be refunded in full and not given a “Net Operating loss” credit.
    Fact – Picard should be replaced and made to refunded every penny since he began case.

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