Bankruptcy lawyers pocket millions. Madoff victims – not so much

Bankruptcy trustee Irving Picard, who is liquidating the bogus investment firm of convicted fraudster Bernie Madoff, gave $26.9 million to a Manhattan law firm to recover $849,000 for the victims of the largest Ponzi scheme in American history.

In a filing with the federal bankruptcy court in Manhattan, Picard noted that $15.8 million went to his own law firm, Baker & Hostetler LLP, in the second and third quarters, the New York Post reports. Another $7.1 million was spent on consultants and $107,560 on “hosting expenses.”

Most of the recovered funds came from payments Madoff made to preferred investors before his company went under. Just $71,158 was from interest and dividends on cash still remaining in Madoff’s company bank accounts.

As of Sept. 30, Picard told the court, he had recovered a total of about $1.5 billion for victims. At the time of the bankruptcy, Madoff’s firm listed 4,900 investors with $65 billion in assets which turned out to be nonexistent investments. About 2,280 have been approved for reimbursement. At this rate, it will likely be pennies on the dollar after the lawyers take their share.

Madoff was arrested in December 2008 when his sons reported him to authorities after he told them he was running a massive Ponzi scheme. His 30-page corporate American Express credit card statement from January 2008 included more than $100,000 he and his family charged at luxury establishments.

He was convicted after pleading guilty and is currently serving a 150-year sentence.

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