Madoff trustee seeking $22.1m

SUBMITS EXPENSIVE BILL The new fee request for Irving Picard (left) and his team averages $4.42 million a month for five months of work. SUBMITS EXPENSIVE BILL
The new fee request for Irving Picard (left) and his team averages $4.42 million a month for five months of work.
By Erik Larson
Bloomberg News / November 24, 2009

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NEW YORK - Irving Picard, the liquidator for Bernard Madoff’s investment advisory business, asked a judge to approve $22.1 million in fees for him and his team with the law firm Baker & Hostetler LLP for five months of work on the case.

The fees, which include a 10 percent “public interest discount’’ from the firm’s normal rates, cover work performed on the liquidation from May 1 through Sept. 30, according to a filing last week in US Bankruptcy Court in New York.

Picard, hired by the Securities Investor Protection Corp. to recover assets and repay victims, in August won his first request for $14.7 million in fees for work from Dec. 15 to April 30. Some victims objected to that request, claiming Picard was burning through cash while approving victims’ claims too slowly.

Picard has recovered about $1.4 billion in assets for victims who thought they had $65 billion in their accounts. He is also seeking the return of about $15 billion in fake profit through lawsuits against Madoff’s biggest investors and beneficiaries, including Madoff’s wife and sons.

“No single document could comprehensively set forth all of the tasks engaged in by the trustee since his appointment,’’ Picard said in the filing. “This task is ongoing and will be engaged in for a number of years in order to fully understand the scope and depth of the fraud perpetrated by Mr. Madoff.’’

Picard is seeking a Dec. 17 hearing on the matter before US Bankruptcy Judge Burton Lifland, who approved the previous request. Additional fees for international law firms and forensic accountants on the case will also be considered.

The new fee request averages $4.42 million a month for five months of work, or about $210,476 per business day. That’s more than Picard’s first fee request, which averaged $175,000 per business day.

“Unfortunately, one of the problems we have in the way these cases are managed is that there’s very little oversight in relation to fees,’’ Stephen French, a partner at LLC, a firm that analyzes legal costs for companies, said in a phone interview. “There’s no specific set of expectations that he is placed under that he could then be held accountable to.’’

If approved, the fees will be paid by Securities Investor Protection Corp., which is overseeing the liquidation and is financed by the brokerage industry. Some victims argued after the first fee request that the agency is low on cash and needs the money to make required payments of as much as $500,000 for each account.

Picard says his fee payments won’t come from money earmarked for victims, and the agency has repeatedly said it isn’t low on cash. The Washington-based entity recently requested an increase in its US Treasury line of credit to $2.5 billion from $1 billion and increased fees it charges member firms, agency president Stephen Harbeck said in an interview last week.

Picard in October said he had approved initial repayments of $534.2 million to 1,558 victims who invested directly with Madoff’s firm. Another 1,303 victims had their claims denied. The payments are considered to be advances on the group’s allowed claims of $4.43 billion. Victims with allowed claims will receive a share of the money Picard recovers.

Madoff, 71, pleaded guilty in March and is serving a 150-year sentence. The global nature of the con man’s fraud has resulted in extensive international legal work for Picard and his team, including lawsuits against “feeder funds’’ that directed customer money to Madoff.

Picard’s share of the fee request is $835,605, based on 1,198 hours of work on the case at a rate of $697.50 per hour, according to his filing.