Expect to hear a bit more about Bernie Madoff this week. Under federal bankruptcy law Irving Picard, the trustee in charge of tracking down Madoff's many missing assets, has two years from the initial bankruptcy filing to file claims for recovery. Since Madoff's filing date is considered December 11, 2008, that means we should have a busy few days ahead of us. In the past week Picard has already sued JPMorgan for $6.4 billion, UBS for $2 billion and, yesterday, HSBC for another $9 billion bringing the total he is claiming on behalf of victims to more than $32 billion (including the 19 suits he's already filed).
That number, which includes punitive damages and "is 50% more than the $20 billion he has estimated as the actual cash losses in the fraud," is so high since Picard and co. don't expect to get all of it back. (Of course, Picard is probably also showing he's worth his high fees.) And, if you are keeping track at home, yes, the HSBC suit is so far the largest brought forth in the Madoff mess. The previous record holder was a $7 billion suit against the late Jeffry Picower (his estate later settled).
The latest suits claim the large banks named made Madoff's scam possible, alleging that the fraud “could not have been accomplished or perpetuated unless the defendants agreed to look the other way and to pretend that they were ensuring the existence of assets and trades when, in fact, they did no such thing.”
The banks, in a real surprise, have vowed to fight the claims in court. Which means at this rate we'll still be talking about Madoff in 2020.
