Climbing Above the Culture Clash

BU Law Looks at the Economy
Picard’s Unenviable Task:
To Help Madoff’s Victims Recover Whatever They Can
Bernard Madoff’s 150-year sentence
may ensure he spends the rest of
his life in prison, but it does nothing
to heal the gaping financial wounds
suffered by more than 14,000 victims
of the largest Ponzi scheme in history.
That daunting task has fallen on the
shoulders of Irving H. Picard (’66),
the court-appointed trustee who is
overseeing the Madoff bankruptcy.
Picard is the man responsible for
recovering as much money as possible
for the victims, and devising a plan
to divide it up fairly among them.
One would think this Robin Hood role
would make Picard a hero among the
victims, but he is already the subject
of four lawsuits, including one class
action, filed by the very people he has
been hired to help. The problem is
that even if Picard is wildly successful
in his quest, there won’t be nearly
enough money to go around.
The painful fact is that the spectacular
“earnings” Madoff engineered on his
customers’ behalf never existed, and
most of the staggering $18 billion
they gave him to invest is long gone.
As Picard wrote in his first interim
report on June 30, Madoff “shrouded
himself in an unapproachable Wizard
of Oz–like aura,” creating an illusion
of fantastic returns when, in fact, not
a dime of his clients’ money was ever
invested. Instead, Madoff pocketed
his clients’ money to support his own
lavish lifestyle, while paying out enough
to early investors to keep the fraud
going and the money rolling in.
Not surprisingly, many of the
victims are apoplectic.
“The wrongdoer is now in jail, so
they have to vent their venom on
Fall 2009 | The Record | 13