Climbing Above the Culture Clash

someone — and I’m it,” said Picard.
“You’ve got to have a thick skin; you’ve
got to be made of shoe leather.”
The central issue in the lawsuits is
Picard’s “money-in/money-out” policy
for dividing up the money he is able to
recover. Under this plan, anyone who
money comes out of the money that
should go to the net losers,” said Picard.
“To me, that’s not fair. My personal
view is that if we simply use the [latest]
statements, we would be continuing
the Ponzi scheme. We would be
continuing to let Bernie Madoff decide
who gets paid and who gets [burnt].”
art expert to appraise the hundreds of
thousands of dollars of art in Madoff’s
offices. Picard’s favorite piece — one
that embodies the whole case — was
a Claes Oldenburg sculpture of an
ordinary screw. Madoff kept the
four-foot-tall sculpture, titled “The
Soft Screw,” behind his desk.
“
This case is like an octopus, and the
tentacles keep growing longer.
”
is a “net loser” — that is, anyone who
invested more money than they withdrew
— is eligible to claim the amount
they lost. So a person who invested $2
million but only withdrew $500,000 is
eligible to claim a $1.5 million loss. But
anyone who is a “net winner” — those
who withdrew more money than they
invested — cannot claim anything.
As a result, several net winners have
sued Picard, arguing that victims should
be eligible to claim the amount shown
on their final investment statements.
The problem with that, said Picard,
is that the money reflected in those
statements — a total of $65 billion
— never existed. It was pure fiction.
“If you go with the [latest] statements,
people who already took out more than
they put in continue to get money. That
No matter which plan is ultimately used
to divide up the money, investors will
only receive a fraction of the money they
thought they had earned. It is Picard’s job
to make that fraction as large as possible.
It is a daunting task.
The number and variety of
responsibilities that fall on Picard’s
shoulders is enough to make anyone’s
legs buckle. To begin with, Picard was
immediately responsible for taking over
Madoff’s business and overseeing it
until its legitimate portions sold. This
required him to manage Madoff’s 140
employees, deal with their health benefits
and 401(k) plans, and gradually lay them
off so the business could be closed down.
To do this, he hired a team of
consultants, attorneys and even an
“So anyone talking to Madoff would
be looking at this screw,” said Picard.
“It’s kind of ironic, don’t you think”
In order to liquidate Madoff’s business
assets, Picard first had to find them.
This hasn’t been easy, given the fact that
Madoff was an extraordinarily wealthy
crook who was well aware that the feds
were going to catch up with him sooner
or later. So Picard also manages a team
of legal, financial and forensic experts
who have been combing the world’s
financial markets to find these assets.
“This case is like an octopus,
and the tentacles keep growing
longer,” said Picard.
Meanwhile, Picard has issued more
than 230 subpoenas and 90 letters of
warning in his effort to track down and
litigate the recovery of all of the investor
money that was paid out to preferred
investors to prop up the Ponzi scheme.
According to Picard’s June 30 progress
report, these efforts have “unearthed a
labyrinth of interrelated international
About Irving H. Picard
Firm: Baker & Hostetler LLP’s New York City office,
where he is a partner and noted expert in bankruptcy and
restructuring. He serves as the court-appointed trustee
under the Securities Investor Protection Act (SIPA) in the
liquidation of Bernard L. Madoff Investment Securities LLC.
Background: Picard has extensive litigation experience
including investigating the financial affairs of debtors and
seeking to recover property, objections to confirmation
of Chapter 11 plans, substantive consolidation and
preference and fraudulent transfer issues. He has
counseled clients with respect to transactional matters,
such as acquisitions of assets from debtors, proposing
Chapter 11 plans and drafting disclosure statements, nonsubstantive
consolidation and true sale opinions; and
provided advice regarding bankruptcy remote entities.
Associations: New York and American Bar Associations (ABA
Business Law and Litigation Sections, Business Bankruptcy
Committee), the American Bankruptcy Institute, Commercial
Law League of America (Bankruptcy Section), Federal Bar
Council, Registry of Mediators for the U.S. Bankruptcy Court
(SDNY), the Turnaround Management Association. Associate
member of the National Association of Bankruptcy Trustees
and the Association of Insolvency and Restructuring Advisors.
14 | Boston University School of Law | www.bu.edu/law