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Madoff trustee briefs investors on claims

February 21, 2009|Walter Hamilton

NEW YORK — Several hundred of Bernard Madoff's investors packed into U.S. Bankruptcy Court on Friday, and many were anything but wealthy.

There was Judith Selsky, a retired high school music teacher from Brooklyn, who said she'd been forced to cut back on restaurant meals and Broadway shows after losing a large chunk of her retirement savings.

"I am poor and obscure," Selsky said after the meeting. "I'm not a movie star. I'm not Zsa Zsa Gabor. I'm not a big fund. And this was the money that I counted on."

Unlike Gabor and other high-profile clients of Madoff's investment firm, including a number of billionaires, those who went to meet with the court-appointed trustee in the firm's bankruptcy case stressed they were people of modest means whose lives had been drastically altered.

One woman complained angrily during the meeting of the public perception of Madoff victims as highfliers.

"Many thousands of us are not wealthy people," she said. "People out there should be ashamed of themselves for the lack of empathy and help that we've received to date."

Madoff was arrested Dec. 11 after allegedly admitting that he ran a $50-billion Ponzi scheme. Under the conditions of his bail, he is confined to his Manhattan apartment.

Investors said they went to the meeting to find out whether they could get their money back and to achieve, if possible, some sort of emotional release from the searing experience they have been suffering through.

Many left saying they got neither.

"It seems I'm going to lose a good part of my hope for retirement money," Theodore Fettman, a 79-year-old retired history teacher from the Bronx, said afterward. "I was born in poverty, and it looks like that's the way it's going to be on my way out."

The trustee, Irving Picard, drew gasps of disgust when he told the audience that, contrary to the account statements that Madoff sent, the financier apparently made no actual investments on their behalf in the last 13 years.

Picard tried to reassure investors by saying they could receive as much as $500,000 in benefits from the federal government's Securities Investor Protection Corp. plus a portion of whatever proceeds he recovers from Madoff's now-bankrupt company.

Although it will take "some period of time" for investors to get paid, Picard promised that his office would begin notifying investors within weeks about their eligibility for recovery.

"We're here and are very sensitive to what happened," he said.

But Picard and his partner, David Sheehan, also warned that in some cases they would seek to "claw back" money from investors who over the years received more cash from Madoff than they actually deposited with him.

That sparked anger from longtime Madoff clients who worried that the government could come after them for money spent long ago.

"These clawbacks are making criminals out of innocent people," one woman said.

Thus far, Picard's office has received 2,350 investor claims totaling about $1 billion. Investors have until July 2 to file claims.

A few victims comforted themselves with gallows humor.

After wishing Picard a good afternoon, a man pointed to his watch and joked: "I don't have to hock it yet."

But a sense of betrayal was always on display.

Reacting to a promise made by Picard to raise money for investors by selling Madoff's artwork, Fettman's wife, Beverly, advised going further.

"I would get the furniture and his clothes and the curtains that are on his windows," she said to applause.

"I can assure you," Picard replied, "all of that is on our radar screen."


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