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Madoff investors rush to beat reimbursement claims deadline

More than 15,000 claims to recoup money lost in the Ponzi scheme have been filed. Valid claims will be eligible for up to a $500,000 payment from the Securities Investor Protection Corp.

July 04, 2009|Anthony M. DeStefano | DeStefano writes for Newsday.

A last-minute rush by investors, including one who drove from Mexico to Dallas to beat the July 2 deadline, pushed the final number of claims in the Bernard L. Madoff fraud to more than 15,000, officials said Friday.

They e-mailed, mailed and walked their claims to a central processing office in Dallas and the New York office of Irving Picard, the trustee appointed by the federal Bankruptcy Court to recover assets for distribution to defrauded investors. It will now be up to Picard's staff at Baker Hostetler to sort out which claims are valid and deserve up to $500,000 from a special fund.

"We have a lot of work to do," said David Sheehan, who is counsel for Picard.

Officials previously reported that about 8,000 claims had been received in connection with the Ponzi scheme for which Madoff received a 150-year prison sentence Monday.

Valid claims will be eligible for up to a $500,000 payment from the Securities Investor Protection Corp., the nonprofit group that advances funds to cheated investors.

So far 543 claims have been approved for payments totaling $231 million. But with more than 15,000 claims to be reviewed, other investors may have to wait months to find out whether theirs are eligible.

Officials said some investors were reluctant to file claims because they were afraid Picard would sue them for money they withdrew that exceeded the amount they put into their accounts. But Sheehan said he was pleasantly surprised with the volume of claims; 1,400 claims were filed in the 48 hours before the deadline, one investigator said.

Sheehan said the claims came from a mix of individual investors and feeder funds that invested their clients' money with Madoff. Clients of feeder funds also filed claims, he said. A full breakdown of the total number of claims should be available next week, he said.

Picard's staff also has been locating Madoff business funds, which will be used to reimburse investors a portion of what isn't covered by their Securities Investor Protection Corp. payments.

Officials believe $13 billion to $21 billion was lost in the scheme. Those numbers cover actual cash investments put in the accounts from 1995 until Dec. 11, 2008, not the false profits reported by Madoff. It is still unclear what percentage of losses will be covered.

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