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October 28, 2009 3:31 PM

Madoff Fraud Tally Now at $21.2 Billion, Victims Get $534 Million

Posted by Brian Baxter

Victims of Bernard Madoff's massive Ponzi scheme seeking to recoup at least some of their losses got more bad news this week when a court-appointed trustee revised upwards the estimated amount of cash losses.

Irving Picard, the Baker & Hostetler partner who has the unenviable task of evaluating victims' claims and liquidating Bernard L. Madoff Investment Securities (BLMIS), said on Wednesday that cash losses had grown from $13 billion to $21.2 billion.

Picard disclosed the adjusted cash-loss figure in a news conference organized by the Securities Investor Protection Corporation. SIPC pays Picard's fees, as well as those of a team of Baker & Hostetler lawyers working with him.

Cash losses are determined under Picard's formula of "net equity," or the difference between what customers put into BLMIS and what they eventually took out. Picard said his team had identified 2,335 investor accounts that put more cash into BLMIS than they withdrew over time, leading to the revised $21.2 billion figure.

That number contrasts with the estimated $65 billion in paper losses caused by the fraud. Many out-of-pocket Madoff investors have lashed out at the methodology used by SIPC and Picard, claiming that their balances at the time the Ponzi scheme imploded in November 2008 are the correct figures to use.

So far Picard has recovered $1.4 billion in assets to cover 2,861 approved customer claims totaling roughly $4.4 billion for those that invested directly with Madoff. SIPC has authorized an initial repayment of $534.3 million for 1,558 of those claims, while the remaining 1,303 have been denied.

Some other numbers of note, according to various news sources: Roughly 11,000 of the 15,974 in claims filed with SIPC have been filed by investors who sunk money into Madoff through third-party feeder funds; the BLMIS liquidation is the largest conducted by SIPC since it was created in 1970; and $15 billion in civil suits are currently pending.

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