Law Firms Are Making a Killing Off Madoff Victims’ Recovery Funds

We all are familiar with the $64b in lost capital by Madoff, which was the worst ponzi scheme loss in history. But did you know that only $17.5b in principal was lost? Of that principal, most of it has been recovered — $9 through Picard and another $4b through Breeden. I am not here to suggest that losing $4.5b isn’t dreadful — because it is. But most people still believe that people were totally wiped out by Madoff, who is currently serving a 150 year sentence in prison.

The big winners in all of this, naturally, are the lawyers who are administrating the victim funds via billable hours.

Through a Bloomberg FOIA request, we’ve learned that the DOJ hired Breeden to distribute $4b in recovered funds to Madoff victims, of which ZERO has been paid to date. Breeden, on the other hand, has racked up $38.8m in fees.

“It’s very frustrating that people are making money off us like this, using money that was recovered for victims,” said Daphne Brogdon, a Food Network personality, whose family lost about $5 million in the Madoff scam. “They’re eating away at whatever percentage we could possibly get.”

The other big recovery fund, managed by Irving Picard, has paid out more than $9b since 2009. The recovery effort was rigorous, via his firm’s aggressive litigation actions, netting as much as $1b in billable hours.

One-fucking-billion for Baker and Hostetler LLP.

Picard called it a “very good return on an investment.”

Unlike Breeden, his fees are paid for by Securities Investor Protection Corp., not the victims.