- The Washington Times - Saturday, February 21, 2009

NEW YORK | The trustee in charge of untangling the mess left behind by Bernard Madoff told a packed auditorium Friday there was no indication the disgraced money manager had bought securities for his clients for more than a decade.

“We have no evidence to indicate securities were purchased for customer accounts” in the past 13 years, said Irving Picard, the court-appointed trustee overseeing the liquidation of Bernard L. Madoff Investment Securities LLC. “This is a case where we’re going to be looking at cash in and cash out” - the definition of a Ponzi scheme.

He said he has recovered $950 million so far.

Mr. Madoff was arrested in December after investigators said he confessed to his sons that he had swindled investors of $50 billion in a Ponzi scheme. The 70-year-old former Nasdaq Stock Market chairman remains confined to his Manhattan apartment under house arrest.

At a meeting for investors in lower Manhattan, Mr. Picard detailed the history of the case and how claims will be processed. His office has received 2,350 claims so far and expects the number to double before the July 2 deadline to submit claims.

David Sheehan, a lawyer working for Mr. Picard, called the suspected fraud “a Ponzi scheme where no stock was purchased.”

Last year, Mr. Picard sought and won permission from a bankruptcy court judge for $28.1 million to cover expenses tied to the liquidation of Mr. Madoff’s investment firm.

On Friday, Mr. Picard said he wants to sell off paintings and sculptures decorating Mr. Madoff’s offices in midtown Manhattan.

Mr. Sheehan told the assembled investors the trustee’s office will be trying to recover “false profits” earned by some investors.

“There wasn’t any stock bought or sold,” Mr. Sheehan said. “It was all just made up. … You got somebody else’s money.”

Mr. Picard noted that victims could qualify for up to $500,000 in funds from the Securities Investor Protection Corp., or SIPC.

Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts.

Detailing the scope of the probe, Mr. Picard said his office and criminal investigators are reviewing a mountain of evidence, including 7,000 boxes of records at a Queens warehouse that go back more than a decade. Mr. Sheehan added that investigators are reviewing “thousands and thousands of e-mails” from Mr. Madoff’s operation.

Mr. Picard said his office plans to issue dozens of subpoenas in the coming weeks related to Mr. Madoff’s business dealings.

He cautioned that the criminal investigation is ongoing and said: “We are operating out of a crime scene. There is a limit to what we can say.”

The meeting, which was called to brief investors who lost money with Mr. Madoff, was held in an auditorium that holds 460. The hall was mostly full, although it wasn’t clear whether everyone attending had actually invested with Mr. Madoff.

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