2 Congress members look to rein in Picard
By ANTHONY M. DESTEFANONewsday
June 26, 2011
Two Long Island members of Congress contend the trustee in the Bernard Madoff case has gone too far in trying to collect billions of dollars from some of those who invested with the Ponzi schemer, including the owners of the Mets.
Bankruptcy trustee Irving Picard is seeking the return of billions in profits he contends individuals and corporations made by investing with Madoff. He will use that money to repay those who lost in the scam.
Leading the charge are Reps. Peter King (R-Seaford) and Carolyn McCarthy (D-Garden City), who asked on June 3 for a Government Accountability Office audit of
Picard's activities and legal fees as he tries to clawback big money from individual investors and financial institutions. Those lawsuits total more than $90 billion when cases against major banks are counted.
The agency hasn't decided to audit Picard, said a spokesman.
"I think Picard has drastically overreached and what I am doing is trying to get him to pull back," King said last week.
King and McCarthy are also among a small group in Congress backing legislation to protect victims of future Ponzi schemes from similar lawsuits. Such lawsuits seek to take back cash victims may have taken out of their investment accounts.
King said he's also irked by what he sees as Picard's bashing of investors like the Wilpon family, owners of the Mets. King called outrageous the trustee's comments that suggested the Wilpons were somehow aware of Madoff's fraud. The Wilpons have consistently said they had no reason to believe Madoff's firm was not legitimate.
"To me, a guy who is trying to get headlines, a guy running up fees and abusing the power the court gave him," King said in a radio interview about Picard, who is suing the Wilpons for up to $1 billion.
The request for the GAO audit was sparked by concern by King and others over the $130 million in fees to Picard and his Manhattan law firm Baker & Hostetler so far, money paid by the nonprofit Securities Investor Protection Corp. King and McCarthy said Security and Exchange Commission officials, while finding no significant problems in this case, believe there could be improvements in the way the agency oversees SIPC and trustee fees generally. In response to a March inspector general report, SEC officials acknowledged it's difficult to determine whether hourly rates paid to trustees by SIPC in cases like Madoff's and the collapse of Lehman Brothers were reasonable.
"I do get the feeling that there are certain influential victims who are offended by large fees Picard is earning, and some small victims [also]," said Garden City attorney Jerome Reisman, who represents some Madoff investors. "But he is doing a very substantial job and on the whole he has done a very good job."
King said he isn't facing off with Picard to help Fred Wilpon, a friend and campaign contributor over the years. He says he's concerned about anyone victimized by Madoff. McCarthy said she didn't even know the Wilpons owned the New York Mets and is more concerned about the elderly victims whose savings were wiped out.
Picard has approved more than 2,400 claims from investors and filed 1,000 clawback suits against investors and banks.
Some legal challenges, which Picard's counsel David Sheehan labeled as "frivolous," have the effect of delaying larger payout to victims from $7 billion in settlements.
Picard wants to collect enough to pay the full $19.5 billion lost in the scam. Picard would not comment but through a spokeswoman said his office would cooperate with the GAO.
The Wilpons and other investors are trying to have the lawsuit transferred from bankruptcy court to federal district court. On Friday, Picard accused them of trying to do an end run around the bankruptcy court.