A court-appointed trustee unraveling Bernard Madoff's massive fraud signaled Thursday that he may go after the disgraced financier's family to pay victim claims, which have grown to almost 9,000.
Legal action against the family "is a matter that's being looked into," trustee Irving Picard said during a telephone conference call with reporters.
Picard already has filed lawsuits in bankruptcy court in Manhattan to try to force hedge funds and other large investors to return $10.1 billion in fictitious profits paid by Madoff's firm, alleging they should have known about the fraud. As of Wednesday, there were 8,848 claims from customers alleging losses, he said.
"I have a duty to investigate and to go to court to recover from persons and entities who received more than their share," he said. "In actual fact, persons who are subject to these recovery efforts actually received money stolen from others."
Stephen Harbeck, head of Securities Investor Protection Corp. or SIPC, also vowed to get tough with anyone else in on the scheme, including Madoff family members.
"Wrongdoers should pay for their wrongdoing," Harbeck, who's working with Picard, said during the call.
In court filings, Picard has alleged that Madoff's inner circle -- his wife, two sons, brother and key employees -- wantonly used investor money to fuel a lavish lifestyle. Madoff has claimed the others were in the dark, and their lawyers also have denied that they were complicit.
Madoff, 70, pleaded guilty in March to charges his secretive investment advisory operation was a massive Ponzi scheme -- what Picard called "the largest and most complex securities fraud in history."
In his plea, Madoff admitted that he never invested the billions of dollars given to him by thousands of clients. Instead, he used the money from new investors to pay returns to existing clients.
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The investors were told in phony statements from last November that their accounts had grown to nearly $65 billion. Picard said Thursday that so far he has only identified about $1 billion in assets that can be used to help cover claims.
The trustee said he and his lawyers were hoping to raise more money soon by negotiating settlements with larger investors who came out ahead. But he cautioned that fund recovery could be an uphill battle.
"In some cases, the money is in foreign countries," he said. "In some cases, the money has been expended by the recipients. In some cases, the recipients are still holding the money."
SIPC -- authorized by Congress to guarantee brokerage accounts for up to $500,000 -- has stepped in to cover a portion of the claims. It expects to have paid $61.4 million to 125 people claiming $368.3 million in losses by the end of next week, Harbeck said.
Madoff, who has been jailed since he pleaded guilty in March, faces up to 150 years in prison at his sentencing on June 29. He had originally been due back in court on June 16, but the judge changed the sentencing date on Thursday without explanation.
Those interested in speaking at court at Madoff's sentencing hearing should send their requests to usanys.madoff@usadoj.gov. In the email, victims should include a brief explanation why they want to address the court.
If snail mail is your best option, you're asked to send your statement to:
The United States Attorney's Office
Attn: Wendy Olsen Clancy, Victim/Witness Coordinator
One St. Andrew's Plaza
New York, New York 10007
Either way you submit your statement, the deadline is June 10.
Judge Denny Chin said Thursday that any statement submitted becomes part of the public record. Obviously, due to the number of victims, not everyone will be able to speak or have their letters read. If you're among the lucky few, you'll be notified by June 15.
