Bankruptcy claims against Bernard L. Madoff’s firm have traded for as much as $14.6 million since July with sellers accepting lower payments now over future, perhaps larger, payouts from trustee Irving Picard, according to court records and lawyers.
The Frederick N. Levinger 1983 Trust of Providence, Rhode Island, sold two claims totaling $28.7 million to C.V.I.G.V.F. (LUX) MASTER S.A.R.L., according to July filings in U.S. Bankruptcy Court in Manhattan. The same buyer, listing a c/o address in Minnetonka, Minnesota, bought two claims that month with a face value of $3.5 million from the Jay Lawrence Moss Trust of Newport Beach, California, according to filings.
Prices for those trades weren’t disclosed. Market rates are 25 cents on the dollar, to 35 cents, said Helen Chaitman, a Madoff victim and lawyer at Becker & Poliakoff LLP in New York.
“Many of my clients sold their claims because of the inordinate delays in receiving money from Picard and the lack of any transparency in the bankruptcy proceeding as to what the ultimate dividend will be,” she said yesterday in an e-mail.
Kevin McCue, a spokesman for Picard, didn’t immediately return e-mails seeking comment yesterday.
At SecondMarket, which trades illiquid securities, buyers of Madoff claims are willing to pay “from the high 20s, to the low 30s,” said spokesman Mark Murphy. Claims from around the U.S. are being offered in amounts of $10 million or more, he said.
No transactions have closed at SecondMarket because sellers are demanding more than buyers will pay, he said.
Picard was appointed in December 2008 to compensate victims of the con man’s fraud after his arrest for masterminding the biggest Ponzi scheme in U.S. history. Picard has recovered about $2.5 billion for creditors, and has committed to paying $738 million on behalf of the Securities Investor Protection Corp., which is obligated to compensate cheated investors with as much as $500,000 on most claims, according to an October report filed in court.
Picard now is seeking more than $50 billion through so-called clawback lawsuits to compensate victims. Targets include Bank Medici AG and its founder, Sonja Kohn, sued for $19.6 billion — which could triple to $58.8 billion under the U.S. Racketeer Influenced and Corrupt Organizations Act. Picard has sued hundreds of investors who took more money out of Madoff funds than they put in.
Madoff, 72, is serving a 150-year sentence in a North Carolina federal prison after admitting he directed the biggest Ponzi scheme in history. He was arrested and New York-based Bernard L. Madoff Investment Securities LLC forced into bankruptcy when news of the fraud became known in December 2008.
At the time of his arrest, Madoff’s account statements reflected 4,900 accounts with $65 billion in nonexistent balances. Investors lost about $20 billion in principal.
The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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