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Madoff Trustee Gets $28 Million for Liquidation Costs

AP
Tuesday, 30 Dec 2008 | 11:47 AM ET

U.S. Bankruptcy Judge Burton Lifland on Tuesday approved the transfer of $28.1 million to cover expenses tied to the liquidation of Bernard Madoff's investment firm.

Bernie Madoff
CNBC.com
Bernie Madoff

Madoff is accused of running an elaborate Ponzi scheme that duped investors ranging from individuals to charities to large banks out of potentially $50 billion.

Irving Picard, the trustee presiding over the liquidation of Madoff's investment firm, said he needed the $28.1 million to cover employee salaries and other costs, according to court documents.

Bank of New York Mellon previously agreed to transfer the funds, but the bankruptcy judge first had to approve the transfer.

BNY Mellon already transferred about $883,000 to cover costs tied to the liquidation.

Picard will oversee the liquidation as the Securities Investor Protection attempts to help investors recoup their money.

Court Approves $28M Madoff Request
Court approves the $28M request from Bernie Madoff's liquidation trustee, reports CNBC's Mary Thompson

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

Video: CNBC's Mary Thompson reports on court approval of $28 million request from Madoff's liquidation trustee.

Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash.

On Monday, a judge presiding over civil claims against Madoff said he may be willing to consider extending relief to those who invested in Madoff's business through third parties.

To consider allowing investors who invested through third parties to file claims with SIPC, U.S. District Judge Louis L. Stanton said he needs a formal application and briefing from SIPC, the Securities and Exchange Commission, a trustee for Madoff's business and representatives of investors.

Madoff, 70, a former Nasdaq stock market chairman, has become one of the most vilified people in America since news broke Dec. 11 that he allegedly had been running a giant Ponzi scheme, paying returns to certain investors out of the principal received from others.

So far, investors have said that they have lost more than $30 billion, according to an Associated Press calculation.

Reports indicate Madoff was running the alleged scam for decades.