NYC legal fees for Madoff trustee top $14 million

NEW YORK - A Manhattan law firm working with a court-appointed trustee to unravel Bernard Madoff's massive fraud has so far run up more than $14.6 million in legal fees, according to court papers filed Friday.

The papers filed in federal bankruptcy court in Manhattan also show trustee Irving Picard is separately seeking about $760,000 for work starting in mid-December to locate and liquidate Madoff's assets.

Picard and the Baker & Hostetler law firm have repeatedly emphasized that a securities industry group that compensates victims of fraud — not Madoff's burned clients — will foot the bill.

"Customer funds are never used to pay for administrative expenses in a liquidation proceeding," Stephen Harbeck, president of the Securities Investors Protection Corp. or SIPC, said in a statement earlier this month.

Baker & Hostetler, which is also seeking more than $274,000 in expenses, says it has applied a 10-percent "public interest discount" from its standard rates — a reduction of about $1.6 million.

A bankruptcy judge also has been asked to approve separate payments for several other law firms, including some in Europe, doing similar work on the case. A hearing was set for Aug. 6.

Madoff, 71, was sentenced late last month to 150 years in prison for orchestrating an epic Ponzi scheme that wiped out life savings and entire charities.

Thousands of investors with Madoff's once-respected advisory firm believed their securities accounts were worth tens of billions of dollars. But investigators say the totals on the clients' monthly account statements were fiction: In reality, Madoff never made investments, and instead used new investors' money to pay returns to existing ones.

After Madoff's arrest late year, Picard was appointed to try to recover any remaining business assets and divvy up those proceeds — along with SIPC funds — to victims. About $1.2 billion in assets have been identified so far.

The search for Madoff's assets "has unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth," Picard said in a report earlier this week.

The report said the trustee has located assets and businesses "of interest" in 11 places: Great Britain, Ireland, France, Luxembourg, Switzerland, Spain, Gibraltar, Bermuda, the British Virgin Islands, the Cayman Islands, the Bahamas.

More than 15,400 claims against Madoff were filed by a July 2 deadline, the trustee said.

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