Published: Friday, 2 Oct 2009 | 11:12 AM ET

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One big investor in Bernard L. Madoff’s Ponzi scheme was having trouble getting his money back from Mr. Madoff at least as early as September 2003, according to a court filing on Thursday by the trustee liquidating the Madoff assets.

On several occasions, Mr. Madoff was able to pay only “a fraction of the amount” requested by the investor, Jeffry M. Picower, the court document asserted.

AP

That failure to pay, it continued, should have put Mr. Picower on notice that Mr. Madoff’s money-management business was a fraud.

William Zabel, a lawyer for Mr. Picower and his wife, issued a statement denying the trustee’s accusations and insisting that his clients — like many other people, including federal regulators — had been deceived by Mr. Madoff.

Nevertheless, the Picowers “have initiated discussions with the trustee to reach a settlement” of the litigation “to avoid years of extensive litigation,” Mr. Zabel said, adding “we would hope the trustee would devote his energy and resources to those discussions.”

The new filing by the trustee provided other details about Mr. Picower’s dealings with Mr. Madoff. For example, it reported that one Picower account had been overdrawn by $6 billion when Mr. Madoff was arrested in December. That amount was “clear evidence something was seriously amiss,” the trustee’s filing continued, because “no legitimate broker-dealer would allow this investor to maintain such a staggering margin balance.”

The document also expanded on an incident reported in the lawsuit filed in May against Mr. Picower by the trustee, Irving H. Picard, who accused the prominent philanthropist of taking at least $5 billion more from his Madoff accounts than he put in.

According to the new filing — which increased the estimate of Mr. Picower’s profits to more than $7 billion — he opened an account with Mr. Madoff on April 18, 2006, by wiring a check for $125 million, more than a quarter of the entire sum he had invested with Mr. Madoff over time.

“Within two weeks, the $125 million deposit had purportedly grown to $164 million because of a dramatic ‘gain’ on the securities held in the account — all of which supposedly had been purchased three months earlier,” the new filing reported. Five months later, Mr. Picower withdrew his original $125 million, leaving $81 million in the account.

“There is no legitimate explanation for these events nor any possibility that they escaped Picower’s notice,” the trustee asserted in the filing on Thursday.

The latest filing was a response to a motion by Mr. Picower’s lawyers in July that asked the bankruptcy court to dismiss crucial elements of the trustee’s lawsuit, which is aimed at recovering money from Mr. Picower to help reimburse Madoff victims.

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