As of Dec. 2, Mr. Picard had approved 2,425 claims totaling almost $7.3 billion. But two-thirds of the 16,519 claims originally filed have been denied, either because claimants took out more cash from the Madoff firm than they paid in over the years or did not have an account directly with the firm.
Some investors, like Helen Davis Chaitman, have mobilized to oppose Mr. Picard on every front. Ms. Chaitman, a lawyer who lost her retirement savings, says she represents about 500 other Madoff investors. She has become a fixture in Mr. Picard’s legal fight and has testified before Congress. Last spring, she asserted that Mr. Picard had “absolutely no legal authority” for his approach to calculating claims, but the federal appeals court disagreed. The deadline for an appeal to the United States Supreme Court is in early February.
At the other end of the spectrum is Howard Siegel, an accountant and lawyer in Palm Beach Gardens, Fla. Mr. Siegel, 71, invested with Mr. Madoff through a fund with more than 300 investors.
Mr. Siegel’s fund is a net loser — meaning that it lost more cash than it withdrew. People in his situation, he says, make up “the silent, vast majority” of Madoff investors.
Mr. Siegel says he thinks the trustee is doing a good job. As for himself, he says he is managing. “But things have to happen sometime in the foreseeable future for me to continue to be able to manage,” he says.
As he sees it, simple justice requires that net winners return their fictional profits. “If you went to the gym and picked up a gold watch you thought was yours and wore it home and discovered you hadn’t worn your watch that day — would you think you could keep it anyway?” he asks. “If you were called and asked to return it, wouldn’t you do that?”
Alexandra Penney, a photographer in New York City, said she had been able to hang on to her studio, which she feared she would lose when she lost her life savings. As a net loser, she has been paid “a small fraction of my claims,” she said. She gave the trustee “a B-plus,” but is frustrated at the slow pace of the process.
“But I don’t think about Madoff at all, at all,” she said. “However, I have to think about the impact of what happened every day — whenever I stop to consider ‘Do I take a bus or walk?’ It is ever-present and it will always be.”
Burt Ross, an investor who lives in Englewood, N.J., has a dog in both fights, with a stake in one account that was a net winner and another that was a net loser. “There is no way to make everybody whole,” he said.
For him, the biggest surprise is that investors like him have recovered anything at all.
“When this hit the news, I said to my wife, ‘We’ve lost all that money.’ It never dawned on me that there was a chance we would get any of it back,” he said.
Most problematic is the fate of the so-called indirect investors, whose money flowed to Mr. Madoff through an intermediary fund — as some of Mr. Ross’s cash did — or perhaps through several layers of funds.
Three years ago, these indirect investors were considered lucky. They still had someone with deep pockets they could sue — the intermediary fund or its managers or sponsors — while Mr. Madoff’s direct investors had little hope of recovering anything.
“Conventional wisdom has been turned on its head,” said Javier Bleichmar of the law firm Labaton Sucharow in New York, which has clients in the Madoff case. So far, indirect investors have been barred from pursuing their claims in bankruptcy court because they were not technically Madoff customers. And domestic courts have proven unreceptive to claims they filed against banks and other third parties, dismissing them on technical grounds.
Many of their offshore hedge funds are being liquidated in countries where the losing side pays all the legal costs — a risk that many investors just can’t take, Mr. Bleichmar said. “In the largest Ponzi scheme in history, not even the domestic investors have been able to access the courthouse steps,” Mr. Bleichmar said. “In offshore jurisdictions, it’s even more difficult.”
The Family: A Double Dose of Agony
THREE years ago today, the Madoff family’s world of wealth and privilege was shattered. One year ago today, Mr. Madoff’s elder son, Mark Madoff, hanged himself in his Manhattan apartment.
For his mother, Ruth Madoff, Mark’s death was bitter proof that she had waited too long to respond to her sons’ demands that she cut off all contact with her husband. She called Bernie Madoff to tell him of the death and hasn’t spoken to him since, she said in a recent interview.