Did you miss him? Irving Picard, the Trustee liquidating Bernard L. Madoff Investment Securities LLC, was back in the news recently. U.S. Bankruptcy Judge Burton Lifland of the Southern District of New York concluded that “time-based” damages to victims of the massive Ponzi scheme should not be awarded. The ruling means that Madoff victims who still stand to recover from the liquidation will not have their distributions adjusted for interest or inflation. In anticipation of the decision, Picard held approximately $1.36 billion in reserve that can now be distributed more quickly, albeit at his desired “discount.”

Although Picard has already recovered $9.35 billion and distributed more than $5.4 billion to former Madoff customers, Judge Lifland’s decision reflected his perception of “unfairness” that would result if interest and inflation were considered in the payout. The decision noted that adding those considerations improperly distinguishes between those who have recovered their principal and those who have not, and might provide a “windfall” for claims traders who were never victims of the massive fraud. In essence, Judge Lifland agreed with the Trustee’s method of calculating the distribution as the court did in 2011, when they decided to disregard the amounts listed on account statements and instead calculate losses by subtracting customer investments from the amount extracted from Madoff’s firm.

Further, in order to expedite the delivery of the $1.36 billion, Lifland voiced his support for a direct appeal to the Second Circuit, bypassing the Southern District. We will track this as it progresses through the appellate process and update with new information.

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