New York – Two major Manhattan banks have found more than $500 million in cash held in business accounts of disgraced investment adviser Bernard Madoff and are expected to be turning over the funds to a special trustee next week, officials said Thursday.
The Bank of New York Mellon Corp. and JPMorgan Chase & Co. located the money in the accounts of Bernard Madoff Securities Llc and plan to turn over the cash to Manhattan lawyer Irving Picard, who is the special trustee in a federal bankruptcy proceeding, according to documents filed yesterday in U.S. Bankruptcy Court in Manhattan.
Picard has the job of locating Madoff company and customer funds so investors can recoup some of the estimated $50 billion lost in what prosecutors believe is the largest Ponzi scheme in history.
Court records show Mellon is holding $301,407,190 in one Madoff company account while JPMorgan Chase holds $233,500,000 in three accounts.
“It is a positive sign that money is being flowed over,” said Manhattan attorney Stuart Rich. He represents a private group of investors known as the Jasper Investors Group Llc, who said they put money into Madoff’s operation.
In a stipulation filed with the court, Picard and the banks have agreed that the money will be wired to the special court account set up for the funds on or before Feb. 6. A hearing is slated for Feb. 4 before Bankruptcy Court Judge Burton Lifland.
On Dec. 30, 2008, the Bank of New York turned over $29 million in Madoff company funds to Picard.
Madoff, who is charged with one count of securities fraud, is free on $10 million bail and is under house arrest at his $7 million Upper East Side apartment. Ira Sorkin, one of Madoff’s attorneys, declined to comment Thursday.
Though substantial, the monies in the accounts amount to only a fraction for investors eager to recoup catastrophic financial losses. Picard is handling the bankruptcy case as trustee for the Security Investor Protection Corp., which maintains a reserve fund authorized by Congress to help investors at failed brokerage firms. It’s authorized to ensure investors up to $500,000 for losses.
While no decision has been made, SIPC would be looking to dispense Madoff’s assets equitably among investors, Stephen Harbeck, SIPC’s chief executive, said earlier this month.
However, numerous Madoff clients have lost hundreds of millions to billions of dollars, and the SIPC has only about $1.4 billion in its own coffers, said attorneys familiar with the case.
“Any money that comes in is just going to sit there until everybody’s claims are resolved,” Rich said.