Client Story

When billions in stolen assets have to be recovered

May 1, 2017

After notorious financier Bernard L. Madoff was arrested on December 11, 2008, for orchestrating the largest Ponzi scheme in history, the hard work of unraveling his complex wealth-management business—and attempting to recover the stolen assets—began. The Securities Investor Protection Corporation appointed attorney Irving Picard of law firm BakerHostetler to serve as trustee overseeing the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS). The trustee’s primary mission was to recover and distribute as much as possible of the estimated $17.5-billion principal lost by Madoff’s investors who filed claims.

A complex claims process requires meticulous management

Picard and his team of court-appointed counsel retained AlixPartners as claims agent and financial advisor. In those roles, we serve as accountants and consultants, helping the trustee manage the complex day-to-day operational challenges of his assignment, including determination of claims, distribution of recoveries to eligible claimants, liquidation of BLMIS’s assets, and wind-down and sale of the broker-dealer businesses.

To those ends, we managed the preservation and analysis of all BLMIS data to support the bankruptcy claims process and the criminal and civil investigations and litigation that followed. We reconstructed almost three decades of books and records from electronic, microfilm, and paper-based records in order to achieve full understanding of the deposits and withdrawals from each customer account. In addition, we assisted the trustee and the government with the recovery of various assets, and we maintained the books and other records for the liquidating trust.

When it really matters

The AlixPartners team has helped the trustee generate outcomes critical to his mission. For example, more than 16,000 customer claims were received, all of which have been either determined or deemed determined pending the outcome of litigation. We have also supported the trustee’s many lawsuits—including clawbacks—and assisted the government in its investigations and prosecutions. Meanwhile, the trustee has successfully sold BLMIS’s market-making business and recovered several assets. As of February 2017, the trustee had recovered almost $11.6 billion of the estimated $17.5 billion principal lost and has distributed more than $9 billion to eligible claimants.