David J. Sheehan

Partner

New York
T 212.589.4616  |  F 212.589.4201
"[David Sheehan] is brilliant; extremely capable at communicating complex ideas in an extremely simple and effective manner."
— Chambers USA 2014

David Sheehan is a veteran trial lawyer who has received national recognition for his achievements in law and who remains at the forefront of major, ongoing global cases. Throughout his career, David has litigated cases in federal and state courts before judges and juries. He brings rich experience to his clients, including trial preparation for litigation and counseling clients accordingly, and he focuses his work in the areas of business litigation, bankruptcy, and intellectual property. David is a fellow in the American College of Trial Lawyers and a Life Fellow of the American Bar Foundation. He has been listed as one of The Best Lawyers in America© since 2003.

Since December 2008, David has served as Chief Counsel to the Securities Investor Protection Act (SIPA) Trustee for the global liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS), one of the largest financial frauds in U.S. history. As Chief Counsel, David oversees the unprecedented BLMIS liquidation on a global basis, managing more than 200 lawyers across the country as well as international legal teams, to investigate, unravel, and reconstruct the Madoff fraud for the benefit of BLMIS customers with allowed claims. Under his leadership, more than 1,000 lawsuits have been filed, involving approximately 4,000 defendants worldwide and seeking tens of billions of dollars in asset recovery. David is engaged daily in the full range of U.S. legal venues, including the U.S. Bankruptcy, District, Second Circuit, and the Supreme Court, and in more than 30 international jurisdictions. As of May 2014, the SIPA Trustee and his legal teams have recovered or entered into agreement to recover more than $9.8 billion and have distributed more than $5 billion to BLMIS customers with allowed claims. Combined with $812.2 million in cash advances from SIPC to speed some financial relief BLMIS customers with allowed claims, nearly $6 billion has been returned to victims. (For more information on the liquidation, visit

www.madofftrustee.com.)

Select Experience

  • In connection with his role as Chief Counsel to the SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC., David led the litigation strategy responsible for the outcomes leading to the following reported decisions:
    • In re Bernard L. Madoff Investment Securities LLC, 654 F.3d 229 (2d Cir. 2011)
    • Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, 424 B.R. 122 (Bankr. S.D.N.Y. 2010)
    • Rosenman Family, LLC v. Picard, 395 Fed. Appx. 766 (2d Cir. 2010)
    • Kruse v. Picard, 708 F.3d 422 (2d Cir. 2013)
    • Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, 454 B.R. 285 (Bankr. S.D.N.Y. 2011)
    • Picard v. Flinn Investments, LLC, 2011 U.S. Dist. LEXIS 136627 (S.D.N.Y. Nov. 29, 2011)
    • Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC (In re: Bernard L. Madoff Inv. Sec.) 496 B.R. 744 (Bankr. S.D.N.Y. 2013)
    • Securities Investor Protection Corporation v. Jacqueline Green Rollover Account, 2012 U.S. Dist. LEXIS 104024 (S.D.N.Y. July 25, 2012)
    • Picard v. Chais, 445 B.R. 206 (Bankr. S.D.N.Y. 2011)
    • Picard v. Fox, 429 B.R. 423 (Bankr. S.D.N.Y. 2010)
    • Picard v. Cohmad Securities, 418 B.R. 75 (Bankr. S.D.N.Y. 2009)
  • Led representation of a major publishing firm in a putative class action brought by an author alleging breach of contract and breach of good faith and fair dealing of foreign royalties provision of a publishing agreement. The U.S. District Court for the Southern District of New York agreed with the publishing firm’s arguments that its calculation of foreign royalties and conduct was consistent with the express terms of the publishing agreement, and dismissed the action with prejudice. The Second Circuit Court of Appeals affirmed. The outcome avoided a potentially costly and protracted class action against BakerHostetler's client.
  • Serves as counsel to an American multinational manufacturing conglomerate in an environmental litigation in the District of New Jersey involving hexavalent chromium contamination. Litigation involves issues related to consent decrees, attorneys' fees, and expenses incurred in connection with remediation issues, and monitoring of contaminated sites which client was required to clean and maintain.
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Experience

  • In connection with his role as Chief Counsel to the SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC. David led the litigation strategy responsible for the outcomes leading to the following reported decisions:
    • In re Bernard L. Madoff Investment Securities LLC, 654 F.3d 229 (2d Cir. 2011)
    • Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, 424 B.R. 122 (Bankr. S.D.N.Y. 2010)
      On June 25, 2012, the Supreme Court of the U.S. denied two petitions for writ of certiorari brought by objecting parties against the SIPA Trustee's net equity methodology. The SIPA Trustee's approach had been, without exception, upheld by all lower courts. On March 1, 2010, the U.S. Bankruptcy Court for the Southern District of New York granted the SIPA Trustee's motion for an order denying customer claims for amounts listed on the last BLMIS customer statements and affirming the SIPA Trustee’s determination of net equity. In August 2011, the U.S. Court of Appeals for the Second Circuit upheld the SIPA Trustee’s use of the "cash in, cash out" net equity formula for the liquidation of BLMIS. Petitions for a panel rehearing of that decision were denied. This led to the filing of the petitions for writ of certiorari by certain appellants. With the Supreme Court's announcement of the denial of the petitions for writ, the appeals process concluded regarding the net equity issue.
    • Rosenman Family, LLC v. Picard, 395 Fed. Appx. 766 (2d Cir. 2010)
      On January 1, 2009, Rosenman Family, LLC filed a complaint seeking the return of $10 million deposited only 10 days before BLMIS collapsed. The SIPA Trustee moved to dismiss the complaint, arguing that Rosenman Family LLC was a BLMIS "customer" as defined under SIPA and could recover only through the customer claims process. The Bankruptcy Court dismissed the Rosenman complaint and both the District Court and the Second Circuit affirmed that dismissal, finding that Rosenman's $10 million deposit was property of the BLMIS estate, and that the timing of the deposit was irrelevant.
    • Kruse v. Picard, 708 F.3d 422 (2d Cir. 2013)
    • Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, 454 B.R. 285 (Bankr. S.D.N.Y. 2011)
      As defined by SIPA, claimants in a SIPA liquidation must have accounts in their own names at the bankrupt broker-dealer in order to qualify for SIPA protections and benefits. On June 11, 2010, the SIPA Trustee filed a motion to affirm this determination in the BLMIS liquidation, specifically addressing claimants who had invested in BLMIS indirectly through 16 so-called feeder funds. On June 28, 2011, the Bankruptcy Court affirmed the SIPA Trustee's treatment of the feeder-fund claimants, finding that their investments in the feeder funds could not be termed as individual accounts at BLMIS, and that the SIPA Trustee was right to deny their claims for securities and/or a credit balance. Twenty-seven notices of appeal were filed with the District Court, and on January 4, 2012, the Court upheld the SIPA Trustee's position. On January 6, 2012, four appeals were taken to the Second Circuit and on February 22, 2013, the Second Circuit affirmed the decisions of the District Court and the Bankruptcy Court.
    • Picard v. Flinn Investments, LLC, 2011 U.S. Dist. LEXIS 136627 (S.D.N.Y. Nov. 29, 2011)
      Flinn Investments filed a motion to dismiss the SIPA Trustee's complaint, disputing whether the SIPA Trustee may, consistent with non-bankruptcy law, avoid transfers that Madoff Securities purportedly made in order to satisfy antecedent debts. The complaint also cited the United States Supreme Court’s decision in Stern v. Marshall and questioned the authority of the Bankruptcy Court’s "judicial power" to resolve the fraudulent transfer claims, before and after final resolutions. On December 19, 2011, the parties agreed to a settlement and stipulated to the dismissal of the action, which was so ordered by the District Court on January 9, 2012.
    • Securities Investor Protection Corporation v. Jacqueline Green Rollover Account, 2012 U.S. Dist. LEXIS 104024 (S.D.N.Y. July 25, 2012)
      On November 14, 2011, the SIPA Trustee filed a motion seeking affirmation of his determination that participants in ERISA plans were not BLMIS "customers" as defined by SIPA and affirmed in other court rulings. On or around January 17, 2012, approximately 18 opposition briefs to the SIPA Trustee's ERISA motion were filed and certain claimants also filed motions to withdraw the reference from the Bankruptcy Court to the District Court, which were granted. On July 25, 2012, the District Court affirmed the SIPA Trustee’s position, and found that the ERISA claimants were not "customers" under SIPA because they did not deposit money directly with BLMIS for the purchase of securities and did not own the assets of the ERISA plans that were deposited with BLMIS. No appeal was taken.
    • Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC (In re: Bernard L. Madoff Inv. Sec.) 496 B.R. 744 (Bankr. S.D.N.Y. 2013)
      On October 12, 2012, the SIPA Trustee filed a motion seeking affirmation of his position that customer claims under SIPA should not include Time-Based Damages, which was supported by SIPC in a Memorandum of Law filed the same day. Approximately 1,200 objections have been raised regarding the "Time-Based Damages Issue," in which certain claimants assert that customer claims should be recalculated with an interest factor or a constant dollar adjustment. Most commonly, the objectors seek an increase in their claims based on the time they were invested with BLMIS, using the New York State prejudgment rate of nine percent per annum, lost opportunity cost damages, or the consumer price index to take inflation into account. On September 10, 2013, the United States Bankruptcy Court for the Southern District of New York approved the SIPA Trustee's motion to deny time-based damages adjustments to customer claims. That decision is currently on appeal at the United States Court of Appeals for the Second Circuit. Until a final, unappealable order is reached on the issue of Time-Based Damages, the SIPA Trustee must hold a court-ordered reserve of approximately $1.375 billion.
    • Picard v. Chais, 445 B.R. 206 (Bankr. S.D.N.Y. 2011)
      The SIPA Trustee has commenced numerous actions to enjoin third-party lawsuits that seek to circumvent the SIPA Trustee's avoidance actions. On May 1, 2009, the SIPA Trustee commenced such an action against Stanley Chais and Pamela Chais, certain members of their family, and a number of related trusts and entities seeking the return of more than $1.3 billion under SIPA, the Bankruptcy Code, the New York Fraudulent Conveyance Act, and other applicable laws in connection with certain transfers of property by BLMIS to or for the benefit of these defendants. On April 2, 2012, certain of the Chais Defendants moved to withdraw the reference to the District Court on several grounds, and the motions were granted. On July 18, 2012, the Court ordered the parties in these actions to participate in a joint mediation. The parties are still engaged in follow-up discussions in furtherance of the mediation.
    • Picard v. Fox, 429 B.R. 423 (Bankr. S.D.N.Y. 2010)
      Among the injunction actions sought by the SIPA Trustee are actions to enforce the automatic stay established by the Bankruptcy Code and related District Court stays, and to enjoin third-party actions seeking to circumvent the orderly claims process established by the SIPA Trustee. Picard v. Fox seeks to enjoin third-party actions that were commenced to prevent the SIPA Trustee's $5 billion settlement with the estate of Jeffry Picower. The Bankruptcy Court's automatic stay and the December 15, 2008 stay order of the District Court were upheld and the Fox third-party actions were declared void. On January 13, 2011, the Bankruptcy Court approved the settlement and granted the requested permanent injunction. On March 26, 2012, the District Court affirmed the Bankruptcy Court's opinion in Fox and the approving the settlement, ruling that the Fox plaintiffs were properly enjoined because they jeopardized the estate's ability to recover fraudulently transferred assets. The Fox Plaintiffs filed notices of appeal to the Second Circuit on April 24, 2012. The parties are awaiting a decision.
    • Picard v. Cohmad Securities, 418 B.R. 75 (Bankr. S.D.N.Y. 2009)
      On June 22, 2009, the SIPA Trustee commenced an adversary proceeding against Cohmad Securities Corporation and several of its executives and other related defendants seeking the return of more than $245 million under SIPA, the Bankruptcy Code, the New York Fraudulent Conveyance Act, and other applicable law. The complaint seeks to recover the fictitious profits withdrawn by the Cohmad defendants and the return of commissions and fees transferred directly from BLMIS. The Cohmad defendants filed motions to dismiss, which were denied on August 1, 2011, based on the finding that the transfer amounts in excess of their principal were not transferred for reasonably equivalent value, and that the defendants lacked good faith in receiving commissions from Madoff. The parties are currently engaged in discovery.
  • Led representation of a major publishing firm in a putative class action brought by an author alleging breach of contract and breach of good faith and fair dealing of foreign royalties provision of a publishing agreement. The U.S. District Court for the Southern District of New York agreed with the publishing firm’s arguments that its calculation of foreign royalties and conduct was consistent with the express terms of the publishing agreement, and dismissed the action with prejudice. The Second Circuit Court of Appeals affirmed. The outcome avoided a potentially costly and protracted class action against BakerHostetler's client.
  • Serves as counsel to an American multinational manufacturing conglomerate in an environmental litigation in the District of New Jersey involving hexavalent chromium contamination. Litigation involves issues related to consent decrees, attorneys' fees, and expenses incurred in connection with remediation issues, and monitoring of contaminated sites which client was required to clean and maintain.

Additional Experience
  • Represented major pharmaceutical company in Federal District Court matter in Central District of California focusing upon the breach of a Toll Manufacturing Agreement and a related Patent Licensing Agreement.
  • Represented a nationally known manufacturer of physical fitness equipment in a patent trial before a jury in the Federal District Court located in Boston, Massachusetts.
  • Represented an Atlantic City casino in connection with a ten-month trial of antitrust and real estate claims in the Superior Court of Atlantic County, New Jersey.
  • Represented a low-carb food manufacturer in a trademark infringement action tried before a jury in the Southern District of New York.
  • Represented a condominium association in a six-month jury trial seeking damages for construction defects associated with the development of a condominium project by a major real estate developer.
  • Represented an automobile manufacturer in an 11-week jury trial of a product liability matter in the Federal District Court of New Jersey.
  • Represented a major publishing corporation in connection with a trademark and copyright infringement matter in the Southern District of New York.
  • Represented a major medical Internet portal in connection with a trademark infringement action instituted in the Federal District Court of New Jersey in connection with the name change of that Internet portal.
  • Represented a major publishing company in a jury trial in the Eastern District of Pennsylvania against an author seeking damages for the negligent publication of his manuscript.

Recognitions

  • Sheehan, David JChambers USA: Litigation: General Commercial in New York (2014)
  • The Best Lawyers in America© (2003 to 2015)
    Copyright 2013 by Woodward/White, Inc., of Aiken, SC
    • New York: Litigation–Bankruptcy
    • New York: Litigation–Intellectual Property
  • New York Metro "Super Lawyers" (2005 to present)
    • "Top 100 Lawyers" in New York Metro area (2011, 2012 and 2013)
  • Above the Law legal website: One of 23 "Top Partners to Work For" in New York (2011)
  • Martindale-Hubbell: AV Preeminent

Memberships

  • American College of Trial Lawyers: Fellow
  • American Bar Foundation: Life Fellow
  • American Bar Association
  • District of Columbia Bar Association
  • New Jersey State Bar Association
  • New York State Bar Association

Services

Prior Positions

  • U.S. Navy Judge Advocate General’s Corps: Lieutenant (1969 to 1973)

Admissions

  • U.S. Supreme Court
  • U.S. Court of Appeals, Second Circuit
  • U.S. Court of Appeals, Third Circuit
  • U.S. District Court, Southern District of New York
  • U.S. District Court, District of New Jersey
  • U.S. District Court, Eastern District of New York
  • New York
  • New Jersey
  • District of Columbia

Education

  • J.D., Rutgers University School of Law, with honors; Phi Delta Phi; Managing Editor, Rutgers Law Review
  • B.A., Seton Hall University