New York partner David Sheehan was quoted in the February 3, 2010 New York Times article, "In Court, Impassioned Challenges of Madoff Trustee's Plans." Sheehan is currently serving as counsel to New York partner Irving Picard, the court-appointed trustee in the liquidation of Bernard L. Madoff Investment Securities LLC.
The article focuses on the recent Federal Bankruptcy Court hearing, the outcome of which will determine how the net equity of victims of the largest Ponzi scheme in history should be legally determined. Sheehan, "speaking for those victims who took less than their initial investment from their Madoff accounts . . . who unwittingly financed the bogus profits Mr. Madoff paid to others," argued that the correct legal process is to repay ex-clients based on the total they actually placed with Madoff, less any withdrawals. Those investors, whose losses the trustee has estimated at nearly $20 billion, will receive far less if the trustee's formula for determining losses is overturned, according to the article.
At the hearing, Sheehan said, "I know the people in this room feel they have been wronged, wronged terribly" by Mr. Madoff, by the government and by the trustee. But investors "cannot have a legitimate expectation of sharing in the profits of a fraudster," he argued. "What's in the pot is the money of the people who didn't take anything out." The final account statements are not supported by the other books and records at the Madoff firm, which the law requires the trustee to consider, Sheehan argued. Moreover, the law gives the trustee some discretion to determine claims "to his satisfaction" to ensure that results are fair, he said. The only fair way to distribute whatever assets the trustee can raise is to channel them to those who have not yet recovered even their original investment, not to share it with those who have, Sheehan asserted at the hearing.
Click here to read the full article from the New York Times website.