‘Net Equity’ Hearing In Madoff Today – Is It A $20 Billion Or $65 Billion Fraud, And Why It Matters

This morning, U.S. Bankruptcy Judge Burton Lifland will be holding a hearing that could have a relatively significant impact on the amount to be recovered by victims of Bernard Madoff’s Ponzi scheme. The bankruptcy court will be deciding what would seem to be a rather straightforward question: how big was this huge financial fraud?

Some customers claim the Madoff scheme was a $65 billion fraud, as Madoff’s records indicated; trustee Irving Picard believes the total was $20 billion, a number he arrives at by excluding those who, over time, received more from Madoff than they had invested.
 
If the bankruptcy court decides that the larger number is correct, then more victims will share in the assets Picard is recovering (and will be able to assert a claim under the securities protection fund). If, on the other hand, the bankruptcy court decides that the $20 billion number is correct, some victims will be excluded from sharing in the recovered assets, and those who do will receive a larger share.
 
This will be interesting.