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In December 2012, Richard C. Breeden was retained to serve as Special Master on behalf of the U.S. Department of Justice. For any information regarding the Special Master and forfeitures to the Department of Justice in the Madoff Ponzi scheme criminal cases, please visit www.madoffvictimfund.com or contact:
Wendy Olsen Clancy
Victim/Witness Coordinator
United States Attorney's Office
One St. Andrew's Plaza
New York, New York 10007
(866) 874-8900
Wendy.Olsen@usdoj.gov
There are two primary reasons why significant funds are not available for distribution at this time: required reserves and ongoing appeals.
Required Customer Fund Reserves for Deemed Determined Claims
First, while the number of allowed claims is – to date – 2,503 and the dollar amount of allowed claims to date is approximately $11.08 billion, both the number of allowed claims and the dollar amount will increase. There remain 169 claims have been "deemed determined" by the SIPA Trustee; however, the final status of each claim remains contingent on the outcome of its respective litigation. If a “deemed determined” claim becomes allowed, it would become eligible for all pro rata distributions to date, currently totaling 42.879 percent of the amount of the allowed claim. For this potential scenario, the SIPA Trustee has, to date, reserved approximately $2.78 billion. The ultimate amount of additional allowed claims depends on the outcome of the litigation, and could add approximately $6.5 billion to the total amount of allowed claims.
Court-Ordered Reserves for Time-Based Damages Issue
More than 1,200 objections have been filed relating to the time-based damages issue. The objections relate to additional payments based on the New York state statutory pre-judgment interest rate of 9 percent, inflation, or other damages calculations. On January 23, 2013, the United States Bankruptcy Court issued an amended scheduling order setting forth that briefing for the time-based damages issue will extend through the spring of 2013, with a hearing before the Bankruptcy Court to be determined by the Court after April 26, 2013.
Until a final, unappealable order is reached on the issue of time-based damages, the SIPA Trustee must hold a 3 percent court-ordered reserve of approximately $1.358 billion.
Other Customer Fund Required Reserves
As of May 17, 2013, approximately $10.363 million must be reserved in the Customer Fund for certain deferred payments, unallocated funds and other matters related to the liquidation.
Amount Unavailable to the Customer Fund Due to Required Reserves and Appeals
Portions of recoveries and settlement agreements have not yet been collected, due to appeals, the timing of payments of certain settlement monies and other issues. Therefore, these funds cannot be either allocated to the Customer Fund or distributed to BLMIS customers with allowed claims until these issues are resolved. Required reserves include the $220 million settlement with the Norman F. Levy family, which is still subject to appeal and, as a result, these funds remain in reserve. Also, approximately $222.8 million relating to settlement reserves and other matters must be held in reserve.
