Bad News for Madoff Victims: Too Many Claims, Not Enough Money

Many of the victims of Ponzi scammer Bernard Madoff's $65 billion fraud are in dire straits, and there may not be enough money to go around, according to a report filed in U.S. Bankruptcy Court in the Southern District of New York yesterday.

Left: Bernard Madoff fraud victims holds a news conference and protest following the sentencing...

Left: Bernard Madoff fraud victims holds a news conference and protest following the sentencing hearing for Madofff, who was convicted for running a multibillion-dollar ponzi scheme, at Federal District Court in Manhattan on June 29, 2009 in New York City. (Photo by Spencer Platt/Getty Images). Right: Disgraced Wall Street financier Bernard Madoff (C) arrives at a US Federal Court on March 12, 2009 in New York.

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The filing, from court-appointed trustee Irving Picard, who is tasked with liquidating Madoff's assets, reports that at least 15,400 claims have been filed by victims. There was a flurry of filings just before the July 2 deadline.

The fund's hardship program, which applies to Madoff victims "facing severe hardship," includes those who can no longer pay their medical bills or afford basic living expenses, those who are 65 or older and must return to work, or those who have declared bankruptcy. So far, 258 such claims have been received and 152 have been approved.

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The hardship program was initiated in May to expedite claims for "customers who have been hardest hit" by Madoff's Ponzi scheme.

In the report, Picard also says he doesn't currently believe "there will be sufficient funds in the debtor's estate" to make monetary distributions to "priority, non-priority general creditors and/or broker dealers" – a group made up largely of vendors, employees, taxing authorities, and customers filing claims on non-customer proof of claim forms.

Madoff Assets Spread Across 12 Countries

The new filing also reveals the challenges involved in locating Madoff's assets and "corporate entities of interest," which are "tangled" across 12 countries and territories - England, Gibraltar, Bermuda, British Virgin Islands, Cayman Islands, Bahamas, Ireland, France, Luxemburg, Switzerland, and Spain.

The trustee "has unearthed a labyrinth of interrelated funds, institutions, and entities of almost unparalleled complexity and breath [sic]," the report says.

In Gibraltar, the trustee is seeking the return of $150 million from numerous funds and banks affiliated with Madoff's investment firm. In Bermuda, Picard is trying to recover $257 million from three funds.