Madoff Help News & Assistance

A FANTASY LETTER….

April 30, 2009

Mr. Irving Picard, Trustee
Bernard L. Madoff Investment Securities
c/o Baker Hostetler
45 Rockefeller Plaza
New York, NY 10111

Dear Irving:

Thank you for your recent posting on your Trustee site. It’s been a long time since we’ve heard from you, and it was reassuring that you took the time to provide some clarification to us. But you have us pretty confused right now, because we’re trying to fathom this back and forth behavior you seem to be showing – threatening one moment, playing nice the next.

Speaking through attorney Mr. Hirshfield recently to the Wall Street Journal you announced your sending out of 223 “avoidance claim” clawback letters “seeking to get back all redemptions made by investors in the last six years.” Meanwhile, copies of the clawback letters began to circulate, letters that were cold, direct, and challenging. You could have prefaced the letters with words like “Dear Investor – we have reason to think that you may have taken out more money than you put in, and we’d like to discuss the situation with you.” Instead, regarding monies that an investor might have withdrawn, you preferred language like “the Trustee demands [emphasis mine] that you immediately return such amounts.…” Cold, cold, cold. And, just like David Sheehan did at the Creditors Meeting after you scared the bejesus out of victims there, you’ve suddenly taken a clarifying position, a kinder, gentler position. Thank you for that.

So what gives, Irving. Did you have an epiphany? Or is this the elaborate scheme of a chess-master playing the good cop, bad cop game with Sheehan, Hirschfield and company?

Or perhaps you’re so overwhelmed and frantic that you’re having difficulty communicating effectively with the public, let alone the very victims of the fraud that you are entrusted to protect? We’re thinking that this is what’s going on. Whatever it is, you’re torturing thousands of poor victims when you’re supposed to be helping them.

One would think that with the funding you’re got set aside, and given everybody’s high sensitivity levels, you might make as a priority the effective management of publicity – calm things down instead of stirring them up.

One would think that given the very mixed response at the Creditor’s Meeting you would have responded by increasing transparency, answering questions and letters sent in by the public and victims, moving expeditiously in paying legitimate claims as you said you would, and carefully considered the impacts of information presented to the press.

Instead, you’ve really got us wondering…. and trembling. This most recent combination of the rather terrifying initial April 22nd Wall Street Journal article announcing the clawback letter, compounded by the cold-hearted, dictatorial style of the clawback letter itself, and now this big turnaround, suggests something is really amiss. We’d rather not think that you are being deliberately mean and adversarial to those you’re seeking to protect. So we’re thinking that perhaps you’re just overwhelmed and under too much pressure to properly manage this situation.

Don’t get us wrong — we don’t envy the position you’ve placed yourself in. It’s a difficult job, you’ve got lots of experience, and someone has to do it. But you’ve voluntarily chosen to take it on. You have money, resources, and loads of latitude in terms of how you wish to proceed, from determining whether to use a 2 year Federal or 6 year New York state clawback time period, or utilizing a more lenient SIPA interpretation of net equity. You’ve chosen to take a very narrow and strict interpretation – by focusing on your being “vested with powers to avoid transfers” — which will hurt many of those you’re supposed to be trying to help and generate some real anger. That’s your choice, despite the fact that numerous attorneys are offering you a sound basis for taking a different approach, and one that doesn’t convey the feeling that you’re in this more to protect SIPC than the victims you’re supposed to be helping. But that still doesn’t explain this wide variation in behavior which is throwing everyone for a loop.

Okay. Let’s put aside for the moment the fact that the count of clawback letters versus SIPC claims paid is 223 or so to 12, and put aside your actual positions on net equity and your choice of the longer clawback period. With respect to the Wall Street Journal article and the clawback letter you’ve made two really big goofs, each creating panic, hostility, confusion. Either mistake alone — affecting thousands of already-terrified individuals in this manner – would have cost me my job.

So Mr. Picard, we ask you this: are you really up to this task? Are you able to find a way to provide clarity and predictability to the terrified and largely innocent victims here with a coherent message? Are you able to offer some greater degree of transparency and timeliness than you’ve done thus far? And maybe are you even willing to be a bit more flexible in how you approach all this using a more lenient SIPA and SEC determination of equity? Are you at least willing to provide greater evidence that you’re more interested in helping than hurting, because Mr. Picard, we really need some help right about now.

Sincerely yours,

Ron Stein
Madoff-Help
rstein@madoff-help.com