Irving Picard: The Lawyer Behind The $10B Haul For Madoff Victims
NEW YORK — Everyone's mad at Irving Picard.
To be fair, his job is thankless: He's the court-appointed bloodhound in charge of hunting down money for the victims of Bernard Madoff, a man who was so skilled at hiding money that he kept the biggest scam in the history of American finance going for at least two decades.
Wall Street hates him. Picard has sued more than a dozen banks, including several whose big link to the Ponzi scheme was one step removed – helping people bet on funds that bet on the fund run by Madoff.
Fans of the New York Mets, which have enough problems on the field, are angry at him for suing the team's owners for $1 billion, just when they're trying to find new owners and are still reeling from their own Madoff-related losses.
And most bizarrely, some of the people Madoff ripped off say Picard has screwy ideas about the law and is making them victims all over again by demanding they hand back "fictitious profits" that many have already spent.
A little more than two years into the job, the 69-year-old Picard, who was plucked from obscurity to recover the money, has become America's most unlikely celebrity lawyer, and perhaps its most underrated.
He's filed more than 1,000 suits in 30 countries, and defied expectations by bringing in $10 billion so far. That's half of what he estimates investors lost in principal when Madoff was arrested, though not as impressive compared with the phony $65 billion that Madoff claimed they had.
To make a bigger dent, Picard will have to wrest money from those banks he's sued. It won't be easy. Picard says they saw plenty of red flags and had an obligation to warn investors. The banks say Picard has gotten his facts wrong and his legal logic is flawed. Some prominent attorneys seem to agree.
"He's pushing the envelope," says Harvey Miller, a well-known bankruptcy lawyer at Weil, Gotshal & Manges who has known Picard for decades. "What is the duty of banks and financial institutions? It's a gray area of the law."
Self-effacing and mild-mannered, Picard is not the first person you'd associate with aggressive legal tactics and a ruthless hunt for money. Then again, he's difficult to pin down, a blend of seemingly conflicting characteristics.
Picard, a lawyer at Baker & Hostetler, turned down an interview request from The Associated Press, but two dozen friends, acquaintances and colleagues who did agree to talk describe a man whose deferential manner belies his tenacity, someone who can seem alternately pragmatic and idealistic, shrewd and empathetic.
"I don't know personally what it's like to lose everything," he told Geraldine Ponto, a colleague at Baker, referring to Madoff victims. "But I understand it in others. It's in my DNA."
Picard is the youngest child of Jewish refugees from Nazi Germany. They fled to the U.S. in 1938 after the father's medical practice was destroyed by a Nazi law barring non-Jewish patients from seeing Jewish doctors, according to Ernest Picard, one of two older brothers who left with the parents.
The father took a job as a hospital orderly as he studied English and prepared for medical exams here. He eventually passed, set up a practice in the textile mill town of Fall River, Mass., and joined a local Zionist group. Recalls Irving Fradkin, 89, a friend of the father, "He would always say, 'You can't place a value on freedom.'"
Classmates of Irving Picard remember a modest, quiet kid with an appetite for hard work. Lester Kretman recalls Picard sweating it out on the basketball court one summer so he could make their school team – to no avail. He joined the Boy Scouts (he aspired to Eagle Scout but fell short there, too) and found a pen pal (he still keeps in touch). Another schoolmate, James Keeley, describes him as a "solid" student who didn't win much acclaim, possibly because "he didn't draw attention to himself."
One standout feature that would serve him well later in his legal career: a prodigious memory. A schoolboy friend with whom he traveled Europe in 1966 says Picard can recall to this day the names of restaurants and what they ate. One of Picard's colleagues says he can spit out case numbers in lawsuits going back three decades.
After the University of Pennsylvania and Boston University law school, he landed a job as a lawyer at the Securities and Exchange Commission, where he rose to oversee a legal team handling bankruptcy cases. He gained a reputation as someone who wasn't hidebound by the agency's old practices, and for a human touch. Charles Tatelbaum, a lawyer trying to get money back from a Mafia-linked trucking firm overseen by Picard's lawyers after it fell into bankruptcy, recalls a half-dozen calls from Picard after news broke that the mob had put a contract out on his life and everyone else seemed to be shunning him.
"I couldn't get a date for six months. My veterinarian wouldn't even see my cat," Tatelbaum says. "But Irving would call – 'Are you all right? Is there anything I can do?'"
In 1979, Picard was appointed one of 12 U.S. trustees in a new Justice Department program charged with overseeing corporate bankruptcies. "If he decided something was unfair, he went after it," says former trustee David Coar, recalling how Picard would attack lawyers representing creditors for withdrawing big money from bankrupt companies to pay themselves. "There were no sacred cows."
In 1982, Picard left for private practice to focus on the niche business of collecting money after investment firms and brokerages went bust. He proved unrelenting at times.
In one case, in 1988, he was assigned to clean up after a 23-year-old art history buff, David Bloom, somehow persuaded 140 people to give him millions to invest in the stock market, then went on a fine-art-buying spree of works from the likes of Edward Hopper and John Singer Sargent instead.
Picard sued Bloom's parents for money their son had given them and, in an echo of his tactics today, went after a couple who had "fictitious profits," or who had taken more out than they had invested. Picard eventually got back $6.7 million, about half the total lost.
Colleagues from those years fill in another aspect of his personality: He is whistle-clean and intensely private, perhaps to an extreme. Several say they can't recall him ever uttering an expletive. Baker lawyer David J. Sheehan, chief counsel to Picard in the Madoff probe, says he's almost never mentioned personal matters in their 30 years working together, and that he's an "old-fashioned man." An old joke among family members is he's so straight-laced he should live on "Buttoned Down Lane." Picard apparently finds this funny.
His reputation as industrious eventually caught the attention of the Securities Investor Protection Corp., a quasi-public group that oversees a fund to compensate customers of failed brokerage firms like the one run by Madoff. SIPC ended up hiring Picard to hunt for money in 10 of their cases, more than any other lawyer. It was SIPC that hired Picard as Madoff trustee in December 2008, citing recoveries in his previous work.
One big success: The 2003 case of Park South Securities, a failed brokerage controlled by fraudster Todd Eberhard. Picard went after assets of Eberhard's family, including Canadian property that Eberhard's mother insisted in several court actions belonged to her, not her son. He also got Eberhard's administrative assistant to hand over part of her salary after arguing in a suit that it had been "inflated" by the fraud. He even targeted a law firm that had been paid $9,000 by "unauthorized transfers" from customer accounts – one-twelfth of one percent of the money customers had lost.
Park South customers got back nearly all their missing $7.4 million.
If not for the Madoff case, Picard would likely have ended his career in obscurity, indulging in classical music (he's a Carnegie Hall season subscriber) and plays (he likes Shakespeare revivals) instead of working 12-hour days. Those who know him suggest a quieter end may have been more fitting. "He doesn't seek the limelight," says former U.S. trustee Arnie Cavazos, recalling how his old colleague just shrugged when he told him the Picard name was sure to enter the history books now. Says Baker lawyer Ponto, who likes to rib Picard that he's as famous as Cher, "He's not out to set the world on fire."
To his many critics, the picture of a humble public servant must rankle. Picard likes to note that he has held back from suing more than 200 victims who spent "fictitious profits" and need money now for medical treatments and other necessities. But many of those he has deemed unworthy of a break claim his calculations of what they owe are wrong and he's heartless for forcing them to sell assets to raise cash when he and his firm are charging tens of millions for their probe. One prominent lawyer for Madoff investors from whom Picard wants money is insisting he resign. After hearing testimony about the case last year, a congressman said Picard had "terrorized" victims.
A sign of the times, and the man: Picard's refusal one cold morning to go to the front of an endless security line outside the New York courthouse where he's a star attraction, according to a Baker lawyer who spotted him, Deborah Renner. He told her, "Enough people hate me already without me cutting the line."
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AP investigative researcher Randy Herschaft contributed to this report.
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BERNARD CONDON 04/25/11 06:53 AM ET Associated Press