Business

SEC TO PICARD: PAY UP

The Securities and Exchange Commission has stepped into the escalating fracas over how much victims of Ponzi schemer Bernie Madoff should be paid by Madoff estate trustee Irving Picard, who’s being accused of making up the rules on reimbursement as he goes along.

An angry group of more than 350 Madoff victims claim they are bring shortchanged by Picard — whose job is to collect as much of the $23 billion lost during the decades-long Madoff fraud, using rules laid out by the Securities Investor Protection Corp. Under those rules, SIPC is required by law to pay victims up to $500,000 in securities or $100,000 in cash.

In past cases, those payments were based on the final balance of each account, and would be paid up to the caps outlined by the rules governing SIPC.

However, Picard is being accused of ignoring those final account balances, and instead is basing the SIPC payouts on the much smaller sums people originally invested with Madoff.

Helen Chaitman — a New York lawyer who lost her life savings to Madoff, and who is representing more than 350 angry victims — took her claims to the SEC, where officials agreed to step in on Thursday.

“It is my understanding that the SEC official we met with is going to take our grievances to Picard and ask him to explain clearly why he is treating us this way and why he has interpreted the law in the way he has,” Chaitman told The Post.

The SEC and Picard both declined to comment

Chaitman was granted an hour-long audience with SEC officials Thursday after sending the regulator a 35-page document detailing her grievances against Picard. She told Tom McGowan, a top SEC official, that Madoff victims were signing away their rights to much bigger payouts from SIPC by agreeing to Picard’s terms.

“We are talking about people who have lost so much money to Madoff that they are on food stamps,” she said. “I have clients who have cancer who cannot afford their chemotherapy now. These are desperate people who will agree to anything to get some money back and it is my firm belief that Picard is taking advantage of them.”

McGowan is understood to have told Chaitman that Picard is basing his interpretation of the SIPC rules on an arcane ruling made by the Supreme Court in 1924 — 50 years before the creation of SIPC.

Picard yesterday posted details of a new “hardship program” on his Web site designed to help victims.

But Chaitman said the hardship rules change nothing. “He still wants to determine how much you are owed by how much you invested. SPIC is supposed to protect you from fraud by honoring the balance in your account. The statute is clear.”