Richard Breeden, the Department of Justice “special master” responsible for doling out some $2.3 billion to burned Madoff investors, is finally answering victims’ questions about when they might get paid — thanks to The Post.
In response to a story earlier this week about his failure to answer investors’ questions about his timeline for distributing investors’ money, Breeden on Thursday came clean about his plans.
Here’s a sampling of the “clarifications” Breeden released today.
THEN: “It would be simpler if we could give a date when the claims process will begin … We can’t do that.”
NOW: “While final signoffs still have to occur, we expect that plan decisions will be made in a matter of several weeks or less.”
THEN: “Before claims can be processed, there are other questions that must be answered, including appropriately defining (with particularity) eligibility …”
NOW: “Plan issues have undergone a thorough analysis, and a detailed draft plan is currently under active review.”
THEN: “The laws governing distribution of forfeited assets and claims in brokerage firm bankruptcies are very different.”
NOW: “Such a decision [to count net-winners as victims] would in fact be strange, and has never even been considered.”
In a posting on the Madoff Victims Fund website, Breeden said that a “detailed draft plan” for payments “is currently under active review.” What’s more, the former head of the Securities and Exchange Commission said “plan decisions will be made in a matter of several weeks or less.”
That’s a far cry from the “September Update” he posted online, which was the subject of an earlier Post story because it had some investors fretting that he was dragging his feet on payments and “milking it.”
Indeed, in the initial update Breeden indicated that he was still in the throes of “appropriately defining” factors that will impact distributions, including “eligibility” and “standards for calculating the size of an eligible loss,” as well “the sequencing of distributions.”
“It would be a lot simpler if we could give a date when the claims process will begin,” he said in that update before adding “we can’t do that.”
Apparently, now he can. And since being called on the carpet, he did.
In reporting out the story, The Post called Breeden three times over five days looking for guidance on this and other issues. He never responded.
Now that the foot-dragging story has come out, however, Breeden is worried that it may have “mis-construed” what he was trying to say.
“It’s a giant leap forward from the prior update,” one holder of Madoff claims said of the special master’s latest missive.
Breeden also clarified another issue that was bugging investors by making it crystal clear — for the first time — that paying net winners is not on the table and “has never even been considered.”
In the earlier, fuzzier update, Breeden, who was retained by the Manhattan US Attorney Preet Baraha in December to distribute the $2.3 billion collected, gave a long explanation of the complicated process for determining who counts as a victim of the scheme.
This had some burned Madoff investors, like Richard Friedman of New Jersey, speculating that Breeden could make payments to net winners, or those who withdrew more from the scheme than they put in to it.
Friedman lost money with Madoff but was sued by Madoff bankruptcy trustee Irving Picard on behalf of his mother, who was deemed a net winner. As such, Freidman was open to the idea that Breeden appeared to be “starting from scratch” when it came to defining who qualifies for a distribution, he told The Post after the first update.
Breeden’s $2.3 billion is separate from the $9.4 billion collected by Picard. The bulk of the money under Breeden’s control comes from the $7.2 billion settlement with the widow of Jeffry Picower, a large beneficiary of Madoff’s scheme. The 2010 deal, hashed out jointly by Bharara and Picard, resulted in some $2 billion of the monies going to the DOJ.