A court-appointed trustee and a Manhattan law firm working together to unravel Bernard Madoff's massive fraud have rung up an additional $22.1 million in legals fees, saying they've worked "thousands of hours" on a job that will take years to complete.
A judge approved the payment — nearly $21.3 million for the Baker & Hostetler firm and about $800,000 to trustee Irving Picard — Thursday in federal bankruptcy court in Manhattan. It follows initial payouts of $14.6 million and $760,000 in July.
The lawyers say they're following a complex paper trail that spans the globe while laboring to process 16,239 claims seeking to recover billions of dollars in loses. Picard reported last month that so far he has recovered about $1.2 billion and sued hedge funds and other large investors for another $14.8 billion.
"Literally thousands of hours have been expended by B&H in support of the trustee's efforts," Baker & Hostetler wrote in its fee request. "This task is ongoing and will be engaged in for a number of years in order to fully understand the scope and depth of the fraud perpetrated by Mr. Madoff."
Picard and the firm have repeatedly emphasized that the Securities Investor Protection Corp. — and not Madoff's burned clients — will foot the bill.
"Contrary to what have mistakenly been reported by the news media and on blogs, no administration costs, including compensation of the trustee and his counsel, will be paid out of any recovery obtained by the trustee," Picard wrote.
So far, SIPC has paid out $559 million to Madoff investors. That's more than the combined total of all the brokerage busts it previously handled.
Madoff, 71, was sentenced earlier this year to 150 years in prison for orchestrating an epic Ponzi scheme that wiped out life savings and entire charities.
Thousands of investors with Madoff's once-respected advisory firm believed their securities accounts were worth tens of billions of dollars. But investigators say the totals on the clients' monthly account statements were fiction: In reality, Madoff never made investments, and instead used new investors' money to pay returns to existing ones.
After Madoff's arrest late year, Picard was appointed to try to recover any remaining business assets and divvy up those proceeds — along with SIPC funds — to victims. SIPC, created by Congress to protect investors when a brokerage firm fails, can provide up to $500,000 for each customer.
Some investors have called the legal fees excessive and accused Picard of wasting money by hiring forensic accounts to determine claims based on a "cash-in-cash-out" basis — an approach that repays customers the money they invested minus the cash they withdrew from their account. They argue the law requires the basis to be the amount reported on final account statement.
