Bernard Madoff sent his clients thousands of receipts purporting to document their trades while leaving no trace of buying securities for customers for as long as 13 years, said the trustee liquidating his bankrupt firm.

“We have found no evidence to indicate that securities were purchased for customers’ accounts” for “perhaps as much as 13 years,” said Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC. It was “cash in and cash out,” he said.
Picard also said he found no separation between the company’s broker-dealer division and its investment advisory unit, which prosecutors have said was at the center of an alleged $50 billion Ponzi scheme at Madoff’s New York-based firm.
“We have found nothing to suggest there was any difference, any separateness,” Picard said at a meeting yesterday with Madoff clients in U.S. Bankruptcy Court in Manhattan. “It was all one.” Madoff’s securities firm went into liquidation on Dec. 15, four days after Madoff was arrested for allegedly running the scheme.
The trustee told customers yesterday that he wants to sell the firm’s market-making unit in “a matter of weeks.”
“That appears to have some value,” he said, adding that he has retained 45 employees to sell the unit. “We’re in the process of getting some bids.”
The unit may fetch no more than $10 million, according to Larry Tabb, founder of TABB Group, a financial-market research and advisory firm. Picard sat at a desk before a crowd of hundreds of people in a packed auditorium at the federal courthouse, located near the southern tip of Manhattan. Customers waited 25 minutes to get past a single-file security line where they removed their belts and coats and went through a metal detector.
Creditors may file claims until July 2, though they are advised to submit forms by March 4 to be paid out of “customer property,” Picard’s Web site said. He said that the July deadline is the more important one because it appears there are no securities to distribute.
Madoff, 70, has been charged by federal prosecutors with one count of securities fraud. He faces as much as 20 years in prison and a $5 million fine if convicted. He hasn’t formally responded to the charges.
“We are operating out of a crime scene,” Picard said at the meeting. He added that his office has received 2,350 customer claims as of noon on Feb. 19. Those claims exceeded about $1 billion, Picard told reporters after the meeting. “That’s my recollection, plus or minus,” Picard said, adding, “I can’t tell you today how many of the 2,400 claims will be allowed.”
Investors will start receiving letters telling them if their claims are permitted soon, Picard said. “I do not mean months,” he said.
“Anybody who thinks he, she or it has a claim against BLMIS is urged to file that claim,” Picard said. “We cannot make a determination in a vacuum.”
Customer claims will be capped at $500,000 for securities under the Securities Investor Protection Act, the trustee said. SIPC has about $1.6 billion in assets, $1 billion in credit available from the U.S. Treasury and another credit line from a consortium of banks. Picard doesn’t expect the claims to exhaust those funds, Picard told reporters after the meeting.
“Based on current homework, we don’t believe that will happen.” Picard told the assembled investors that his office has located Madoff firm books and records at its Manhattan offices, the basement of its Third Avenue building, at a warehouse and at a
He said the trustee would seek to recover money that investors withdrew over the amount they put in. “We will be seeking to recover false profits from people who received them in substantial amounts over the years,” Sheehan said. “You have to think of it this way: It’s your money.”
Picard said he would not pay out a SIPC claim if he has a potential clawback claim against the investor.
Dozens of investors asked Picard questions about the possibility of clawbacks.
“These clawbacks are making criminals out of innocent people,” a woman from the audience said.