ask where your business is coming from to-morrow,” he says. “It’s obviously a significantamount. Our lawyers are getting great results,and we’re looking to build on this work.” The $7.6 billion that Picard and his BakerHostetler team have already recovered orreached settlements for is more money thanmost observers thought possible at the start.(Another $2.5 billion in forfeited property isheld by the U.S. Department of Justice andmay be distributed to customers.) Of thisamount, $5 billion comes from a settlement with the widow of investor Jeffry Picower, which is under appeal [see “Hunting for $100 Million,” below left]. Picard’s outstandingclaims include a $9 billion suit against
Holdings plc, a $6.4 billion suit against JP- Morgan Chase & Co., and a $1 billion claimagainst a group of investors including the topexecutives of the New York Mets. The Madoff matter is mind-boggling inits size and complexity. In rough numbers thefirm is overseeing 16,500 customer claims,of which 2,400 have been approved as valid;4,700 objections have been filed by those whose claims Picard rejected. The 1,000lawsuits that Picard has filed include actionsagainst so-called feeder funds that funneledmoney to Madoff on behalf of investors, andhigh-profile investors (like Picower and the Mets owners) who, Picard claims, knew orshould have known that Madoff was up to nogood. The firm is investigating activities in atleast 20 countries. And who manages all of this? “DavidSheehan,” says Kestner. “David is a masterat keeping all the trains running on time andmoving in the right direction.”
“THERE’S NEVER BEEN
a case like the Madoff case,” says Sheehan in an interview in March.“We’ve had, to a large extent, to create a newtemplate for large-scale litigation with what we’re doing here.”Sheehan neatly outlines the process of managing this mountain of work in a way that makes it sound simple. He’s divided the work into four “tranches,” as he puts it—pure avoidance actions, bad-faith cases, suitsagainst feeder funds and banks, and customerclaims—and assigned teams from differentoffices to each task. He’s also organized com-mittees to make sure that the firm takes aconsistent approach to handling claims. Onecommittee looks at every proposed settle-ment, another considers investor hardshipcases, and a third focuses on overall strat-egy. “He has a remarkable gift for makingcomplex things very plain,” says Oren War-shavsky, a Baker Hostetler partner who servesas Sheehan’s lead Madoff deputy. To organize the blizzard of documents— which the firm estimates may reach 25 mil-lion—Baker Hostetler’s
professionals,led by chief information officer Bob Craig,have built an ambitious intranet to organizeand share information. Craig says that doz-ens of other clients have been able to ben-efit from the technologies developed for the Madoff case.“You don’t have to have the next Madoff [case] to take advantage of these resources,”says partner Judy Selby, who heads the firm’sdiscovery management team. “We offer a re-ally top-notch document review team. Theefficiencies are four times greater than if aclient did an outside [document] review.”“It sounds like we’re the Seventh Army,”says Sheehan, referring to the famed Ameri-can unit of World War II. “But it’s notquite that.”Sheehan is a student of military history and served as a lieutenant in the U.S. Navy Judge Advocate General’s Corps during the Vietnam War. He credits this experience withhelping him oversee a mammoth project. “Icame away with real insight into managingpeople and achieving good overall team re-sults,” he says.He honed his management skills dur-ing his 17 years as the managing partner of the Gibbons law firm in New Jersey, whichgrew from 45 to 200 lawyers during his ten-ure from 1987 to 2004. It was at the Gib-
HUNTING FOR $100 MILLION
As trustee for the liquidation of Bernard L. Madoff Investment Securities LLC, Baker &Hostetler’s Irving Picard has filed roughly 1,000 lawsuits in his effort to recoup $100 billion forMadoff’s victims. Here are four of the most prominent cases:
IRVING PICARD V. JEFFRY PICOWER
Picard sued this longtime Madoff investor and his wife for $7.2 billion. After Picower was founddead in his swimming pool in 2009, Picower’s widow, Barbara, agreed last December to settle for$5 billion. This represents the largest Madoff settlement to date. U.S. bankruptcy court judge BurtonLifland approved the settlement in January. It is under appeal by certain investors.
PICARD V. SAUL KATZ AND FRED WILPON
Here, Picard has gone after a group of investors who include the top executives of the New YorkMets—suing the baseball team’s chief executive officer, Fred Wilpon, and president, Saul Katz, aswell as their investment fund, Sterling Equities, Inc., and their family members. Picard seeks the re-turn of $300 million in fictitious profits, plus $700 million in principal as a fraudulent conveyance. Thedefendants’ lawyers at Davis Polk & Wardwell have called Picard’s allegations “indisputably false.”
PICARD V. JPMORGAN
Seeking $6.4 billion, Picard claims that the megabank was Madoff’s primary banker for morethan 20 years and was complicit in his fraud by turning a blind eye to suspicious behavior. Picard de-mands $1 billion in fees and profits and $5.4 billion in damages. JPMorgan Chase & Co., representedby Wachtell, Lipton, Rosen & Katz, asserts that it wasn’t aware of any fraud and at press time wastrying to get the case transferred out of bankruptcy court and into federal district court.
PICARD V. HSBC
In his biggest action to date, Picard seeks $9 billion from the British bank, a network of feederfunds, and the mysterious Austrian banker Sonja Kohn. The trustee claims that the bank marketedMadoff feeder funds to investors throughout the world with the assistance of Kohn, while it ignoredwarnings of fraud from its own auditors. Represented by Cleary, Gottlieb, Steen & Hamilton, HSBCHoldings plc has stated that it wasn’t aware of Madoff’s fraud and itself lost $1 billion to Madoff’sscheme. Like JPMorgan, it’s seeking to get this case transferred to federal court.
P H O T O C R E D I T S P R E V I O U S P A G E F R O M T O P : D A N I E L A C K E R / G E T T Y I MA G E S ; A R N D O T T O D E WA L D ; M O N I K A G R A F F / N E W S C O M ; D O N E MME R T / G E T T Y I MA G E S ; R I C H P I L L I N G / G E T T Y I MA G E S
“WE’VE HAD TO
CREATE A NEW TEMPLATE
FOR LARGE-SCALELITIGATION WITH WHAT WE’RE DOING HERE,” SAYS SHEEHAN.