In December of 2008, the world learned about Bernard Madoff’s unprecedented fraud, a Ponzi scheme that spanned decades and defrauded customers of approximately $20 billion.

On the day the news broke, I received a call from the Securities Investor Protection Corporation (“SIPC”) and was asked to serve as SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”) under the Securities Investor Protection Act (“SIPA”). The appointment was made official on December 15, 2008 by the United States District Court for the Southern District of New York.

My mandate as the SIPA Trustee in the BLMIS liquidation is to oversee the liquidation as directed by the law, to marshal assets stolen in this fraud and to assemble the largest Customer Fund and General Estate possible so that all BLMIS customers and creditors, as designated by the statute, can ultimately receive some compensation for their losses as a result of this unprecedented Ponzi scheme.

I am joined in this massive effort by my counsel at Baker Hostetler, a team of dedicated and experienced attorneys led by partner David J. Sheehan. Together with special experts, consultants and international counsel, we are engaged in a broad range of activities required to fulfill our mission, including evaluating claims, conducting forensic analysis of years of documents, working through complex negotiations, filing and responding to motions, assembling detailed complaints and litigating them. We have worked diligently since December of 2008 to perform the necessary groundwork to ensure a maximum recovery. These efforts have achieved significant results, and we have excellent success to report.

As of February 15, 2012:

• We have recovered or entered into agreements to recover more than $9 billion: 100 percent of the monies recovered will be allocated to the Customer Fund for distribution to BLMIS customers with allowed claims.

• We have worked with SIPC to pay the maximum SIPC advance of up to $500,000 against each allowed BLMIS claim, for a total to date of approximately $800 million paid in advances.

• We are working to hold entities, such as feeder funds, major banks and other sophisticated investors that knew or “should have known” a fraud was underway, accountable for their actions.

• We have initiated and continue to administer a successful Hardship Program, which has to date provided relief to more than 350 BLMIS accountholders suffering proven hardship.

Given the size and scope of the Madoff Ponzi scheme, this is extraordinary progress in a relatively short time. And we are not done yet.

In the BLMIS Ponzi scheme, the investments and balances that appeared month after month and year after year on customer statements were completely fabricated. This is why BLMIS customer claims can only be evaluated based on original deposits less withdrawals. On August 16, 2011, the United States Court of Appeals for the Second Circuit ruled that this was not only the correct approach, but also the most equitable approach in this liquidation.

Any customer withdrawal from BLMIS was actually a transfer by Madoff of other people’s money to that customer. Some BLMIS customers never withdrew the full amount of their deposits, while others unwittingly withdrew funds that were, in reality, money stolen by Madoff from other BLMIS customers. Part of my statutory mandate as the SIPA Trustee is to ask customers who withdrew more money than they deposited to return those excess funds.

We understand that some BLMIS customers who withdrew more than they deposited have extenuating financial circumstances, and that returning excess funds they withdrew may create hardship. We have a well-established and successful Hardship Program that allows us to evaluate individual circumstances and to exercise discretion on a case-by-case basis.

We have recently started to return recovered funds to BLMIS customers with allowed claims, with our first cash distribution commencing on October 5, 2011. However, the amount available for distribution was unfortunately restricted due to unresolved appeals and issues, which my Chief Counsel David Sheehan discusses in his letter on the homepage of this website. Regardless of whether or not we believe these appeals have merit, we are required to continue holding significant reserves until they are finally resolved.

For our part, we will continue to do all that we can to ensure a maximum recovery in this unprecedented Ponzi scheme. Please check this website from time to time, as we will do our best to update with our progress.

Irving H. Picard