Law firms representing 200 customers cheated by Bernard L. Madoff Investment Securities Inc. (BLMIS) filed papers in the Second Circuit Court of Appeals last week requesting a full court rehearing in In Re: Bernard L. Madoff Inv. Sec., LLC.
In August, a three-judge panel affirmed a bankruptcy judge's decision to disregard the Madoff victims' falsified account statements in calculating recovery from the customer property fund.
Irving Picard, the trustee for liquidation of BLMIS, argued that the customer statements do not reflect "securities positions" that could be "liquidated" because the account statements were wholly the invention of Madoff and do not reflect actual securities positions.
The Second Circuit Court of Appeals agreed, finding that customers' claims must be measured by the amount of cash put in less the amount taken out, reports The San Francisco Chronicle.
This is not the customers' first time to request rehearing. Rehearing was previously rejected because the petitions exceeded the Second Circuit's 15-page limit.
Rather than amending their clients rehearing claims to comply with the 15-page limit, the lawyers turned to the law school study group method of petitioning: each client group took responsibility for one argument and discussed a limited number of issues at length in its 15-page petition.
Specifically, instead of writing about 15 issues in 15 pages, attorneys representing the 3 groups of Madoff victims divided the issues and each one wrote about, for example, 5 issues in 15 pages. While no single petition would address every argument, the groups could then collectively present a detailed argument for rehearing.
Picard is asking the Second Circuit to again deny rehearing, arguing that the groups are attempting to circumvent the court's rules.
Though customers could file for rehearing in the Supreme Court if the Second Circuit Court of Appeals again denies their petitions, it may not be in their best interest. Picard indicated in a separate filing that the rehearing effort is preventing him from making an additional 11 percent distribution to customers, reports BusinessWeek.