December 10, 2011, marked the three-year anniversary of Bernard L. Madoff's arrest.  To date, almost $11 billion of the $18 billion in estimated losses has been recovered by Madoff trustee, Irving Picard.  Nevertheless, Picard faces challenges in 2012.  First, Picard needs to appeal lower court rulings that could reduce any future recovery by approximately $11 billion.  These lower court rulings involve three general issues:  first, whether Picard has the legal right to sue Madoff's bank and/or other third parties on behalf of defrauded investors; second, whether there is a safe harbor that would protect investors from having to turn over profits made prior to the collapse of the Ponzi scheme; and finally, the question remains regarding the level of proof Picard needs to show to establish that sophisticated investors were "willfully blind" to the fraud.  

Picard has also sustained congressional and public criticism with respect to his "claims formula."  Specifically, in approving the 2,425 out of 16,519 claims filed, Picard reviewed only the net figures, denying claims by those who ultimately withdrew more money than they had invested with Madoff.  Last February, however, Rep. Scott Garret (R-NJ) introduced a bill that would require the trustee in a brokerage-firm bankruptcy to accept claims on the final account statements, rather than the net cash they lost.  The same bill would also proscribe the trustee from recovering the "fictional profits" the investor received.  ("The Lasting Shadow of Bernie Madoff," The New York Times, December 10, 2011).