Less than two weeks remain to file lawsuits attempting to recover billions of dollars from Bernie Madoff’s clients. Bankruptcy court trustee Irving Picard and his team of lawyers at Baker & Hostetler are working at what one insider calls “a feverish and frantic pace” to meet the December 11 filing deadline.

December 11 is also the two year anniversary of big bad Bernie’s $65 billion implosion and revelation that the world’s largest Ponzi scheme had stolen billions from more than 8,000 customer accounts.

Team Picard has received 13,403 claims from Madoff clients but only allowed 2,232 of those claims totaling $5.6 billion to move forward. SIPC (the Securities Investor Protection Corporation) has committed to pay about $728 million to those 2,232 clients, leaving them holding the bag on roughly $4.9 billion, but there is a good chance they will get back some of their money. 

Team Picard has already recovered $1.5 billion from settlements with some of Madoff’s other clients and has filed lawsuits that total more than $15.5 billion. Any money Team Picard recovers in court will eventually be distributed to Madoff’s victims. A source inside Team Picard says they will file hundreds of more lawsuits “against a number of parties who withdrew more than they deposited with BLMIS (Bernard L Madoff Investment Securities)” by December 11 of this year.  

Among the suits just filed are disturbing details involving former less publicly visible Madoff employees who Picard says had full knowledge of the crime but have not been criminally charged.

David Kugel worked for Madoff almost 40 years as a securities trader and Picard alleges Kugel was one of the Ponzi scheme's masterminds. Picard says Kugel “misrepresented to at least 1,300 of (Madoff’s) clients that their BLMIS accounts were invested in a convertible arbitrage strategy when in reality their money was never invested by BLMIS. Kugel very likely was the architect of this fraudulent strategy.”  

Team Picard is suing Kugel, his wife, son and daughter for $22,229,363. Kugel’s son Craig also worked at BLMIS starting back in 1997. Despite the allegations that David Kugel helped create and run the Ponzi scheme, no criminal charges have been filed against him. The US Attorney’s office in New York will not comment and none of the Kugels returned phone calls about the lawsuit.

Enrica Cotellessa-Pitz started working at BLMIS in 1978. She was Madoff’s Controller, shifting money between bank accounts and various parts of BLMIS. According to Picard, Pitz and those transfers were instrumental helping Madoff avoid a liquidity crisis in 2006 and throwing SEC investigators off the trail as they started asking questions around the same time. 

Picard’s just-filed lawsuit also contains some salacious details claiming Pitz was “romantically involved with Frank DiPascali for two years early in her career.” DiPascali was Madoff’s right- hand man and is currently the prosecutor’s key witness. He pleaded guilty to all the criminal charges filed against him and is currently naming names while supposedly leading criminal investigators to others who were in on the scheme.  

That presumably includes people like Pitz who Picard says was responsible for closing the books at BLMIS every month and “played a key role in disguising the fraudulent Ponzi scheme from investors and investigators... She was paid at least $3,255,588 in compensation for her role in the fraud.” 

Pitz was also the primary liaison between BLMIS, the SEC and Madoff auditor David Friehling. Friehling, like DiPascali, has already pleaded guilty to criminal charges and will be sentenced in March 2011. Pitz has not been criminally charged and the US Attorney’s office, similar to the case of David Kugel, will not comment. Court documents indicate Pitz has not yet hired a lawyer and she did not respond to messages left on her answering machine to discuss Picard’s allegations regarding her role in the Ponzi scheme.

Pitz and Kugel are just two of 18 former BLMIS employees Team Picard is suing to recover money for Madoff’s victims. Only six of those 18 have been criminally charged. although the US Attorney’s office says the investigation continues. Baker & Hostetler, home to Team Picard, will also continue its work even after the December 11th filing deadline as they litigate hundreds of lawsuits intended to recover billions of dollars.

Adam Shapiro joined FOX Business Network (FBN) in September 2007 as a New York based reporter.