A court-appointed trustee has hired a team of forensic accountants to recreate customer accounts as part of the liquidation of Bernard Madoff’s scandal-scarred investment management firm.

The accountants are recreating the customer accounts from paper records found at Bernard L. Madoff Investment Securities, as well as records sent in by claimants who are hoping to get back some of the money lost in the estimated $65 billion Ponzi scheme.

Court-appointed trustee Irving Picard (pictured) and Securities Investor Protection Corp. president Stephen Harbeck said they had already committed to distribute over $61.4 million to 125 people who had claimed about $368 million in losses. About $30 million has already been mailed to the Madoff victims. The payments are generally about $500,000 each, the maximum amount that the SIPC awards to claimants.

“As the largest and most complex securities fraud in history, BLMIS presents many unique difficulties rarely encountered in the typical failure of a broker or dealer,” said Picard. “Due to the fact that every customer statement was a fiction, the first task was to reconstruct the books and records of BLMIS from scratch. This entails reconstructing every customer account from the ground up using BLMIS records, bank statements, e-mails, records from third parties as well as documents received from customers through the customer claims process. This has been and continues to be an enormously time-consuming endeavor.”

Picard said they had been working on reconstructing accounts going back to December 1995. The trustee also recently set up a hardship fund for people affected by the scandal. So far, nine people have applied and two have been approved. Hardship fund recipients include those who are in danger of losing their homes and retirees who have lost much of their savings.

The trustee has sued to recover about $10.1 billion so far by suing six investors who had withdrawn large amounts of money from the firm in recent years. The SIPC has also expanded its funds to help pay claimants and has begun charging participating brokerage firms 0.25 percent of their net operating revenue instead of the flat fee of $150 for an annual assessment. Harbeck said the SIPC also met with the commissioner of the IRS early on in the case and helped develop the tax guidance recently provided by the IRS to the defrauded investors.

When asked whether the Madoff family had been of any assistance in the endeavor, they replied no. However, some employees of the firm had been retained to help recover funds and records.

The trustee’s staff includes forensic accounting experts who “are working as quickly as possible to catalog all the far-reaching aspects of the Madoff scheme and to recover [money] for investors to the extent possible by law,” said Harbeck.

“There were paper records,” said Picard. “There are microfilm and microfiche. There was nothing that was electronic, and one of the projects has been to digitize those records so that they are easier to compare, including customer statements, letters that came in, faxes and bank records. We’ve been able to get some records from third parties, and most importantly the customers have been able to provide records that have filled in some gaps. That’s been very helpful.”