Illustration by Minh Uong/NYT; Photos (clockwise, from top): Daniel Acker/Bloomberg; Chang W. Lee/NYT; Chip East/Reuters; Bebeto Matthews/AP; Eliot J. Schechter/Bloomberg  “I made the tragic mistake of trying to change the way money was managed and was successful at the start, but lost my way after a while and refused to admit that I failed.”  — Bernard L. Madoff, in an e-mail on Oct. 11, 2011  BERNIE MADOFF can’t let go.  He still hangs on each nugget of news from the outside, still points fingers, still spins his own story.  And, on occasion, he still mourns — something, he says, he will do for the rest of his life.  But these musings from prison, conveyed in dozens of e-mails to a reporter for The New York Times over the last year, are merely comments from the sidelines. For him, the case of the United States of America v. Bernard L. Madoff is officially over.  But for those he ensnared, the Madoff story drags on. It began three years ago today, when F.B.I. agents arrested a man who, to the world, was a wizard of Wall Street. Mr. Madoff soon confessed to a Ponzi scheme that became a symbol of our troubled financial times. Its unraveling took tens of billions of dollars of fictional wealth from thousands of victims around the world.  Mr. Madoff will mark this day in a federal prison in Butner, N.C., where he is serving a 150-year sentence. For countless others affected by his crimes — the lawyers and prosecutors still trying to unravel his scheme; the victims still hoping to recover money; and the Madoff family, who remain targets of public suspicion and hostility — today is but a milepost on a long, long road.  The Trustee: A Hunt for Billions  THIS might have been a triumphant year for Irving H. Picard, the lawyer appointed to unravel the Madoff estate and try to compensate victims.  To date, almost $11 billion has been recovered, more than half of the estimated $18 billion in cash that vanished in the Ponzi scheme.  For Mr. Picard, the trustee, 2011 began with court approval of a $7.2 billion settlement by the estate of Jeffry Picower, a longtime Wall Street investor who had profited enormously from his Madoff accounts. Other settlements this year made roughly $1 billion more available for victims.  The year also brought vindication when, last summer, a federal appeals court approved Mr. Picard’s formula for determining who should be paid first — a formula that some Madoff investors had denounced as illegal.  But as Mr. Picard and David J. Sheehan, his chief counsel at Baker & Hostetler, reach the third anniversary of their difficult but well-paid work, they are still struggling to make headway in the federal courts, and in the court of public opinion.  Their first priority for 2012 will be to appeal several lower court rulings that, together, could reduce by about $11 billion the total they had hoped to recover through future litigation and settlements. The rulings also could rewrite the bankruptcy laws that govern nearly 1,000 lawsuits they have filed.  At issue is whether Mr. Picard has the legal right to sue Mr. Madoff’s bank and other third parties on behalf of defrauded investors. Also in question is whether there is a safe harbor in the law that prevents Mr. Picard from recovering fictional profits that Madoff investors withdrew before the Ponzi scheme collapsed.  And, finally, there is a question of the level of proof Mr. Picard must show for his claims that sophisticated investors — specifically, the owners of the New York Mets — were “willfully blind” to the fraud and therefore should return profits and some of their principal.  Handicappers on the legal sidelines say Mr. Picard faces an uphill fight on the first issue but they give him better odds on the second.  “He’s had a setback,” said Anthony Sabino, a law professor at St. John’s University, but chances are that Mr. Picard will prevail on the safe-harbor question.  As for the third question, all bets are off. The willful blindness issue has been spotlighted in the Mets case by Judge Jed S. Rakoff of Federal District Court in Manhattan, who is known for bucking conventional wisdom. But in Mr. Picard’s favor, Judge Rakoff did not dismiss that element of the Mets case entirely and will allow the trustee to press it at trial in March, said Thomas S. Harty, a lawyer with Cozen O’Connor in Philadelphia.  Such legal uncertainties will hang over the Madoff case through the coming year, if not beyond. But there is no way to appeal verdicts rendered in the court of public opinion against Mr. Picard and his employer, the Securities Investor Protection Corporation, which provides a limited safety net for clients of failed brokerage houses.  For the last three years, Mr. Picard and SIPC have been fiercely criticized at Congressional hearings, on the Internet, in court filings, in several books and in many news media interviews.
Three years after his arrest, the mastermind of Ponzi schemes still haunts his victims, his family and himself.