The task of untangling the web of financial transactions and lawsuits created by Bernard Madoff’s $65 billion, 20-year Ponzi scheme is expected to take years to complete.

An international treasure hunt is already under way for the billions of dollars that some suspect Madoff has squirreled away in an offshore location.

In the US, investors and government agencies have fired off hundreds of legal actions against anyone involved with Madoff — his family, feeder funds, auditors and bankers.

Ken Rubinstein, partner of Rubinstein & Rubinstein, a New York law firm advising Madoff investors, said: “The sentencing is nice drama but that’s all. The real issues are going to be litigated in the courts for at least the next two to three years, if not five or six years.”

Pressure is mounting on Irving Picard, an attorney who was appointed by the courts to recover as much cash as he can from Madoff’s empire so that it can be shared amongst victims.

Investors are estimated to have lost about $13.2 billion in the Ponzi scheme. So far Mr Picard has recovered about $1.2 billion by selling Madoff’s assets, including the 71-year-old’s legitimate securities business.

Mr Picard has started about $10 billion worth of so-called clawback suits, in which he is suing Madoff investors for the return of money that they withdrew from the scheme above the sum that they put in.

Mr Picard himself faces a blizzard of claims, though; some from victims opposing the clawback and others from victims who believe that he has underestimated their losses.

When Madoff confessed to his sons on December 10 last year that his investment business was a Ponzi scheme, he told them that he was “broke”, “insolvent” and “had absolutely nothing”. Many people swear that he has hidden money outside the US.

“I believe there’s money in Monaco, it’s the only country that doesn’t have a mutual legal assistance treaty with the US and a big enough banking system to swallow Madoff’s deposits without raising any eyebrows,” Mr Rubinstein said.

Mr Picard has tracked down up to $110 million sent by Madoff to an account in Gibraltar and is thought to be co-operating with federal investigators to find cash hidden in other countries.

Lawsuits have also have been filed by investors and government agencies against fund managers that invested their clients’ money with Madoff. Among those facing huge compensation claims are Stanley Chais, the Hollywood investment manager, Robert Jaffe, the Palm Beach socialite, Ezra Merkin, the former chairman of GMAC, Walter Noel, the Connecticut fund manager, and Sonny Cohn, Madoff’s business partner.

Marc Gross, a partner at Pomerantz who is advising on several class action suits against the feeder funds, said: “We expect this process to take months, if not years, to resolve.”

Investors claim that they had no idea that the men were passing their money on to Madoff. The Securities and Exchange Commission (SEC), America’s financial regulator, and William Galvin, the Massachusetts Attorney-General, have also brought various charges against some of the men, alleging that they should have known that Madoff was conducting a giant scam.

JP Morgan Chase has been sued by investors for providing a bank account to Madoff, while KPMG has been sued for auditing one of the feeder funds.

Investors have attempted to sue the SEC for failing to properly regulate Madoff, and civil claims are expected against Ruth Madoff, the fraudster’s wife, and his sons and brother, all of whom worked in Madoff’s business.

Some victims will get payments of up to $500,000 each from the Government’s Securities Investor Protection Corporation, which was set up compensate victims of bust brokers.

The corporation is currently working overtime to make hardship payments to individuals who put their entire savings with Madoff, but issuring compensation to the 8,000 victims is expected to take some time.

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