The Wall Street Journal reports that Irving Picard, the Madoff Investment Trustee, intends to sue about 1,000 investors who withdrew more than they put into the Madoff fraud. Mr. Picard faces a December 2010 filing deadline to start his lawsuits. This is not just going to be an inconvenience for some people, it could mean the end of their lifestyle as they know it.

This will leave these investors with a predicament. Do they spend down some of their remaining money to fight the lawsuit and argue that they don’t owe the money back? Do they argue that it is unfair because they didn’t know about the fraud, or that they spent the money? Do the try and cut a deal with the Trustee, who seems determined to treat everyone “equally”.

And fairness issues become very tangled. What happens to the person who spent the money in an unrecoverable manner, like a round-the-world trip, or something less extravagant like a grandchild’s college education? Will Mr. Picard try to drill down and recover the funds? Will he require the sale of long-held assets that were unrelated to the fraud? These are difficulty legal, practical and moral issues that the trustee will have to address.

In the meantime, it is likely that a cottage industry of Madoff defense lawyers will develop. They will develop some sort of strategy to deal with the Madoff Trustee’s lawsuits. Time will tell.

That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin,