The New York Times reports that Irving Picard, the SIPC trustee in the Bernard Madoff Securities liquidation, was successful in justifying his method of validating claims. His method, which uses the traditional “cash-in, cash-out” methodology, is one that has been used time and time again.

On the other hand, there were people who felt that, even though they had gotten some, or all, of their money back from Madoff, they were entitled to the values contained on their account statements, no matter how false. I was surprised to hear this theory has been used since it doesn’t make any sense to me. In fact, it would encourage people to believe whatever is told to them, rather than be diligent in their choice of advisors and investments. One could conceive a scenario where a fraudster conspired with “victims” to inflate values and let SIPC pay out. That doesn’t make any sense.

I said it when I was writing The Law Planet Blog, and I’ll say it again, there’s no free lunches, people. Bernie Madoff got away with this for so long because no one asked the simple question of “how does he do it when nobody else can?” No one, except for Harry Markopoulos, was willing to say that the Emperor was wearing no clothes. And that fell on deaf ears.

Mr. Picard’s lawyer says he expects the other side to appeal. It’s unlikely that the appeal will be successful, in my opinion.

But that’s the opinion of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin and what do I know?