new york (Bloomberg) — Lawrence Velvel, a Bernard Madoff victim who is dean of the Massachusetts School of Law, urged a judge to investigate why the liquidator for the con man's firm chose to ignore fake profit from the fraud when calculating customers claims in the case.

The evidence may show whether trustee Irving Picards choice was inspired by the law or by a desire to avoid financially ruining the Securities Investor Protection Corp., the government-chartered agency that hired him to repay victims, Velvel said in a filing yesterday in US Bankruptcy Court in New York.

Picard is calculating victims claims based on their cash deposits minus withdrawals. Velvel and hundreds of other victims argue Picard is required by law to set claims based on the sums on their final account statements, which include fictitious profit and securities that were never purchased.

SIPC and Picard knew or suspected that using cash-in/cash-out would provide less protection than Congress intended and would frustrate investors legitimate expectations, Velvel said in the filing. Any documents that show how and why Picard chose the method over others should be viewed as evidence, he said.

SIPC, which is financed by the brokerage industry, makes initial repayments of as much as $500,000 to victims, based on their claims in the case. Those whose claims are large enough then qualify to receive a proportional share of whatever assets are recovered by the trustee through litigation.

Velvel in June filed a claim in the case for $3.9 million in securities, Picard said in a court filing. The trustee denied the claim, saying Velvel had withdrawn from his Madoff account $341,012 more than he deposited, court records show.

Picard has asked for an order denying Velvel's request, saying its excessively broad and not allowed under the law.