Madoff trustee recovers $7.2bn
The "largest forfeiture recovery in US history" won by court trustee after lawyer's estate agrees to settlement deal.
Last Modified: 18 Dec 2010 12:03 GMT
Bernard Madoff is serving a 150-year prison term for what is considered the biggest financial fraud in history [EPA]

The man assigned to recover money for victims of Bernard Madoff's Ponzi scheme has won his biggest settlement yet - an agreement by the estate of longtime Madoff friend Jeffry Picower to give back $7.2bn in profits from the epic fraud.

The settlement significantly boosts the recovery pot to close to $10bn, capping a weeks-long flurry of settlements and lawsuits around the December 11 second anniversary of Madoff's arrest.

Madoff had confessed to orchestrating what is considered the biggest financial fraud in history.

His ally, Picower, died of a heart attack in Florida in October 2009 at the age of 67 - five months after the court-appointed trustee, Irving Picard, claimed Picower's rates of return were implausibly high from his investments and control of some Madoff accounts since the late 1970s.

"This is the largest forfeiture recovery in US history," Preet Bharara, Manhattan US attorney, said at a press conference with Picard, the FBI and the Internal Revenue Service to announce the settlement by Picower's wife, Barbara.

Bharara said she had "agreed to forfeit $7.2bn ..., a figure that represents every last dollar of the Picowers' profit from Bernie Madoff's fraud".

Picard said that as soon as practicable after the settlement is approved by a US Bankruptcy Court judge in New York, he would ask the court to begin an initial distribution of funds to customers. The approval is expected next month.

Settlement reached

The family of the accountant and lawyer turned billionaire philanthropist said that Picower at the time of his death had been working toward reaching a settlement.

His wills over the years directed most of his wealth to charity, the family lawyer, William Zabel, said.

Madoff, 72, is serving a 150-year prison sentence after pleading guilty in March 2009 to orchestrating the massive scheme.

US prosecutors estimated the international investment fraud took in about $65bn over at least two decades.

The trustee has put the amount investors lost at about $20bn and this month ramped up his global search for money, adding to lawsuits he has filed over the last two years against individuals, Madoff family members, funds and banks.

One defendant was Mark Madoff, the eldest son of Bernard Madoff, who committed suicide on the anniversary of his father's arrest.

Mark Madoff and his brother Andrew ran the brokerage at the firm. They denied prior knowledge of the fraud.

Picard sued several major banks in recent weeks to bring the total sought for the victims to about $50bn.

Major banks

The banks include UBS AG, HSBC, JPMorgan Chase & Co, Citigroup Inc's Citibank, Natixis, Fortis Prime Fund Solutions Bank (Ireland) Ltd, ABN AMRO Bank NV, Banco Bilbao Vizcaya Argentaria, Nomura and Merrill Lynch, owned by Bank of America since January 1, 2009.

Some of the banks have vowed to fight the lawsuits.

Barbara Picower said in a statement through her lawyer that she was "absolutely confident that my husband Jeffry was in no way complicit in Madoff's fraud and want to underscore the fact that neither the Trustee nor the US Attorney has charged him with any illegal conduct."

She called the Madoff Ponzi scheme deplorable.

"I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering."

A Ponzi scheme is one in which early investors are paid with the money of new clients.

Until Friday, Picard had secured about $2.6bn in settlements and asset sales since the collapse of Bernard L. Madoff Investment Securities LLC.

The money recovered is to be distributed to investors under the auspices of the US Department of Justice and the Securities Investor Protection Corporation, an agency established by Congress to help investors of failed brokerages.

Topics in this article
Featured on Al Jazeera
Muslim volunteers face questioning and threat of arrest, while aid has been disrupted or blocked, charities say.
Six months on, outrage and sorrow over the mass schoolgirl abduction has disappeared - except for families in Nigeria.
ISIL combatants seeking an 'exit strategy' from Mideast conflict need positive reinforcement back home, analysts say.
European nation hit by a wave of Islamophobia as many young fighters join ISIL in Syria and Iraq.
Lack of child protection laws means abandoned and orphaned kids rely heavily on the care of strangers.
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Since she was 16-years-old, Scottish Nationalist Party's Sturgeon has strove for independence from the UK.
Armed group's ransom success with German hostages marks a re-emergence, as authorities investigate ISIL links.
Western nations are moving into the resource-rich country after decades of disinterest, challenging China's interests.