Madoff Trustee Reaches Record 7.2 Billion Dollar Settlement. Victims Could Get Half Their Money Back

The Manhattan U.S. Attorney’s office announced on Friday (12-16-2010) that the government had reached an agreement with the estate of Jeffry Picower to recover more than $7.2 billion for those duped in the $65 billion fraud scheme.

Picower was an investor in Madoff’s funds starting in the late 1970s, and withdrew more than $7.2 billion in profits for roughly 30 years. Once Madoff’s scam was revealed two years ago, it was evident that Picower had profited at the expense of the newer investors in the classic Ponzi scheme of taking investments from recent investors to pay the distributions to older investors.

“By returning every penny of the $7.2 billion her late husband received from BLMIS to help those who have suffered most, Barbara Picower has done the right thing,” U.S. attorney for the Southern District of New York Preet Bharara said in a statement.

Jeffry Picower died in October 2009 and his wife is now in charge of his estate. BLMIS is short for Bernard L. Madoff Investment Securities, the firm through which Madoff defrauded investors.

Madoff operated his massive Ponzi scheme from at least the early 1980s until the time he was arrested two years ago. The admitted fraud stole a reported $65 billion in that time.

The settlement with the Picower estate finds no admission or fault against Jeffry Picower, according to the government.

A representative from the Securities Investor Protection Corp., the agency that secured the settlement, did not immediately return a request for additional information.

The distribution of the funds will be handled by Irving Picard, the court-appointed trustee overseeing the liquidation of BLMIS. Up until the Picower settlement, Picard had advanced more than $760 million to the Madoff victims.

Madoff, currently serving a 150-year prison sentence in North Carolina, did not attend the funeral of his eldest son, Mark, who hung himself on Dec. 10. The younger Madoff was reported to be distraught about recent lawsuits filed against him and his family in connection with the Ponzi scheme.