Another batch of compensation checks is in the works for victims of Bernard Madoff on the 10th anniversary of the con man’s arrest in New York following the collapse of his $19 billion Ponzi scheme.
Irving Picard, the trustee unwinding Madoff’s defunct investment advisory firm, said in a statement Tuesday that he asked a bankruptcy court judge to authorize $419 million in distributions on approved claims, which will go out to 880 accounts.
That would bring total payouts over the past decade to more than $12 billion. While victims will never recover the $45 billion in fake profits Madoff claimed on account statements, the trustee has focused on returning the cash they invested.
“Very rarely do you see a case of this magnitude where the victims receive a return like this,” Jerry Reisman, a lawyer who represented more than 30 victims who lost a total of about $50 million, said in a phone interview.
Madoff, 80, and his top aides fabricated securities transactions and doctored client records to make customers believe he was trading on their behalf. Instead, he used their cash to pay other client withdrawals, prop up his failing market-making unit and enrich himself and his inner circle. He’s serving a 150-year prison term after pleading guilty in 2009.
In total, Picard and his legal team have raised $13.3 billion -- about 70 percent of approved claims for lost principal, including the $12 billion that’s been distributed so far. The cash was recovered mostly by lawsuits against Madoff customers who had withdrawn more money than they deposited.
The trustee has said the recovery effort would have stalled years ago if not for the Securities Investor Protection Corp., an industry-financed organization that supports customers of failed broker-dealers and pays the fees in such cases. SIPC has paid $1.6 billion to the trustee’s firm, Baker & Hostetler LLP, and to third parties it hired for the massive project.
“At the start of this recovery initiative nearly 10 years ago, conventional wisdom said we would only be able to get pennies on the dollar,” Picard said in the statement. “Our teams and Madoff’s claimants have much to celebrate on this tenth anniversary. However, we are far from done. ”
A federal appeals court in Manhattan is weighing Picard’s request to revive about 80 lawsuits in which he’s seeking the return of as much as $4 billion in fake profit withdrawn by customers overseas in the years before Madoff’s arrest.
Picard’s previous distribution, in February, totaled more than $620 million. About 1,400 victims have had their claims for lost principal repaid in full. The trustee’s process, overseen in bankruptcy court, is separate from a $4 billion fund set up by the U.S. Justice Department.
© Copyright 2021 Bloomberg News. All rights reserved.