A U.S. judge approved a $7.2 billion settlement on Thursday to pay former customers of the Madoff firm, the largest yet in the worldwide search for money lost in Bernard Madoff's multibillion-dollar Ponzi scheme.

U.S. Bankruptcy Court Judge Burton Lifland in New York made the ruling over the objections of some investors, who contested the deal between the estate of Jeffry Picower, a Madoff friend and investor, and a trustee liquidating the Madoff firm.

The trustee and the U.S. Department of Justice announced the settlement on December 17 with Picower's wife, Barbara. Picower died of a heart attack in Florida at the age of 67 in October 2009.

The objection to the settlement, the biggest since the December 2008 revelation of Madoff's decades-long fraud, was made on behalf of a putative class of investors whose claims are not recognized by the trustee, lawyer Irving Picard.

Picard has put the amount of principal that investors lost at about $20 billion. So far, Picard and his team of lawyers have won settlements of about $10 billion.

Madoff, 72, is serving a 150-year prison sentence after pleading guilty in March 2009 to orchestrating a Ponzi scheme. A Ponzi scheme is one in which no actual trades in securities take place and early investors are paid with the money of new clients.

The cases are Securities Investor Protection Corp v. Bernard L. Madoff Investment Securities LLC, U.S. Bankruptcy Court for the Southern District of New York No. 08-1789 and Picard v. Jeffry M. Picower No. 09-01197.

(Reporting by Grant McCool; editing by Andre Grenon)