The estate of Madoff insider Jeffry Picower agreed to give back $7.2 billion to settle civil claims on Friday, significantly boosting the amount available to repay thousands of investors swindled in the epic fraud.
Picower, a longtime friend of Bernard Madoff, died of a heart attack in Florida in October 2009 -- five months after court-appointed trustee Irving Picard claimed his rates of returns from his investments were implausibly high.
This is the largest forfeiture recovery in U.S. history, Manhattan U.S. Attorney Preet Bharara said at a press conference to announce the settlement by Picower's wife, Barbara.
He said she has agreed to forfeit $7.2 billion ... a figure that represents every last dollar of the Picowers' profit from Bernie Madoff's fraud.
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, which is considered the biggest financial fraud in history.
U.S. prosecutors estimated the fraud took in about $65 billion. The trustee has put the amount of money investors lost at about $20 billion.
I am 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 U.S. Attorney has charged him with any illegal conduct, Barbara Picower said in a statement through her lawyer. I believe that the Madoff Ponzi scheme was deplorable, and 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.
Picard had secured about $2.6 billion in settlements and asset sales by the two-year anniversary of Madoff's December 11, 2008, arrest and collapse of Bernard L. Madoff Investment Securities LLC.
Friday's settlement brings the amount close to $10 billion that should be distributed to investors under the auspices of the U.S. Department of Justice and the Securities Investor Protection Corporation, an agency established by Congress to help investors of failed brokerages.
The importance of this settlement cannot be overstated, as it shows significant progress in our efforts to assemble the largest customer fund possible, Picard said in a statement.
The trustee's team of lawyers has sued hundreds of individuals, Madoff relatives, banks and funds around the world for a total of $50 billion, asserting they benefited improperly from the massive Ponzi scheme. A Ponzi scheme is one in which early investors are paid with the money of new clients.
The case is Picard v. Jeffry M. Picower, U.S. Bankruptcy Court for the Southern District of New York No. 09-01197
(Additional reporting by Basil Katz, editing by Gerald E. McCormick and Lisa Von Ahn)