Madoff insider's estate settles $7.2 billion claim

By @ibtimes on

The estate of Madoff insider Jeffry Picower settled civil claims of $7.2 billion on Friday, significantly boosting the amount available to repay 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.

Documents filed in U.S. District Court in New York said Picower's wife, Barbara, agreed to forfeit $7.2 billion of net withdrawals, considered proceeds of the Madoff fraud. The settlement is the largest yet for the trustee searching the globe for proceeds of the 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.

The FBI and U.S. prosecutors had also investigated whether or not Picower knew he was profiting from Madoff's investment scheme, which is considered the biggest financial fraud in history.

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

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 trustee's team of lawyers have 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)

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