A big step was taken Friday in the recovery of money lost as part of Bernard Madoff’s illegal investment scheme.
Irving Picard, the trustee liquidating Mr. Madoff’s investment firm, announced that he will collect $7.2 billion from the estate of philanthropist Jeffry Picower, one of the global Ponzi scheme's largest beneficiaries. This brings to $9.8 billion the amount collected so far on behalf of Madoff’s victims – nearly half the $20 billion investors lost as part of the fraudulent scheme.
In the largest forfeiture in US history, Barbara Picower, the widow of the billionaire philanthropist, agreed to turn over the $7.2 billion. Mr. Picower died at the couple’s home in Palm Beach, Fla., last year.
Mrs. Picower said in a statement that "this settlement honors what Jeffry would have wanted, which is to return this money so that it can go directly to the victims of Madoff."
At a press conference at his New York office Friday, Preet Bharara, US attorney for the Southern District of New York, said, "I commend Barbara Picower for agreeing to return this staggering sum, which was other people's money."
"The entire $7.2 billion will be distributed to the victims,” he said. “We expect to distribute the money in the new year."
Authorities had been pressuring Mrs. Picower and her husband’s estate. Mr. Picard – the Securities Investor Protection Act (SIPA) official in charge of recovering money for investors victimized by Madoff – had been in negotiations with lawyers for Picower’s estate.
Picower's lawyers claimed he knew nothing about the scheme, but Picard had argued in court papers that he must have known that the returns were "implausibly high" and based on fraud.
In her statement, Mrs. Picower said she was "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 US attorney, has charged him with any illegal act."
The recovery of the $7.2 billion means that those people who lost money via Madoff could now recover about half of their original investment.
Madoff's victims were glad to hear the news.
“They’re getting the whole thing? Wow. That’s great,” Madoff investor Timothy Murray of Minneapolis told Bloomberg News. “I’m beginning to think that there’s a real possibility that Picard could pay all the claims he approved and there could be extra money.”
Picard is suing hundreds of individuals, banks, and funds around the world that he says benefited improperly from the epic fraud, Reuters reports. He filed hundreds of complaints in US Bankruptcy Court in New York in the weeks before the statute of limitations expired on the two-year anniversary of Madoff's arrest, which was Dec. 11, 2008.
Among these are Austrian banker Sonja Kohn and the bank she founded, Bank Medici; Madoff's primary banker for 20 years, JPMorgan Chase; Swiss bank UBS; and Harley International Ltd., a Cayman Islands-based fund.
In separate lawsuits, Picard sued Madoff's wife, his brother, two sons, and a niece for a total of $244 million. Madoff’s older son, Mark, committed suicide in his New York apartment on the second anniversary of his father’s arrest.
In addition to the money recovered from those who benefited from Madoff’s illegal investment dealings, authorities have been auctioning off thousands of belongings from his New York City penthouse – everything from a 10.5-carat diamond engagement ring that belonged to Madoff's wife, Ruth, to vintage Rolex watches and a 1917 Steinway grand piano.
The Ponzi Scheme Investor Protection Act has been introduced in Congress. It would amend the Securities Investor Protection Act of 1970 to provide insurance coverage for certain indirect investors caught in Ponzi schemes.
Madoff is serving a 150-year prison sentence.