Madoff Trustee Makes It Halfway With $7.2 Billion Deal
Madoff Trustee Irving Picard
Ramin Talaie/Bloomberg
Irving Picard, the trustee liquidating the Madoff firm.
Irving Picard, the trustee liquidating the Madoff firm. Photographer: Ramin Talaie/Bloomberg
Dec. 17 (Bloomberg) -- The estate of Jeffry Picower, an investor with imprisoned con man Bernard Madoff, has reportedly agreed to pay $7.2 billion to recover money he made from the fraud. Picower’s estate will pay $5 billion to Irving Picard, the trustee overseeing the liquidation of Madoff’s firm, and $2.2 billion to U.S. authorities, according to two people familiar with the matter. Bloomberg's Jon Erlichman reports. (Source: Bloomberg)
The estate of billionaire Jeffry Picower, an investor in Bernard L. Madoff’s Ponzi scheme, agreed to forfeit $7.2 billion to victims of the fraud, bringing the amount collected by authorities to $9.8 billion.
Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, sued Picower in May 2009, claiming he withdrew $7.2 billion more than he invested. Picower died in October 2009 at age 67. Picard and U.S. Attorney Preet Bharara, who is probing the Madoff fraud, announced the settlement today.
The settlement is “the most substantial step to date in the effort to make the Madoff victims whole,” Bharara said today at a news conference in New York.
Picard said that investors in Madoff’s Ponzi scheme, the largest in U.S. history, lost $20 billion in principal. Account statements at the time of Madoff’s arrest in December 2008 showed total balances of $65 billion. Picard, who filed hundreds of lawsuits seeking $50 billion, has now recovered $9.8 billion.
Picower began investing with Madoff in the late 1970s, controlling dozens of accounts. He had a heart attack and drowned in his swimming pool in Palm Beach, Florida. The settlement “honors what Jeffry would have wanted,” said his widow, Barbara.
‘Deeply Saddened’
“I am absolutely confident that my husband Jeffry was in no way complicit in Madoff’s fraud,” she said in the statement by her lawyer, William Zabel of Schulte Roth & Zabel LLP. “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, a court-appointed trustee, approved 2,232 investor claims for recovery as of Sept. 30 and rejected 11,171 on the ground that the claimants took more from their accounts than they invested. The Picower accord, which needs a bankruptcy judge’s approval, would recover all of the money that he sought.
“They’re getting the whole thing?” said Madoff investor Timothy Murray, 58, of Minneapolis. “Wow. That’s great. That’s wonderful. 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.”
Murray said he and his family invested $12 million over two decades and are among those rejected.
Admitted No Wrongdoing
Picower, his family and related entities, beginning in the 1970s, deposited $619.4 million with Madoff and took out $7.8 billion, according to a forfeiture complaint filed today by Bharara in federal court in New York. The estate admitted no wrongdoing in settling the case.
In his will, dated 10 days before he died, Picower left $200 million in cash to his wife. He also left $25 million to his daughter, Gabrielle Picower, and about $15 million to 20 other beneficiaries. The unspecified remainder is to go to charity.
“My late husband was a talented and active investor who had extraordinary successes in business investments during his career, which will allow me to make this settlement and return to the philanthropic work that was so important to Jeffry and me,” Barbara Picower said in the statement.
Picard has filed hundreds of suits against banks, feeder funds, investors and others alleged to have profited from Madoff’s decades-long fraud. The $7.2 billion represents the entire amount that Picard sought in a May 2009 lawsuit claiming Picower should have known Madoff ran a Ponzi scheme.
Bank Medici
This month, Picard sued Bank Medici AG and its founder, Sonja Kohn, as well as Bank Austria, UniCredit SpA and dozens of other parties. He is seeking $19.6 billion from them, which might triple to $58.8 billion under the Racketeer Influenced and Corrupt Organizations Act.
In a settlement announced Dec. 8, the family of Boston philanthropist Carl Shapiro agreed to pay back $625 million in Madoff profits. Under the agreement, the Shapiros agreed to pay $550 million to Picard for distribution to Madoff creditors. The family also agreed to pay $75 million to the Justice Department, which named Picard as special master to distribute the funds.
The deadline for Picard to file claims expired Dec. 11, the two-year anniversary of when Madoff confessed the biggest Ponzi scheme in U.S. history. He is serving a 150-year prison term.
To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net.
To contact the editors responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net; David E. Rovella at drovella@bloomberg.net.
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