Bernard Madoff’s victims are set to get $349 million in a fresh round of payments by the trustee unwinding his firm, a day after five of its ex-employees were convicted of aiding the con man’s $17.5 billion Ponzi scheme.
The payments, which need approval in U.S. Bankruptcy Court in New York, will bring total distributions to victims to nearly $6 billion, or 34 percent of the principal lost in Madoff’s fraud, Irving Picard, the trustee for Bernard L. Madoff Investment Securities LLC, said in a statement today. It’s the fourth such distribution since Madoff’s 2008 arrest triggered the liquidation.
“Our commitment is simple: to recover the maximum amount of funds stolen in the Madoff Ponzi scheme and to distribute these funds to their rightful owners as quickly as possible,” Picard, who recovered the money through lawsuits and settlements with alleged beneficiaries of the fraud, said in the statement. A hearing on the distribution was scheduled for April 17, Picard said.
A federal jury in Manhattan yesterday found five former Madoff employees guilty of aiding his fraud for decades by creating fake trading documents and account statements. They were accused of targeting thousands of retirees, wealthy investors, charities and even family and friends, and getting rich in the process.
Madoff, 75, pleaded guilty to fraud in 2009 and is serving a 150-year sentence at a federal prison in North Carolina. At least seven other people have pleaded guilty to roles in the scheme, including his brother Peter Madoff, who is serving a 10-year term.
The trustee said he hopes to fully reimburse victims, including by pursuing claims totaling about $3.5 billion from UBS AG (UBSN), HSBC Holdings Plc (HSBA) and UniCredit SpA (UCG), which the trustee has accused of benefiting from Madoff’s fraud. The banks have denied the allegations.
Two months ago, Picard reached a $325 million accord with JPMorgan Chase & Co. (JPM), which he accused of negligence for failing to recognize the fraud and profiting from Madoff’s business in the process. With that accord, Picard’s recoveries for victims reached about $10 billion, or 59 percent of the principal lost by thousands of customers of Madoff’s investment advisory business.
JPMorgan also agreed to pay $218 million more to resolve two related class actions, or group lawsuits, filed with Picard’s assistance after an appeals court barred him from bringing common-law claims against the New York-based bank.
Billions of dollars earmarked to be paid to victims have been set aside pending the outcome of litigation among some victims who want a greater share of the recovered funds, according to Picard’s statement.
An interim distribution in 2011 amounted to $516 million. In 2012, another $3.75 billion was sent out, followed by $523 million in 2013. Securities Investor Protection Corp., an industry-backed entity overseeing the liquidation and paying Picard’s fees, also paid advances to victims totaling about $811 million, according to the trustee’s statement.
Claims linked to more than 1,100 accounts with Madoff’s firm will be fully repaid after the latest distribution, representing almost half of the allowed claims in the case, Picard said.
The liquidation is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-bk-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Erik Larson in New York at email@example.com
To contact the editors responsible for this story: Andrew Dunn at firstname.lastname@example.org Stephen Farr