A federal judge upheld a $5 billion settlement between the trustee liquidating Bernard Madoff’s former firm and the estate of Jeffry Picower, one of the con man’s biggest individual investors.
U.S. District Judge John Koeltl, considering an appeal from bankruptcy court decisions, affirmed the settlement and ruled that the bankruptcy judge was right to bar suits against the Picower estate.
“The Bankruptcy Court was correct in approving the settlement with the Picower defendants that was extraordinarily beneficial to the BLMIS estate,” Koeltl said in an opinion today, referring to Bernard L. Madoff Investment Securities LLC.
The ruling is a loss for Adele Fox and Susanne Marshall, two investors in Madoff’s Ponzi scheme who sued the Picower estate and a group of related defendants in federal court in Florida. Fox and Marshall, who sought to sue on behalf of a class of other Madoff investors, claimed Picower was a co-conspirator in the fraud.
Nolan Shanahan, a laywer for Fox, declined to say whether his client will appeal today’s ruling. Helen Chaitman, who represents Marshall, said she will appeal.
Picower, who began investing with Madoff in the late 1970s, had a heart attack and drowned in his swimming pool in Palm Beach, Florida, in 2009 at age 67. Madoff, 74, pleaded guilty to running the biggest Ponzi scheme in history and is serving a 150-year sentence in federal prison in North Carolina.
In December 2010, Picower’s widow, Barbara Picower, agreed to a settlement in which the estate would pay $5 billion to be returned to Madoff investors through the Madoff bankruptcy estate. The agreement called for an additional $2.2 billion to be forfeited to the U.S. government.
The case is In Re Bernard L. Madoff, 10-cv-4652, U.S. District Court, Southern District of New York (Manhattan).