Justice Department’s Madoff Fund Inches Closer to Victim Payoutsby
Fund administrator set to act on 25,000 claims for $4 billion
Victims haven’t been told when checks to start flowing
The government fund to repay Bernard Madoff’s fraud victims is preparing to recommend approval of more than 25,000 claims covering almost $4 billion in losses, but the Justice Department didn’t say how much it would pay or when checks might go out.
Thousands of victims who lost $17.5 billion in principal have been trying to tap the $4 billion fund since it was set up three years ago, though no payments have been made. By comparison, the trustee unwinding Madoff’s fraud and repaying victims in bankruptcy court has paid out about $9 billion since Madoff’s arrest in December 2008. The two funds are administered separately under different U.S. laws.
“I would love to see every eligible Madoff victim receive a cash recovery,” Richard Breeden, the administrator of the Justice Department fund, said in an update on his website. “However, we can’t complete the process and actually pay claims until we resolve the incomplete claims one way or the other.”
Breeden said the fund is set to recommend denial of 7,540 claims covering about $25.7 billion in losses that don’t satisfy the requirements of the plan. There are also about 30,750 incomplete or deficient claims covering about $27 billion in losses from Madoff’s Ponzi scheme, he said. Those amounts include fake profits that Madoff reported to investors for years, as well as the cash they invested with him.
“We don’t yet know how many of these claims will be finalized successfully, and how many will eventually be denied due to incomplete documentation,” he said on the website. “The initial claim review process is now substantially complete.”
Breeden has been analyzing 64,000 claims from around the world, and didn’t begin the process until after his appointment in December 2012. His review involves many more claimants than those eligible for payments by the bankruptcy trustee, Irving Picard, who has a team of 200 lawyers. They are also using different methods, with Breeden accepting claims from third-party investors who were turned away by Picard.
Breeden didn’t immediately return a call Wednesday seeking comment.