Madoff Victims Set To Bank $7.2bn Windfall

6:20am UK, Saturday December 18, 2010

Ian Collier, Sky News Online

The estate of a billionaire investor in Bernard Madoff's Ponzi scheme has agreed to forfeit $7.2bn to victims of the fraud.

Madoff is serving a 150-year prison sentence

The money from Jeffry Picower's estate "is the largest forfeiture recovery in US history" and takes the total recovered to $9.8bn.

Federal prosecutor Preet Bharara said: "The entire $7.2bn will be distributed to the victims. We expect to distribute the money in the new year."

Court-appointed trustee Irving Picard is clawing back money from Madoff family members and investors who profited from the decades-long pyramid scheme - the biggest in Wall Street history.

Mr Picower, who made billions as one of Madoff's top investors, died in October 2009 of a heart attack in his Florida swimming pool.

This agreement puts the best interests of the Madoff customers first, is fair and equitable, and avoids time-consuming litigation.

David Sheehan, a lawyer with the trustee

His widow, Barbara Picower, said: "It is a great tragedy that my husband Jeffry's sudden and untimely death last fall prevented him from seeing the timely and full restoration of his reputation for honesty, integrity and professional achievement.

"He was committed to overcoming the devastation resulting from Bernard Madoff's fraud by reaching a fair and generous settlement with Mr Picard."

Madoff, serving a 150-year prison sentence, was arrested in December 2008 and pleaded guilty to running a Ponzi scheme that Mr Picard has estimated lost some $20bn dollars of investors' money.

"The importance of this settlement cannot be overstated, as it shows significant progress in our efforts to assemble the largest customer fund possible," Mr Picard said.

An auction of Madoff property raised $2.6bn

"This agreement puts the best interests of the Madoff customers first, is fair and equitable, and avoids time-consuming litigation," David Sheehan, a lawyer with the trustee, said.

Picower died without having been charged with complicity in Madoff's scheme. But he had an extraordinarily close relationship with Madoff from at least the 1970s, officials say.

During that relationship, Picower withdrew just over $7.2bn in profits from the Madoff investment operation.

The settlement requires his widow to give up that fortune, but "contains no finding or admission of fault against Picower", the prosecutor's office said.

Previously $2.6bn had been recouped partly through confiscation of Madoff family properties and an auction of personal belongings.

Madoff's family, which spent decades living in luxury as a result of Bernard Madoff's vast theft, was struck by tragedy this month when one of his two sons committed suicide.

Mark Madoff, 46, hanged himself in his Manhattan apartment on the second anniversary of his father's arrest.