Investors in Bernie Madoff’s $17.5bn Ponzi scheme got some good Christmas news yesterday as trustees for the recovery fund announced another distribution of recovered capital, worth approximately $322m (£208m).
The funds will be distributed to investors following confirmation at a New York bankruptcy court, with the hearing scheduled to take place on 15 January.
The payout is the fifth and smallest so far, despite more than $10bn in funds having been recovered. Much of the surplus is currently in legal limbo pending more litigation by victims over how liquidation proceeds have been settled and the amounts they have been offered.
The average payout for this fifth instalment will be $299,900, with the highest individual payment being more than $60m and the smallest $400. The new settlement takes the total amount of money recovered and distributed to investors to $7.22bn.
Irving Picard, the trustee appointed by the Securities Exchange Commission to oversee the pursuit, liquidation and distribution of Madoff assets, said: “The fifth distribution is yet another important milestone for the Madoff Recovery Institute… My legal teams have negotiated significant recovery agreements with several defendants.”
In November, Mr Picard confirmed agreements had been met with a handful of investors who profited from Madoff’s scheme, most notably Cayman Islands-based investment funds. The largest single settlement related to this payout was $500m received from two funds, Primeo and Herald, both of which are in liquidation.
More than half of the 2,213 accounts affected by the scheme have now been settled in full. The amount already paid out by Mr Picard is way beyond the expectations of most observers when he was appointed – the total represents almost 60 per cent of the funds lost in the fraud.
Bernard L Madoff Securities collapsed in 2008 after being revealed as a “Ponzi” scheme, in which returns to existing investors are paid from new investors’ capital rather than profits. The fund claimed that the returns were a result of trading profits.
Madoff, who is serving 150 years in a North Carolina jail, founded the company in 1960 and duped many thousands of investors over 48 years. Several members of his family worked for him – one son, Mark, committed suicide in 2010 while Andrew died of cancer in September.Reuse content