Madoff victims win $7.2 billion from Picower estate

By Aaron Smith, staff writer


NEW YORK (CNNMoney) -- It's a landmark day for victims of Bernard Madoff's Ponzi scheme. A bankruptcy court judge approved the trustee's request to dole out billions of dollars in seized assets to the victims.

Judge Burton Lifland ruled on Thursday that Irving Picard, the court-appointed trustee in the recovery of assets stolen by Madoff, should free up cash to compensate victims.

This applies specifically to the $7.2 billion estate of Jeffry Picower, a philanthropist and Madoff associate who died of a heart attack in 2009. On Dec. 17, 2010, Picard reached a deal with Picower's widow Barbara, who agreed to turn over the money her husband received from the Madoff scheme so it could be returned to victims. This is the largest forfeiture in U.S. history.

"It was totally appropriate and correct and very beneficial to the victims," Picard told CNNMoney.

Picard claimed in court filings that Picower was a key beneficiary of Madoff's scheme. The trustee said Picower had withdrawn $7.8 billion from Madoff's firm since the 1970s, even though he only invested $619 million. Picower "knew or should have known that [he] was profiting from fraud, because of the highly implausible high rates of return" on his accounts, the trustee said.

Barbara Picower has denied that her late husband knew anything about the scheme.

Many victims have received compensation through the Securities Investor Protection Corp., which insured $783 million of the damages to investors. But with the court's ruling, this is the first time that victims will receive money from seized assets.

The trustee has verified nearly $6 billion worth of claims from 2,372 victims. More than 10,000 claims have been denied, in some cases because the victims withdrew more from Madoff than they invested, and in other cases because they invested through feeder funds.

The trustee has sued at least 400 investors, who withdrew more money from Madoff than they invested.

Madoff pleaded guilty in March 2009 to orchestrating the most massive Ponzi scheme in history. He used his Manhattan investment firm as a front for the pyramid-style scam.

He stole money from investors while claiming to be investing it in the markets. He would provide the stolen money to his more mature investors, like Picower, while fraudulently claiming that the returns were legitimate.

Madoff is serving a 150-year sentence in a medium security federal prison in Butner, N.C. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 27,171.90 17.70 0.07%
Nasdaq 8,204.14 57.65 0.71%
S&P 500 2,985.03 8.42 0.28%
Treasuries 2.04 -0.01 -0.24%
Data as of 11:28pm ET
Company Price Change % Change
Micron Technology In... 47.19 1.67 3.67%
General Electric Co 10.21 0.17 1.69%
Advanced Micro Devic... 32.85 0.34 1.05%
Ford Motor Co 10.02 -0.18 -1.76%
AT&T Inc 32.13 -0.66 -2.01%
Data as of 4:15pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.