Madoff Trustee Makes It Halfway With $7.2 Billion Deal
Irving Picard, the trustee liquidating the failed investment firm of Bernard Madoff. Photographer: Daniel Acker/Bloomberg
Dec. 17 (Bloomberg) -- The estate of Jeffry Picower, an investor with imprisoned con man Bernard Madoff, has reportedly agreed to pay $7.2 billion to recover money he made from the fraud. Picower’s estate will pay $5 billion to Irving Picard, the trustee overseeing the liquidation of Madoff’s firm, and $2.2 billion to U.S. authorities, according to two people familiar with the matter. Bloomberg's Jon Erlichman reports. (Source: Bloomberg)
Irving Picard, the trustee liquidating Bernard L. Madoff’s failed investment firm, will collect $7.2 billion from the estate of philanthropist Jeffry Picower, bringing to $9.8 billion the amount collected for victims.
Investors in Madoff’s Ponzi scheme, the largest in U.S. history, claimed losses of principal totaling $20 billion and paper losses -- including fake profits -- of about $65 billion. Picard has filed lawsuits over the past two years seeking the “clawback” of more than $50 billion.
Picower’s estate will pay $5 billion to Picard and $2.2 billion to U.S. authorities to resolve claims that he profited from the fraud, according to separate statements today from Picard and the office of Manhattan U.S. Attorney Preet Bharara. The settlement, for the amount Picard sought, would be the biggest so far. He had already recovered $2.5 billion.
“They’re getting the whole thing?” said Madoff investor Timothy Murray, 58, of Minneapolis. “Wow. That’s great. That’s wonderful. I’m beginning to think that there’s a real possibility that Picard could pay all the claims he approved and there could be extra money.”
Picard, a court-appointed trustee, approved 2,232 investor claims for recovery as of Sept. 30 and rejected 11,171 on the ground that the claimants took more from their accounts than they invested. Murray said he and his family invested $12 million over two decades and are among those rejected.
Heart Attack, Drowning
Picower, 67, a billionaire, had a heart attack and drowned in his swimming pool in Palm Beach, Florida, in October 2009.
Picower, his family and related entities, beginning in the 1970s, deposited $619.4 million with Madoff and took out $7.8 billion, according to a forfeiture complaint filed today by Bharara as part of the settlement.
Picard has filed hundreds of suits against banks, feeder funds, investors and others alleged to have profited from Madoff’s decades-long fraud. The $7.2 billion represents the entire amount that Picard sought in a May 2009 lawsuit claiming Picower should have known Madoff ran a Ponzi scheme.
In his will, dated 10 days before he died, Picower left $200 million in cash to his wife. He also left $25 million to his daughter, Gabrielle Picower, and about $15 million to 20 other beneficiaries. The unspecified remainder is to go to charity.
William Zabel, an attorney for Picower’s widow, Barbara, didn’t return calls seeking comment.
Bank Medici
This month, Picard sued Bank Medici AG and its founder, Sonja Kohn, as well as Bank Austria, UniCredit SpA and dozens of other parties. He is seeking $19.6 billion from them, which might triple to $58.8 billion under the Racketeer Influenced and Corrupt Organizations Act.
In a settlement announced Dec. 8, the family of Boston philanthropist Carl Shapiro agreed to pay back $625 million in Madoff profits. Under the agreement, the Shapiros agreed to pay $550 million to Picard for distribution to Madoff creditors. The family also agreed to pay $75 million to the Justice Department, which named Picard as special master to distribute the funds.
The deadline for Picard to file claims expired Dec. 11, the two-year anniversary of when Madoff confessed the biggest Ponzi scheme in U.S. history. He is serving a 150-year prison term.
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