Victims of Bernard Madoff’s Ponzi scheme to get another $372m

Bernie Madoff’s fraud, estimated as high as $64.8bn, went undiscovered for years until he confessed to his sons in December 2008.

Disgraced financier Bernard Madoff is escorted by police and photographed by the media as he departs U.S. Federal Court after a hearing in New York
Disgraced financier Bernard Madoff was sentenced to 150 years in prison, where he died at age 82 in April 2021 [File: Lucas Jackson/Reuters]

Bernard Madoff’s victims will soon receive another $372m to help cover their losses, nearly 14 years after the swindler’s capture for running a massive Ponzi scheme, the United States Department of Justice (DOJ) has said.

The payout from the government’s Madoff Victim Fund will go to 27,219 victims, including more than 400 who had yet to recoup a penny from any source, the DOJ said on Wednesday.

Following the payout, the fund will have distributed about $4.08bn in one or more payments to 40,454 individuals, schools, charities, pension plans and others.

“People getting these cheques are not hedge funds,” Richard Breeden, the former US Securities and Exchange Commission chairman who oversees the government fund, said in an interview. “They’re real people, and it helps families around the world.”

An additional $14.54bn has been recouped for customers of the former Bernard L Madoff Investment Securities LLC by Irving Picard, the trustee liquidating that firm in bankruptcy. That boosts the total payout to about $18.6bn.

Madoff’s fraud, estimated as high as $64.8bn, went undiscovered for many years until he confessed to his sons in December 2008, one day after his firm’s annual Christmas party.

After pleading guilty to 11 criminal counts, Madoff was sentenced to 150 years in prison. He died behind bars at age 82 in April 2021.

Wednesday’s payout is the eighth from the government fund, with victims recouping an average 88.35 percent of their losses.

Another 2,265 victims with valid claims have received nothing from the fund, but many have been made whole by Picard or other sources.

The fund was created in 2013, mainly from settlements between the DOJ and Madoff’s former bank JPMorgan Chase & Co, and between Picard and the estate of former Madoff investor Jeffry Picower.

It originally held $4.05bn, but has grown because the DOJ has recovered additional assets.

Breeden said about $200m remains available, and a ninth payout next year will “almost certainly be the last”.

He also cautioned investors not to let their guard down and chase higher returns, to combat falling stock prices and elevated inflation.

“People start looking for alternatives, and that’s when fraudsters thrive,” he said. “People like Madoff are always happy to throw their lures in the water and offer deals too good to be true.”

Source: Reuters