Victims of Bernard Madoff will find good news in their mailboxes in the days ahead, after checks totaling nearly $2.5 billion were posted late Wednesday as part of the recovery of cash in Wall Street's largest Ponzi scheme.
The money represents about 33 percent of the original investment lost by 1,230 customers of Madoff who have been allowed claims to recover money they gave him, said trustee Irving Picard, who is handling the worldwide search for customer funds. About $17.3 billion was lost when Madoff's house of cards collapsed in December 2008.
Average payments in the latest round of checks amounted to just more than $2 million, with the smallest check being a little less than $2,000 and the largest $526.8 million, Picard said in a statement Thursday.
Of the 1,230 claims, 182 are now fully satisfied, Picard noted.
"Clients are elated and have been waiting for this day for a long time," said Jerry Reisman, a Garden City attorney who represents several Madoff victims. "This is a meaningful payment, it is going to help people's lives and restore some normalcy to people, most of whom are in their 80s and need this money for normal living."
Under the settlement of a contentious federal clawback lawsuit filed by Picard, Fred and Jeff Wilpon, Saul Katz and other Sterling partners agreed in March to pay back the trustee $162 million. Picard said the money was fictitious profits received from Madoff. In return, the Sterling partners were allowed to file a claim for $178 million in Madoff losses.
Under the settlement, the Sterling partners will have about $60 million of the latest round of Picard payments applied to the $162 million they owe. The Wilpons and their partners won't be clear of the debt and entitled to any money until Picard recovers about 91 percent of the total customer losses; he is at 53 percent. If the debt isn't paid in three years, then the Sterling partners are liable for the remainder. A spokesman for Sterling declined to comment Thursday night.
Picard's big payout, when combined with an earlier distribution of more than $325 million, means customers with allowed claims have recovered on average 38.1 percent of their original investments for a total of $3.6 billion. That amount includes advances from the Securities Investor Protection Corp. In the early days of the Madoff scandal, some financial experts estimated that customers would get back only 2 percent or 3 percent.