A Manhattan judge Tuesday freed up to $2.3 billion recovered in the Bernie Madoff Ponzi scheme to pay hundreds of his victims checks worth from about $22,000 to nearly $64 million by the end of September.
Judge Burton Lifland signed an order that allows trustee Irving Picard to begin paying off the claims of about 1,214 investors who lost their savings in Madoff's fraud. Picard, who is handling the bankruptcy of Madoff's old company, has approved about 2,300 claims out of more than 16,000 filed.
Madoff's fraud lost investors about $17.4 billion by the time he was arrested in December 2008. Madoff, 73, is spending the rest of his life in federal prison.
Picard has actually recovered well over $7 billion, but because of appeals and challenges to his actions, the trustee is holding back all but about $280 million as a reserve. As a result, investors with approved claims will for now be getting only about 4 percent of their losses, a figure that could rise in coming months.
"This is not an ideal world, so unfortunately, there has to be a significant holdback," Lifland said in court of the need for Picard to keep billions in reserve.
"The court's approval of the initial allocation and distribution enables the trustee to move forward with payments to [Madoff] customers with allowed claims," said Amanda Remus, a spokeswoman for Picard. "Our intention is to issue payments by the end of the third quarter of 2011, after completing a thorough accounting, reviewing all approved claims and processing the payments."
David Sheehan, counsel for Picard, said the average check will be about $222,551, with the largest being $62.8 million and smallest coming in at $21,339. Some 868 accounts have been fully paid with advances of up to $500,000 from the Securities Investor Protection Corporation, said Sheehan.