Victims of Bernard Madoff's massive Ponzi scheme are closer to recovering 50 percent of their losses based on a payment announced Tuesday by the bankruptcy trustee handling the case.
Trustee Irving Picard said that he plans to pay out an additional $349 million to investors with approved claims from the $9.8 billion he has recovered in his five-year worldwide search for customer funds.
The payment is Picard's fourth to Madoff clients. Assuming it is approved by the federal bankruptcy court in Manhattan, the payment raises the amount investors have recovered of their original investment to just over 46 cents on the dollar. The new payment would lift the total paid to victims so far to nearly $6 billion when advances paid by the Securities Investor Protection Corp. are included.
"While we are pleased to announce the fourth distribution; we are looking ahead to additional distributions," said Picard counsel David Sheehan.
In the three previous payments, Picard has paid a total of nearly $4.8 billion to customers. Under court rulings, Picard is reimbursing customers who were net losers -- those who lost more money than they put into Madoff's investment company. Those investors with approved claims total 2,517. If Picard's latest planned payment is approved, 1,129 of those claims will be paid in full.
Monday's conviction of five former Madoff employees will lead to a seizure of millions of dollars of their assets. But that money will go to a special federal master handling a different pot of cash, not to Picard.
The size of the customer reimbursements by Picard is much greater than many expected when the Madoff scandal first broke in December 2008. Then, some experts believed the cash in Madoff's coffers would only fund a recovery of 2 cents on the dollar.