TODAY'S PAPER
83° Good Evening
83° Good Evening
NewsNew York

$280M settlement reached with Ezra Merkin in Madoff case

Nearly $13 billion, or 74 percent of the estimated $17.5 billion invested in Bernard Madoff’s Ponzi scheme, has been recovered, one official said.

Bernie Madoff exits federal court March 10, 2009

Bernie Madoff exits federal court March 10, 2009 in New York City. Photo Credit: Getty Images / Mario Tama

The court-appointed trustee handling the collapse of Bernard Madoff’s 2008 Ponzi scheme has recovered nearly 75 percent of the money lost in Wall Street’s largest fraud, officials said.

Irving Picard, the trustee handling the bankruptcy of Madoff’s investment scam, revealed the news in a release Wednesday, which also announced the settlement of sometimes acrimonious litigation with financier and philanthropist Ezra Merkin and some of his companies, which had funneled money to Madoff.

Under the terms of the settlement, which was reached with Merkin as well as his Ascot Partners and Gabriel Capital Corp, Picard said he will recover $280 million. The money will be used to pay back Madoff victims.

So far, Picard said he has recovered $12.98 billion, or 74 percent, of the estimated $17.5 billion invested in Bernard L. Madoff Investment Securities LLC. If approved by a bankruptcy judge, the funds from the Merkin settlement will be added to the pot.

“Seventy-five percent is a fabulous amount in any fraud case. Usually you don’t recover a nickel,” said Jerome Reisman, a Garden City bankruptcy attorney. Referring to Picard, Reisman said, “He has done a phenomenal job.”

When Madoff’s company collapsed in December 2008, his books showed customer accounts worth over $54 billion. But investigators quickly learned that the amount was fictitious because Madoff made no stock trades and instead used the money from new investors to pay off earlier investors.

After nearly a decade of lawsuits, Picard has paid back about $11.59 billion to customers with allowed claims. The payments include $884.92 million in funds advanced to victims by the nonprofit Securities Investor Protection Corporation.

Under the new settlement, Merkin’s Ascot Partners will be allowed to put in its own claim for $280 million, which would be used to help “indirect” customers — people who deposited funds with Ascot — who then lost money through Madoff’s scam, Picard said.

“Mr. Merkin is pleased that the Receiver has settled the Trustee’s lawsuit on terms that will result in a significant recovery for Ascot’s investors,” Merkin attorney Andrew Levander said in a statement.

Madoff pleaded guilty to the fraud in 2009. He was sentenced to 150 years in federal prison.

Referring to the settlement announced Wednesday, SIPC President Stephen Harbeck said, “The agreement is another significant win for all victims of Bernard Madoff’s Ponzi scheme, but in particular, the indirect investors in Madoff feeder funds.”

More news