Irving Picard readies $584 payout to Bernie Madoff victims

The trustee charged with liquidating Bernard Madoff’s fraudulent investment operation is ready to pay out nearly $600 million to the imprisoned financier’s victims early next year, officials said Monday.

Trustee Irving Picard said in a statement that he is seeking bankruptcy court approval to pay customers about $584 million in what would be the ninth disbursement of funds recovered after Madoff’s company went bust in December 2008.

The payments would be made to holders of some 2,625 approved claims who were defrauded by a Ponzi scheme run by Madoff that essentially stole more than $17 billion from them over a period of years. Once the planned disbursement is made, the victims would have recovered about 63-percent of their original investments.

The disbursements would go to so-called “direct” investors — those who had accounts directly with Bernard Madoff Investment Securities LLC. “Indirect” investors, those who put money into feeder funds they thought were investments to Madoff, will also benefit, officials said. Those investors will get a portion of any proceeds paid back, said David Sheehan, who is counsel to Picard at the law firm of BakerHostetler. A separate customer fund being administered by the federal government is aimed at giving payouts to indirect investors.

So far, Picard has disbursed $10.15 billion to Madoff’s victims. Picard recovered the money after a worldwide search for funds. Madoff, now 79, was arrested on Dec. 11, 2008 and a few months later plead guilty to the largest Ponzi swindle in Wall Street history. In June 2009, Madoff was sentenced to 150 years in prison and is serving his time at Butner Federal Correction Institution in North Carolina.

“Even now, nearly a decade since the unmasking of the Madoff fraud, we are still finding and recovering millions of dollars for the victims of this complex global deception,” said Picard, adding that “additional distributions are still on the horizon and we remain committed to restoring as much of the stolen money as possible.”

All of the monies recovered so far by Picard, with the assistance of the non-profit Securities Investor Protection Corporation, amount to about 73-percent of the original customer investments, he said. The money paid back so far has fully satisfied 1,386 accounts, leaving 879 accounts partially satisfied and entitled to more in future distributions.

By Anthony M. DeStefano

tony.destefano@newsday.comtonynewsday

Anthony M. DeStefano has been a reporter for Newsday since 1986 and covers law enforcement, criminal justice and legal affairs from its New York City offices.