The checks won’t come in time for the holidays but the trustee in the Bernard Madoff Ponzi scheme case said Wednesday he will ask a federal bankruptcy judge to approve $252 million in reimbursements for victims of the convicted Wall Street con artist.
If the judge approves the request by trustee Irving Picard, Madoff customers with approved claims would have recovered nearly $10 billion of the $17.5 billion lost in the scheme. The planned disbursement is the eighth in the case.
Madoff’s investment empire collapsed in December 2008 when it was revealed that his customers, instead of having accounts worth in excess of $60 billion, had lost their entire initial investments of more than $17 billion. Madoff never made any promised stock market investments but simply paid out earlier customers with money deposited by newer investors, the classic Ponzi scheme tactic. He was arrested, quickly plead guilty to fraud charges and was sentenced in June 2009 to 150 years in federal prison.
“For those who find the annual December anniversary of Madoff’s arrest difficult, we hope the recoveries that have resulted in eight distributions so far have been helpful,” said Picard in a statement.
Picard’s request for the reimbursement will be the subject of a hearing on Jan. 12, 2017 in Manhattan federal bankruptcy court. If approved, customer recoveries would amount to 60 percent of the losses.
Picard, a private bankruptcy attorney at the firm of Baker & Hostetler, was appointed trustee under the Securities Investor Protection Act on Dec. 15, 2008. His staff at the law firm set out on a global search to recover customer funds, mostly through clawing back illusory investment profits paid to Madoff customers.
So far, Picard has recovered $11.5 billion. Picard and his firm are paid by the nonprofit Securities Investor Protection Corporation and not from those customer funds.
To date, Picard has allowed 2,608 claims related to 2,255 Madoff accounts. Taking into account the seven earlier disbursements and advances to customers by the nonprofit corporation, some 1,333 account holders of Madoff have recovered their initial investments in full. The remaining 922 accounts will have their outstanding balances repaid with future allocations, Picard said.
The claims approved by Picard only cover direct investors with Madoff. Thousands of other investors whose money was placed with Madoff through hedge funds have to seek recovery through the funds or from a special fund administered by a special federal master through the Department of Justice.