Trustee seeks $1.5B allocation for Madoff victims
The trustee seeking Bernard Madoff's assets Tuesday sought court approval to allocate an additional $1.5 billion for investors victimized by the infamous Ponzi scheme mastermind.
Irving Picard filed the application two weeks after the Supreme Court declined to hear an appeal by some Madoff victims who had sought inflation or interest adjustments on the money they lost in the decades-long scam.
If Picard's motion is approved after a scheduled Nov. 18 hearing, the trustee will allocate $1.18 billion for immediate distribution to Madoff customers whose loss claims have been allowed. Also scheduled for distribution is $320 million held in reserve for customer claims that are deemed as determined, pending the resolution of litigation and other issues.
In all, the quest to reclaim Madoff-related assets has generated $10.987 billion in recoveries and settlement agreements, according to data compiled by the trustee.
The total represents more than half of the estimated $20 billion lost by charities, average investors, celebrities and others burned by Madoff — and means that victims whose claims are allowed will recover more than half of their losses.
Former customers who invested up to $1,161,000 with Madoff will “be made completely whole," while those who invested more will get back 61 cents on the dollar, Stephen Harbeck, president and CEO of the Securities Investor Protection Corp. told ABC News.
"That is much more than anyone could have expected at the start of the case in 2008," said Harbeck, whose federally-created entity asked Picard to serve as trustee for the recovery effort.
Madoff's scam, one of the largest in history, involved his use of money from new investment clients to pay earlier customers, all without conducting any of the securities trades he promised. The scheme collapsed in December 2008 as investors sought their money back amid the national financial recession.
Madoff pleaded guilty the following year without standing trial, and is serving a 150-year federal prison sentence.
Five former Madoff employees were convicted in March 2014 on charges they joined him in aiding and profiting from the fraud. They are serving prison terms ranging from 2 1/2 years to 10 years. However, federal prosecutors have appealed the sentences on grounds the punishment was too lenient.
A separate recovery effort for Madoff victims launched by the Department of Justice has received claims from 63,737 people in 135 countries. Initial loss claims totaled approximately $77.3 billion, the fund's Special Master Richard Breeden reported in May.