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Bernie Madoff Ponzi Victims Will Recover $7.2 Billion

Written By Rana G on Sunday, December 19, 2010 | 7:04 PM


In a surprising development in the Bernie Madoff investment fraud case, Barbara Picower, the widow of Madoff investor Jeffry Picower, agreed to voluntarily return all the
investment income received from Madoff over a 35-year period. The recovery is valued at $7.2 billion, which accounts for almost a third of the total losses investors incurred at Madoff's hands.

Madoff's ponzi scheme lasted for decades as the investment adviser paid out some investors with the deposits of others. According to trial documents, Madoff lived high on the hog on his investors' money. He was arrested and pleaded guilty to the largest investment fraud in history in March 2009 (What is a Ponzi Scheme and How to Avoid One). Madoff is serving a 150-year sentence for the fraud in a North Carolina prison.

A trustee administering the investment pool is accepting claims from investors who lost money under Madoff's ponzi scheme, including celebrities, charities and pension funds. Madoff's personal assets have been seized and, along with the Picower recovery, cover approximately half of the money lost by investors.

Madoff's family is also being sued directly by investors and by the trustee and, on Dec. 11, the second anniversary of his father's arrest, Mark Madoff committed suicide.

The Madoff ponzi scheme also led to one of the biggest investigations into the Securities and Exchange Commission in history. The SEC investigated Bernie Madoff and his investment firm after receiving several complaints from investors. According to the Inspector General, although the SEC found several inconsistencies and indications of fraud, they were never followed up on. The case has led to several reforms in the way the SEC handles investor complaints.
Preet Bharara, in Manhattan's U.S. Attorney's office, made the announcement of the Picower voluntary forfeiture today, praising the negotiated settlement with Barbara Picower. Bharara works frequently
with the FBI and the SEC on insider trading and other investor fraud cases in the state of New York. Bharara called the forfeiture the largest in United States history.

Barbara Picower also delivered a prepared statement today saying that turning the ill-gotten returns over was what her husband would have wanted.
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