Two years after the implosion of the largest Ponzi scheme in US history the trustee in charge of Bernard Madoff’s estate is looking to claw back US$50 billion for defrauded investors.
Court-appointed trustee Irving Picard won his greatest victory yet on Friday when the estate of an investor who made a fortune off the fraud agreed to surrender US $7.2 billion, quadrupling the size of the trustee’s fund.
US Federal prosecutors called the settlement “the largest forfeiture recovery in US history” and said the money would be distributed to victims of the 72-year-old jailed fraudster in the coming year.
“The importance of this settlement cannot be overstated, as it shows significant progress in our efforts to assemble the largest customer fund possible,” Picard said in a statement.
However, most of those cheated by the scheme will have to wait much longer, as a flurry of recovery suits filed earlier this month makes its way through the courts.
Madoff, now serving a 150-year prison sentence, was arrested in December 2008 and pleaded guilty in a Manhattan federal court to running a Ponzi scheme that Picard estimates lost some US$20 billion in invested principal.
The total fraud, once the lost potential interest on the funds is calculated in, has been estimated at US$50 billion and suits have poured in from more than 16,000 investors from around the world who claim to have been defrauded by Madoff.
The victims ranged from major banks, savvy financial players and Hollywood moguls to charities and individual investors.
Prior to the haul announced on Friday, Picard had recouped some US$2.5 billion, partly through the confiscation of Madoff family properties and auctions of his belongings — including a watch that sold for US$67,500 — that offered a glimpse at the life of luxury he once enjoyed.
On Dec. 10 Picard filed his largest suit yet, seeking nearly US$20 billion from a conglomerate led by Austrian banker Sonja Kohn, 62, whom Picard said was Madoff’s “criminal soul mate.”
Kohn’s lawyers denied the allegations, insisting she was herself a victim of Madoff and rejecting Picard’s claims that she fed Madoff’s scheme with new investors in exchange for US$62 million in kickbacks.
Picard has meanwhile sought US$9 billion from the British bank HSBC, US$6.4 billion from JP Morgan, US$2.5 billion from the Swiss UBS, US$400 million from Natixis and others, all accused of profiting from the Ponzi scheme.
He is also seeking hundreds of millions of dollars from individual investors, feeding funds that invested with Madoff, and even charities who benefited from fraudulent revenues or donations.
The legal battle looks to continue for several years, however, and it will be difficult for many investors, especially those living outside the US, to recover their losses, much of which were invested indirectly.
In Luxembourg, for example, thousands of investors together lost some US$2 billion that was invested in three funds linked to Madoff.
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