Madoff’s burned investors to recoup €5.5bn

THE trustee recovering money for Bernard Madoff’s burned investors has reached a $7.2 billion (€5.5bn) settlement with the estate of a Florida philanthropist and businessman who had been the single-largest beneficiary of the fraud.

Court-appointed trustee Irving Picard planned an announcement late last night in Manhattan about the estate of Jeffry Picower, who drowned after suffering a heart attack in the swimming pool of his Palm Beach, Florida, mansion on October 25, 2009.

The amount of the settlement was not immediately made public, but the figure was provided by a person familiar with the civil case against the estate. The person was not authorised to speak publicly and spoke on condition of anonymity.

A recovery of that size would mean that a sizeable number of Madoff’s victims could get at least half of their money back — a remarkable turnaround for people and institutions that thought two years ago that they had lost everything.

A spokeswoman for the estate had no immediate comment.

Picower, who was 67 when he died, invested many years ago with Madoff. Picard’s investigators said that, over time, he withdrew about $7bn in bogus profits from his accounts. That amounts to more than a third of the dollars that disappeared in the scandal.

That money was supposedly made on stock trades, but authorities said in reality it was simply stolen from other investors.

Picower’s lawyers claimed he knew nothing about the scheme, but the trustee argued in court papers he must have known that his returns were “implausibly high” and based on fraud.

Lawyers for Picower’s estate have been in negotiations with the trustee for some time.

After Picower drowned, his will revealed he earmarked most of his fortune for charity, but his widow said in a statement the family wished to return some of it to Madoff’s victims through “a fair and generous settlement“.

A huge charitable foundation that Picower had created with part of his fortune closed in 2009 after its assets were wiped out in the Madoff fraud.

It had donated hundreds of millions of dollars to colleges, libraries and other non-profit groups.

Thousands of people, banks and hedge funds that invested money with Madoff saw their savings wiped out when the fraud was revealed to be a hoax. Many though had been drawing bogus profits from their Madoff accounts for years.