Posted on 02 Jul 2009
A court-appointed trustee unraveling Bernard Madoff's massive fraud so far has allotted $231 million from a securities industry fund that compensates victims -- a record amount for the fund, but a mere fraction of what was lost.
In a statement Wednesday, Trustee Irving Picard said to date he has processed 543 claims brought by Madoff's burned clients, and concluded they are owed nearly $3 billion. But only $231 million can be covered through the Securities Investors Protection Corp. or SIPC, which is authorized by Congress to guarantee brokerage accounts for a maximum $500,000.
Still, Picard said the payout was noteworthy because it far exceeds totals paid by SIPC in past securities fraud cases.
The figures were announced on the eve of a deadline for Madoff victims to file claims with Picard under the supervision of a Manhattan bankruptcy judge. The trustee has so far received more than 10,000 claims.
Madoff, 71, was sentenced earlier this week to 150 years in prison for orchestrating a multibillion Ponzi scheme that spanned decades and spun a web of phantom wealth. The epic swindle, which wiped out life savings and entire charities, turned Madoff into a national pariah.
Thousands of investors with Madoff's once-respected advisory firm believed their securities accounts were worth tens of billions of dollars. But investigators say the totals on the clients' monthly account statements were fiction: In reality, Madoff never made investments, and instead used new investors' money to pay returns to existing ones.
After Madoff's arrest late year, Picard was appointed to try to recover any remaining business assets and divvy up those proceeds — along with SIPC funds — to victims. About $1.2 billion in assets have been identified so far.
The trustee has warned victims who file claims they are entitled only to the amount of money they put into Madoff's fund — not what their statements showed.
Picard has filed a series of lawsuits to try to reclaim what he says were tens of billions in phony profits earned by hedge fund managers and other big investors. The defendants, many longtime Madoff associates in the world of high finance, have denied any wrongdoing.
Victims also expect to benefit from a judge's forfeiture order stripping Madoff of all his personal property. The order last week authorized the sale of a Manhattan co-op, homes in Montauk and Palm Beach, a yacht and other valuable property.