Picower Estate agrees to forfeit $7.2 billion for Madoff victims

The estate of Jeffry Picower has agreed to forfeit $7.2 billion that the investor got from Bernard L Madoff’s Ponzi scheme, bringing the amount collected by authorities for the victims of the fraud to $9.8 billion.

Irving Picard, the trustee liquidating Bernard L Madoff Investment Securities LLC, sued Picower in May 2009, claiming he withdrew $7.2 billion more than he invested. Picower died in October 2009, aged 67. Picard and US Attorney Preet Bharara, who is probing the Madoff fraud, yesterday announced the settlement with Picower’s widow, Barbara.

“I commend Barbara Picower for agreeing to turn over this truly staggering sum, which really was always other people’s money,” Bharara said at a news conference in New York. “This settlement provides a significant measure of hope to the many victims of Bernard Madoff’s horrific crimes.”

Picard said that investors in Madoff’s Ponzi scheme, the largest in US history, lost $20 billion in principal. Account statements at the time of Madoff’s arrest in December 2008 showed total balances of $65 billion. Picard, who filed hundreds of lawsuits seeking $50 billion, has now recovered

$9.8 billion. Picower began investing with Madoff in the late 1970s, controlling dozens of accounts. He had a heart attack and drowned in his swimming pool in Palm Beach, Florida. The settlement “honors what Jeffry would have wanted,” Barbara Picower said in a statement by her lawyer, William Zabel of Schulte Roth & Zabel LLP.

‘Deeply saddened’
“I am absolutely confident that my husband Jeffry was in no way complicit in Madoff’s fraud,” she said. “The Madoff Ponzi scheme was deplorable, and I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering.”

Picard, who was appointed trustee by a bankruptcy judge in Manhattan, approved 2,363 investor claims for recovery as of December 10 and rejected 13,189. Reasons for rejection include that the claimants withdrew more money from their accounts than they invested. The Picower settlement, which must be approved by the bankruptcy court before it can take effect, covers all the money claimed by Picard.

“They’re getting the whole thing?” said Madoff investor Timothy Murray, 58, of Minneapolis. “Wow. That’s great. That’s wonderful. I’m beginning to think there’s a real possibility that Picard could pay all the claims he approved and there could be extra money.”

Murray said he and his family invested $12 million over two decades and were among those rejected. Beginning in the 1970s; Picower, his family and related entities, deposited $619.4 million with Madoff and took out $7.8 billion, according to a forfeiture complaint filed yesterday by Bharara in federal court in New York.