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Madoff trustee recovers $7 billion from fraudster's deceased colleague

20 December 2010

Bernard Madoff's bankruptcy trustee has recovered $7.2 billion from the estate of Jeffry Picower, a philanthropist from Florida.

Picower, who died of a heart attack in October last year, had been Madoff's friend and close business contact for many years.

According to Irving Picard, the lawyer who is acting as liquidator for Madoff's busted investment fund BLMIS, Picower was one of the fund's biggest beneficiaries. But all the gains were fake: BLMIS was a "Ponzi scheme" that paid profits to investors out of capital received from new investors.

Picower's widow has now reached a settlement with Picard, under which she will forfeit "every last dollar" of the couple's profits from the fraud, said US attorney Preet Bharara.

It is reported that Picower himself was already working on a similar settlement at the time of his unexpected death. Mrs Picower has issued a statement claiming that Jeffry was "in no way complicit in the fraud".

This is said to be the largest forfeiture recovery in American history. It is certainly Picard's biggest success by far in recovering the lost funds, boosting the pool of returned cash to $10 billion - perhaps half of what investors are owed, although the sums are complicated because there are net winners as well as net losers.

Picard has also launched a $50 billion fusillade of lawsuits against various banks and "feeder funds" that he alleges knowingly abetted Madoff in his fraudulent activities. These include HSBC, JP Morgan Chase, and Austria's Bank Medici.

 

Sources

Reuters

Bloomberg (via Businessweek)

Bloomberg (via Businessweek)(2)

International Business Times

 

 


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