A court-appointed trustee handling the liquidation of Bernard Madoff’s shuttered firm reached a $7.2 billion settlement with the estate of philanthropist Jeffry Picower, who was a major beneficiary of the former investment adviser’s fraud.
U.S. Attorney Preet Bharara of the Southern District of New York said in a statement on Friday that the settlement is “truly historic” and “a game-changer for Madoff’s victims.” The settlement is the biggest single forfeiture in U.S. history.
Bharara applauded Barbara Picower, who represented her late spouse’s estate, for going into the deal with the U.S. Attorney’s office. Her husband had a heart attack and drowned in his pool at his Palm Beach, Fla., mansion, a few months after Madoff was sentenced to 150 years in prison for defrauding thousands of investors in an enormous Ponzi scheme.
Picower’s widow said in a statement that her husband wasn’t involved with Madoff’s fraud, but that the Picower estate would “return every penny received” through the convicted Ponzi schemer’s investments, according to the Associated Press.
Picower and his account-holders deposited $619.4 million with Madoff from the late 1970s until 2008, according to a forfeiture complaint. They withdrew $7.8 billion from Madoff’s firm, the court document said.
Barbara and Jeffry Picower (MIT)
“By returning every penny of the $7.2 billion her late husband received from [Madoff's firm] to help those who have suffered most, Barbara Picower has done the right thing,” Bharara said. “We will continue to work tirelessly with our partners … to track down any and all proceeds of Madoff’s Ponzi scheme and return them to victims.”
The court-appointed bankruptcy trustee is Irving Picard a partner at the law firm of Baker & Hostetler LLP in New York, who has filed several civil lawsuits to recover funds for victims of Madoff’s fraud. Picard filed a complaint last year asserting that a sophisticated investor like Picower should have suspected fraudulent activity by Madoff, but Picower was never accused of criminal wrongdoing.
The settlement consisted of $5 billion to resolve Picard’s lawsuit and $2.2 billion to settle with federal authorities.
Picower’s wife is represented by William Zabel. He is the father of Richard Zabel , the criminal chief in the Southern District of New York U.S. Attorney’s Office. The younger Zabel recused himself from the case.
Assistant U.S. Attorneys Lisa Baroni, Julian Moore, Barbara Ward and Matthew Schwartz handled the case and the ongoing Madoff investigation.
Marc O. Litt, who was a lead prosecutor in the Madoff probe, will join Baker & McKenzie LLP. He stepped away from the Madoff investigation in May to prevent conflicts during his job search.
