A US government fund to compensate people swindled by Bernie Madoff is making its final round of payments, taking the total paid from the fund to the late fraudster’s victims to $4.3bn (£3.4bn).
The Madoff Victim Fund is paying out $131.4m from forfeited assets to 23,408 people around the globe in the 10th and final distribution, according to a statement by the Department of Justice (DoJ).
Madoff, the former chair of the Nasdaq stock exchange who was long regarded as an investment sage, ran a huge Ponzi scheme in one of the biggest frauds in US financial history. He died in prison aged 82 in 2021 while serving a 150-year prison sentence.
In total, 40,930 victims of Madoff’s Ponzi scheme have received compensation in 127 countries, and will have recovered 93.71% of their fraud losses. Most of them were small investors who each lost less than $500,000 in the fraud. Victims include 38,860 individuals, as well as schools, charities and pension plans.
An additional $14.7bn has been recouped for customers of the former Bernard L Madoff Investment Securities LLC by Irving Picard, the trustee liquidating that firm after its bankruptcy in 2008. This means about $19bn has been paid out to Madoff victims overall.
The DoJ said the final compensation payment through its fund represented the “culmination of a decade of work identifying thousands of victims around the world and unwinding layers of complex financial transactions”.
Richard Breeden, the former US Securities and Exchange Commission chair who oversees the Madoff Victim Fund, said: “Our objective was to find all of the victims, and know what everybody lost, to deploy the assets we had in the fairest and most equitable way. Nobody got left behind.”
Unlike Picard, Breeden also returned money to victims who lost money indirectly, for example through “feeder” funds.
after newsletter promotion
Breeden stressed it was important not to forget Madoff’s “complete depravity,” though it happened many years ago, and that people “remain wary and careful about how they invest their money and guard their savings”.
The fund was created mainly from settlements between the Justice Department and Madoff’s former bank JP Morgan Chase, and between the liquidator of Madoff’s former firm and the estate of former Madoff investor Jeffry Picower.
It had $4.05bn at the beginning, but grew because the Justice Department recovered more assets. Madoff’s fraud was estimated as high as $64.8bn.
In 2008, Madoff pleaded guilty to orchestrating the Ponzi scheme, in which instead of investing cash, he paid off older investors with funds from new investors.
The global financial crisis of 2008 prompted the scheme to unravel, leaving thousands of victims bereft of their savings. In December 2008, as investors worried about the impending crisis started asked for their money back, Madoff called a family meeting at his Manhattan apartment, and confessed to his sons that the family business they both worked in was based on “one big lie”.
In March 2009, Madoff pleaded guilty to 11 criminal counts, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme.
“We thought he was God; we trusted everything in his hands,” Elie Wiesel, the late Holocaust survivor and Nobel laureate, said in 2009. Madoff’s scam cost Wiesel’s foundation $15.2m.