In what has turned out to be the largest civil forfeiture case in United States history, the widow of a wealthy investor and philanthropist, who was also a friend of Bernard Madoff, is returning $7.2 billion to victims of Madoff’s massive Ponzi scheme from money her husband received from him over the course of three decades.
The settlement — announced Friday afternoon by federal prosecutors and Irving Picard, the court-appointed trustee of the Madoff recovery fund — means that Picard has now recovered more than $10 billion from money paid out to Madoff investors.
In a Ponzi scheme, funds from new investors are continually being paid out to original or prior investors with no true profit ever being earned. And in the case of Bernie Madoff, who is serving a 150-year prison term after he was arrested in 2008, that fraud was massive: More than $20 billion of cash over the decades, and prosecutors have estimated that more than $60 billion of total wealth, including profits on paper, were wiped out.
The $7 billion-plus will be returned from the estate of Jeffrey Picower, a longtime billionaire friend of Madoff’s who invested in his fund and withdrew more than $7 billion in profits from it, but said he was unaware of the fraud. Manhattan U.S. Attorney Preet Bharara told reporters today that his widow, Barbara, agreed to forfeit “every last dollar of the Picowers’ profit from Bernie Madoff’s fraud.”
Jeffrey Picower died last year after suffering a heart attack and drowning in a swimming pool. His wife, Barbara, said that her husband did not know of the scheme, and wanted to reach a settlement before his death.
in a statement released through her lawyer, Barbara Picower said she acted with her late husband in mind.
I believe that this settlement honors what Jeffry would have wanted, which is to return this money so that it can go directly to the victims of Madoff.
And she added:
I am absolutely confident that my husband Jeffry was in no way complicit in Madoff’s fraud and want to underscore the fact that neither the Trustee nor the U.S. Attorney has charged him with any illegal conduct. I believe that 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 had earlier filed suit against the Picower estate, contending that Jeffrey Picower had to be aware that something deceptive was going on. But in announcing Friday’s settlement, Picard said he had “determined there is no basis to pursue the complaint against Mr. Picower.”
New York Times reporter Diana Henriques, who was on the NewsHour earlier this week and will be on-air and online again Friday evening, told us earlier this week that when the case began, no one ever expected Picard to recuperate nearly as much money as he has. But Picard, she said, has a unique history: He’s worked more than a dozen bankruptcy or asset recovery cases prior to the Madoff case – “perhaps more than any other lawyer in the country,” as she put it to us — and says Picard believes he can recoup billions more.
Picard has said he would like to recover $50 billion, though few believe he could reach that number. But he is going after big hitters and smaller players alike. Earlier this month, Picard sued Bank Medici and its founder, Sonja Kohn, for more than $19 billion along Bank Austria, UniCredit SpA and others associated with Madoff.
The numbers are staggering, but there are some handy charts to see whom Picard is pursuing and how the money breaks down.