Trustee Secures Additional $7.2 Billion for Victims of Madoff Fraud

Victims of the Ponzi scheme perpetuated by convicted fraudster Bernard L. Madoff are likely to see much more of their initial returned to them after the trustee charged with recouping losses along with federal authorities announced a settlement that will add billions to the amount available.

The court-appointed trustee in charge of recovering money for the spurned investors, Irving H. Picard, reached a settlement with the estate of Jeffry Picower that will add $7.2 billion to the amount available to compensate victims of the Madoff fraud, The New York Times reported on its website.

Picower, a philanthropist and businessman who withdrew $7 billion in bogus profits before the scheme went belly-up in 2008, suffered a heart attack and drowned while swimming in his pool at his mansion in Palm Beach, Fla., in October 2009 at the age of 67.

"What Jeffry Would Have Wanted"

"The settlement will return every penny received from almost 35 years of investing with Bernard Madoff," Picower's wife, Barbara, said in a statement through her lawyer, William D. Zabel of Schulte Roth & Zabel, the Times reported.

Lawyers for Picower's estate have been in negotiations with Picard for some time. The $7.2 billion greatly expands the $2.3 billion sum that Picard has so far secured for victims of the Madoff fraud.

"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," she said, adding that she planned to return to "the philanthropic work that was so important to Jeffry and me."

A Widow's Wish

The $7 billion Picower withdrew from his accounts with Madoff accounted for more than a third of the money that disappeared in the fraud. Investors thought they were making stock trades, but in reality the funds were used to pay off other investors, authorities have said.

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Following Picower's death, it was revealed in his will that much of his fortune was to go to charity. But his widow sought instead to have some of it returned equitably to Madoff's victims, many of whom were left penniless after the fraud was revealed.

The settlement follows the death last weekend of Madoff's oldest son, Mark, who committed suicide Saturday by hanging himself in his Manhattan loft apartment. The death of Mark Madoff, at age 46, fell on the second anniversary of his father's arrest for defrauding investors of some $20 billion. It is believed the son was distraught after being named in an $80 million lawsuit brought by Picard against the international arm of the elder Madoff's business.

Mark Madoff and his brother, Andrew, have said they knew nothing of their father's illegalities, and alerted federal authorities to the crimes after Bernard Madoff told his sons of the fraud.