US expects Madoff $4 billion fund payout to start this year

NEW YORK (Reuters) - The U.S. government expects this year to begin payouts from a $4 billion fund for Bernard Madoff's victims, ending their nearly nine-year wait to begin recouping losses from his Ponzi scheme.

In a letter made public on Wednesday, the U.S. Department of Justice said it "recently notified victims whose petitions have been approved and is poised to issue initial distributions from the Assets Forfeiture Fund by the end of 2017."

The undated letter by Assistant Attorney General Stephen Boyd was addressed to Florida Congressman Vern Buchanan, who had complained to the Justice Department about payout delays.

Buchanan's district is on Florida's Gulf coast.

Payouts from the government fund are expected to go to 35,508 Madoff victims whose total losses exceeded $6.5 billion.

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David Friehling, the former accountant for con artist Bernard 'Bernie' Madoff, center, exits federal court following a sentencing hearing in New York, U.S., on Thursday, May 28, 2015. Friehling, who signed off on phony audits of Madoffs firm for decades, became the fourth person tied to the $17.5 billion fraud to avoid prison after aiding prosecutors. Photographer: Sam Hodgson/Bloomberg via Getty Images
NEW YORK, NY - OCTOBER 08: Daniel Bonventre (L), former director of operations for investments, working under Bernie Madoff, arrives at Federal Court, to begin a trial being brought against him by the federal government on October 8, 2013 in New York City. Federal prosecutors allege that Bonventre worked for Madoff and knowingly supported the largest Ponzi in history, which Madoff led. Prior to the collapse of the scheme, Madoff reported that his accounts held approximately $68 billion, when they in fact only held a few hundred million dollars. Madoff was found guilty and is serving a 150-year sentence in North Carolina. (Photo by Andrew Burton/Getty Images)
NEW YORK, NY - DECEMBER 20: Brother of convicted Ponzi king Bernard Madoff ,67-year-old Peter Madoff, arrives at U.S. District Court in Manhattan on December 20, 2012 in New York City. A plea agreement makes a 10-year prison term all but certain for Madoff who was convicted after he pleaded guilty to conspiracy and falsifying books and records of an investment adviser. (Photo by Spencer Platt/Getty Images)
Daily News back page February 16. 2011, Headline: The Knew Nothing - Fred Wilon and Mets partner Saul Katz didn't know about Bernie Madoff's multi-billion dollar sam, says the man who ran it all. Madoff comes to Mets owners defense. Lupica: with nothing to gain why would Bernie lie now? (Photo By: NY Daily News via Getty Images)
Annette Bongiorno, a former secretary at Bernard L. Madoff Investment Securities LLC, exits federal court in New York, U.S., on Friday, Jan. 14, 2011. Bongiorno, 62, is among five people facing charges of helping Bernie Madoff defraud investors of billions of dollars in a Ponzi scheme. Photographer: Michael Nagle/Bloomberg via Getty Images
Daniel Bonventre, former director of operations for Bernard L. Madoff Investment Securities LLC, exits federal court in New York, U.S., on Friday, Jan. 14, 2011. Bonventre, 63, is among five people facing charges of helping Bernie Madoff defraud investors of billions of dollars in a Ponzi scheme. Photographer: Michael Nagle/Bloomberg via Getty Images
UNITED STATES - JUNE 29: Ira Sorkin, Bernie Madoff's lead attorney, arrives at manhattan federal court in New York, U.S., on Monday, June 29, 2009. (Photo by Jin Lee/Bloomberg via Getty Images)
UNITED STATES - MARCH 14: Daily News front page March 14, 2009, Headline: WHAT BERNIE MADE OFF WITH, Reviled Madoffs own more than 826M in planes, homes & assets, Bernie Madoff,Bernard Madoff. Rihanna's back in town, Rihanna (Photo by NY Daily News Archive via Getty Images)
NEW YORK - MARCH 12: Investors DeWitt Baker (R) and Judith Welling, who had invested with financier Bernard Madoff, are interviewed outside a Manhattan Federal courthouse after Madoff was sent by a judge to jail to await sentencing on March 12, 2009 in New York City. Madoff was ordered to jail after pleading guilty to a multibillion-dollar financial fraud scheme and could end up with a sentence of 150 years in prison. (Photo by Rick Gershon/Getty Images)
NEW YORK - MARCH 10: Accused $50 billion Ponzi scheme swindler Bernard Madoff exits federal court March 10, 2009 in New York City. Madoff was attending a hearing on his legal representation and is due back in court Thursday. (Photo by Mario Tama/Getty Images)
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Nearly all had invested indirectly with Madoff, such as through "feeder funds," and roughly three-quarters have received nothing since the Ponzi scheme was uncovered in December 2008.

Richard Breeden, a former U.S. Securities and Exchange Commission Chairman, oversees the government fund, which was set up in November 2013. He was not immediately available on Wednesday to comment.

A court-appointed trustee liquidating Bernard L. Madoff Investment Securities LLC, Irving Picard, has recouped about $12 billion for Madoff customers, and is awaiting court approval for an additional $687 million payout.

Indirect investors are ineligible to recover from the liquidation.

Madoff, 79, is serving a 150-year prison term.

 

(Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy)

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