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Banking and Finance

If You Invested Less Than $925,000 With Bernard Madoff, You're Now Even

 In an announcement from the court-appointed trustee overseeing recovery for victims of Bernard Madoff's massive Ponzi scheme, a proposed fourth distribution of approximately $350 million will resolve all claims from victims with an allowed claim of $925,000 or less. The trustee, Irving Picard, sought court approval to make a total distribution of approximately $349 million, which will bring the total amount distributed to Madoff victims at nearly $6 billion to date. With an average payment of approximately $323,000, the proposed distribution will also fully satisfy nearly 52% of the 2,189 accounts for which a claim was submitted.

According to Picard, the bulk of the proposed distribution will be comprised of the recent $325 million settlement with JP Morgan over the bank's alleged role as Madoff's primary banker. The bank's settlement with Picard was part of a record $2.6 billion settlement paid to resolve a panoply of civil and criminal investigations. The distribution will include payments ranging from $496.00 to $77.3 million, and comes over one year after Picard announced a third distribution of approximately $500 million in February 2013.

The proposed distribution will mark the fourth year in a row that Picard has made a distribution to victims, bringing the total payout thus far to nearly $6 billion including the proposed distribution. With the fourth distribution, Picard announced that Madoff victims will now have received approximately 46% of their allowed loss. Combined with the fact that many victims also received a SIPC cash advance of up to $500,000 from an industry-funded reserve, this means that every allowed claim of $925,000 or less will now have been repaid in full.

More than five years after Madoff's fraud was unraveled, it is now becoming clear that many, if not all, of Madoff's victims will receive at least a significant reimbursement of their losses.  While the proposed distribution represents the smallest payment of the four distributions to date, there still remains several billion dollars locked up in the bankruptcy estate due to Picard's obligation to hold certain amounts in reserve pending the finality of various litigation, including a time-based damages dispute that was appealed in January. Additionally, nearly $3 billion is being held in reserve for 155 "deemed determined" claims that are still subject to litigation or further determination.  Finally, the Madoff Victim Fund, a separate fund of nearly $4 billion consisting of government forfeitures and recoveries, is also currently accepting claims from a larger subset of victims for an eventual distribution. Thus, theoretically, more than $8 billion potentially remains for distribution in the future - a figure that exceeds the total amount of distributions made thus far by Picard.

Previous Ponzitracker coverage of the Madoff scandal is here.

 For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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