Six years after the collapse of Bernard Madoff’s multi-billion dollar Ponzi scam, over $10 billion has been recovered—that’s close to 60% of the principal that went missing after his arrest in 2008. Nearly $6 billion has been paid back to investors. Trustee Irving Picard recently provided these figures in an interim report.
Thousands of investors lost $17.5 billion in principal because of Madoff’s scheme. Even as a significant amount of the money has been returned to them, billions of dollars are being kept in reserve until the securities fraud lawsuits filed by victims wanting bigger payouts are resolved.
The Securities Investor Protection Corp. has spent over $1 billion to facilitate the recovery process. Picard was tasked with recovering investors’ funds. He has worked with forensic accountants, lawyers, and others to figure out who was owed money and who should be sued for benefiting from Madoff’s Ponzi scam. He has even able to recover investor funds via hundreds of lawsuits involving the Madoff clients and banks that didn’t know they were benefiting from the fraud.
Already, Picard has filed over 1,000 lawsuits against feeder funds that sent customer money to Madoff, as well as “net winners” that withdrew more than what they paid. Among the individuals he sued that took more cash from their accounts than what they put in is Edward Blumenfeld. The New York real estate developer settled for $62 million.
Picard also settled with the estate of now deceased Florida investor Jeffrey Picowar for $7.2 billion, as well as recovered $325 million from JP Morgan Chase & Co. (JPM), which was Madoff’s primary bank. Recently, the trustee arrived at a deal with Herald Fund and Primeo Fund, which both funneled cash to the Ponzi scam. They consented to pay $497 million to resolve lawsuits over withdrawals from Madoff’s firm.
Madoff, who pleaded guilty to securities fraud, is serving 150 years in federal prison.
Prosecutors say that Madoff’s Ponzi scam began in the early 1960’s and went on for decades, defrauding famous and wealthy investors, along with average investors, financial instittuions, charities, and others. Bogus trades and account documents were used to make individual and institutional investors think that they owned securities in the largest American companies. According to final account statements, fake profits were at around $47 billion.
Now, five ex-Madoff employees are getting ready to hear their prison sentences for their involvement in his Ponzi scam. These individuals are the only defendants linked to the scheme to stand trial. They are Madoff’s former assistant Annette Bongiorno, ex-Madoff operations manager Daniel Bonventre, account manager JoAnn Crupi, and ex-Madoff computer programmers George Perez and Jerome O’Hara. They are accused of conspiring with Madoff to deceive investors. Earlier this year, a jury found them guilty on all charges in a 31-count indictment.
Madoff scam recovery hits $10 billion, almost 60% of lost money, at a cost of $1 billion, InvestmentNews, November 22, 2014
5 ex-Madoff employees face prison terms, USA Today, December 4, 2014
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SEC Files Charges Against Former Broker-Dealer Owner Over Fraudulent Stock Sales, Stockbroker Fraud Blog, December 2, 2014