Payback Time: Madoff Victims Compensation Fund is Growing
More than 200 closer to receiving some money back, but most still empty handed.
May 27, 2009— -- More than two hundred investors in Bernard Madoff's $65 billion Ponzi scheme are one step closer to receiving some of their money back, according to the appointed bankruptcy trustee who is liquidating Madoff's assets. As of this week, letters have been sent to commit more than $116 million to satisfy claims from 237 Madoff victims.
Those investors will receive up to $500,000 from the Securities Investor Protection Corporation (SIPC), an organization founded by Congress to protect investors. The bankruptcy trustee Irving Picard says his office has received nearly 9,000 claims from jilted Madoff investors.
Picard called Madoff's scam the "most complicated and far reaching financial fraud in U.S. history."
Slowly but steadily though the fund to compensate Madoff investors continues to grow. On Tuesday, two hedge funds connected to Banco Santander reached a $235 million settlement with Picard. Optimal Investment Services withdrew more than $275 million from their two accounts within 90 days prior to Madoff's arrest, according to documents filed in bankruptcy court Tuesday. The $235 million settlement represents 85% of the original claim.
"I am very pleased that we reached such a favorable settlement with Optimal and that Optimal will pay more than $235 million to resolve the claims against it," Picard said in a statement. "We hope that other entities against which we have claims will likewise come forward to settle those claims for the benefit of all of Madoff's victims."
Opitmal was "not complicit in the fraud perpetrated by BLMIS and Bernard Madoff on BLMIS's customers and did not have actual knowledge of the fraud," Picard concluded in documents filed in bankruptcy court.
If Approved, Settlement Brings Amount Collected for Madoff Investors to over $1.2B
Optimal will be allowed to file claims for approximately $1.5 billion and $9.8 million for the two respective funds invested with Madoff, according to the court documents.
Optimal says its two funds "would be entitled to Securities Investor Protection Corporation advance of $500,000 each," according to a statement released by the company.
Stephen Harbeck, President of the SIPC said in a statement that he supports the settlement with Optimal and "it is in the best interest of the customers of the Madoff brokerage firm."
The bankruptcy court will hold a hearing on the settlement on June 16. If the agreement is approved it will bring the total amount collected for the victims to $1.225 billion, according to Picard.
Madoff is being held in the Metropolitan Correctional Center in New York awaiting his sentencing scheduled for June 29. He faces up to 150 years in prison.