Bankruptcy judge approves $7.2 billion settlement with Madoff client

Bankruptcy judge approves $7.2 billion settlement with Madoff client

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[JURIST] A US bankruptcy judge approved a historic settlement on Thursday with the estate of Jeffry Picower, a friend and investor of fraudulent financier Bernard Madoff [JURIST news archive]. As part of the approved settlement, Picower’s widow, Barbara, has agreed to forfeit an unprecedented $7.2 billion to Trustee Irving Picard [LA Times report] to be returned to victims of the multi-billion dollar Ponzi scheme. The settlement was approved by US Bankruptcy Judge Burton Lifland in Manhattan over objections by some investors. Picower, a philanthropist and businessman, drowned in October 2009 [AP report] after suffering a heart attack in the swimming pool of his mansion in Palm Beach, Florida. The settlement was announced [press release] in December by US Attorney’s office after Picard, the trustee responsible for liquidating Madoff’s assets, including his investment firm, sued Picower in May 2009 [Bloomberg report]. Barbara Picower agreed to return all profits received from the Madoff firm but insists that her husband was unaware of Madoff’s fraudulent activities and was never charged with a crime. With the Picower forfeiture, authorities have collected a total of $9.8 billion related to the Madoff fraud.

In December, Picard filed close to 60 lawsuits in an attempt to recover more than $40 billion [JURIST report] from numerous banks, hedge funds and individuals, coinciding with the two-year deadline for seeking compensation. In November 2009, David Friehling, former outside accountant for Madoff, pleaded guilty to fraud charges [JURIST report] in the US District Court for the Southern District of New York, but denied knowledge of Madoff’s Ponzi scheme. In June 2009, Madoff was sentenced to 150 years in prison [JURIST report] on securities fraud charges stemming from his multi-billion dollar Ponzi scheme, the largest in US history.