Latest Update

Jun 25, 2012 9:26 PM

NY AG: Madoff Victim Payouts Within 3 Years

ALBANY, N.Y. (AP) - Investors in four funds that lost more than $1.2 billion in Wall Street swindler Bernard Madoff's Ponzi scheme will receive $405 million in payouts over the next three years, New York's attorney general said Monday.

A settlement with hedge fund manager J. Ezra Merkin was approved Friday in state Supreme Court in Manhattan. It settled state civil charges filed in 2009 claiming breach of fiduciary duty by Merkin. He had collected management fees while steering assets to Madoff from Ariel Fund Ltd., Gabriel Capital L.P., Ascot Fund Ltd. and Ascot Partners L.P.

"By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars," Attorney General Eric Schneiderman said.

The attorney general's office said the investors are likely to get more money when Madoff's estate is settled, though a federal trustee in that case, Irving Picard, said he is now reviewing the New York agreement and issued a caution about third-party settlements.

Many eligible investors will be entitled to get more than 40 percent of their cash losses, with higher proportions to those who didn't know about Madoff's involvement, according to the attorney general's office. The agency also said that investors will likely receive additional payments when Madoff's estate is able to distribute money recovered by Picard, the federal trustee, who was not involved in Schneiderman's settlement.

"With this settlement, Ezra Merkin has made an enormous personal commitment to addressing his investors' losses from Madoff's unthinkable fraud," said his attorney, Andrew Levander. "Mr. Merkin is pleased to have achieved a resolution that is fair to his investors, many of whom are friends and institutions that he and his family have cared about deeply for generations."

Amanda Remus, spokeswoman for Picard and his counsel, said Monday they will have no direct comment on the New York agreement until they have finished reviewing it. "However, to the extent any third-party settlement seeks to divert funds that are rightfully sought by (Picard) for equitable distribution to all (Madoff) customers with allowed claims, we will have to consider taking appropriate steps," she said, adding that the federal trustee's claims take precedence under the law.

According to Picard, they have recovered or entered agreements to recover more than $9.1 billion, more than half of some $17.3 billion in principal estimated to have been lost in the Ponzi scheme, which will be distributed to Bernard L. Madoff Investment Securities customers with allowed claims, with $334 million paid out so far. "We are working to hold entities, such as feeder funds, major banks and other sophisticated investors that knew or 'should have known' a fraud was under way, accountable for their actions."

Madoff, once the Nasdaq chairman, used his reputation and savvy to dupe sophisticated investors, regulators and Wall Street banks. Merkin invested more than $2 billion with Madoff, who used money from new investors to pay returns to previous clients.

Madoff confessed in December 2008 that he was running a multi-decade Ponzi scheme and that more than $65 billion he claimed to have on hand for investors had dwindled to a fraction of an original investment of about $20 billion. He pleaded guilty to fraud and is serving a 150-year prison sentence in Butner, N.C.

.

(Copyright 2012 The Associated Press. All rights reserved.)

»Comments

More News

Most Popular

Top Videos

1 2 3 4