Madoff Trustee Gets ‘game Changing' 7.2 Billion Settlement

NEW YORK (AP) - The widow of a Florida philanthropist who had
been the single-largest beneficiary of Bernard Madoff's colossal
Ponzi scheme has agreed to return $7.2 billion in bogus profits to
the victims of the fraud, she and authorities announced Friday.

The trustee recovering money for Madoff's burned investors filed
court papers formalizing the settlement with the estate of Jeffry
Picower, a businessman who drowned after suffering a heart attack
in the swimming pool of his Palm Beach, Fla., mansion on Oct. 25,
2009.

"We will return every penny received from almost 35 years of
investing with Bernard Madoff," Picower's wife, Barbara, said in a
written statement.

"I believe the Madoff Ponzi scheme was deplorable and I am
deeply saddened by the tragic impact it continues to have on the
lives of its victims," she said. "It is my hope that this
settlement will ease that suffering."

U.S. Attorney Preet Bharara called the settlement a "game
changer" for Madoff's victims.

A recovery of that size would mean that a sizable number could
get at least half of their money back - a remarkable turnaround for
people and institutions that thought two years ago that they had
lost everything.

"Barbara Picower has done the right thing," Bharara said.

Jeffry Picower, who was 67 when he died, was one of Madoff's
oldest clients. Over the decades, he withdrew about $7 billion in
bogus profits from his accounts with the schemer. That amounts to
more than a third of the dollars that disappeared in the scandal.

That money was supposedly made on stock trades, but authorities
said that in reality it was simply stolen from other investors.

Picower's lawyers claimed he knew nothing about the scheme, but
court-appointed trustee Irving Picard had argued in court papers
that he must have known that the returns were "implausibly high"
and based on fraud.

In her statement, Barbara Picower said she was "absolutely
confident that my husband Jeffry was in no way complicit in
Madoff's fraud and want to underscore the fact that neither the
trustee, nor the U.S. attorney, has charged him with any illegal
act."

Lawyers for Picower's estate have been in negotiations with the
trustee for some time.

After Picower drowned, his will revealed that he had earmarked
most of his fortune for charity, but his widow said in a statement
that the family wished to return some of it to Madoff's victims
through "a fair and generous settlement."

A huge charitable foundation that Picower had created with part
of his fortune closed in 2009 after its assets were wiped out in
the Madoff fraud.

It had donated hundreds of millions of dollars to colleges,
libraries and other nonprofit groups.

Thousands of people, banks and hedge funds that invested money
with Madoff saw their savings wiped out when the fraud was revealed
to be a hoax. Many, though, like Picower, had been drawing bogus
profits from their Madoff accounts for years and wound up walking
away from the scheme having taken out more money than they put in.

Picard has been involved in a two-year effort to claw back those
false profits and return the stolen money to people who were
net-losers in the scheme.

It is those people, who lost more than they withdrew, who could
now be poised to recover half of their original investment.

The person said Picower's estate would pay $5 billion to settle
the civil lawsuit brought by Picard and other $2.2 billion to
resolve a civil forfeiture claim by federal prosecutors
investigating Madoff's crimes. All the money will go to victims of
the fraud.

Bharara called the total "a truly staggering sum that was
really always other people's money."

Madoff's clients had thought, based on his fraudulent account
statements, that they collectively had more than $60 billion
invested in stocks through the money manager's funds.

Investigators found, though, that no investments had ever been
made, and that the $20 billion in principal contributed by Madoff's
clients was simply being paid out bit by bit to other investors.

Bharara said roughly half of that lost money has now been
recovered.

      (Copyright 2010 by The Associated Press.  All Rights Reserved.)