A federal bankruptcy court has approved plans to issue $1.18B to investors who lost money in Bernard Madoff’s multibillion-dollar Ponzi scam. This means that immediate distribution of the funds can take place to those whose claims for repayment have been approved by Madoff trustee Irving Picard.
This is the sixth distribution to date in the over $20B investment fraud run by Madoff, who is spending the rest of his life behind bars for his crimes. This latest round will bring the amount paid to his victims to about $91.13B. Another $320M is being held for investors whose claims are still pending or in litigation.
According to Securities Investor Protection Corp CEO Stephen Harbeck, ex-Madoff customers who invested up to $1.16M will get all of their lost funds back while those who invested more will get about 61 cents for every dollar.
Madoff, who ran his Ponzi scam for decades, used new investors’ money to pay earlier investors. He never conducted any securities trades but instead used a lot of the money to fund his lavish lifestyle. It wasn’t until 2008 that the scheme was uncovered. Thousands of retail investors, charities, celebrities, and others were among those who suffered devastating losses.
In other Madoff Ponzi scam-related news, a Washington State jury ruled that Ernst & Young is guilty of negligence because of the way it audited a feeder fund that sent money to Madoff’s company. The fund was overseen by FutureSelect Portfolio Management.
Ernst & Young audited for funds run by Rye Investment Management, which is a Tremont Group Holdings Inc. unit, and FutureSelect sued Ernst & Young in 2010 after losing over $195M in the Madoff Ponzi scam because it had invested in the Rye funds. Tremont, which is an OppenheimerFunds Inc, affiliate, already has settled charges against in this case. The terms of its settlement are confidential.