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New York - Madoff Customers' Recovery Tops 75 Percent With Merkin Settlement

Published on: June 13, 2018 06:21 PM
By: Reuters
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New York - The court-appointed trustee liquidating Bernard Madoff’s firm on Wednesday announced a $280 million settlement with one of the swindler’s earliest investors, enabling customers to recoup more than 75 percent of the principal they lost.

The accord with hedge fund manager Ezra Merkin also resolved claims against Ascot Partners LP, a “feeder fund” he ran that sent customers’ money to Madoff, often without their knowledge, as well as his management company Gabriel Capital Corp.

Upon receiving court approval, the accord would boost recoveries for former customers of Bernard L. Madoff Investment Securities (BLMIS) LLC to $13.26 billion.

That is nearly 76 percent of the $17.5 billion that the trustee Irving Picard said was wiped out in Madoff’s fraud, which was uncovered in December 2008. A New York state judge appointed a receiver for Ascot the following July.

“Mr. Merkin is pleased that the receiver has settled the trustee’s lawsuit on terms that will result in a significant recovery for Ascot’s investors,” Merkin’s lawyer Andrew Levander said in a statement.

The settlement allows Ascot to file a claim in the Madoff firm’s liquidation. But any payouts must go to its investors, not to Merkin, who also lost money with Madoff.


In a filing in Manhattan bankruptcy court, Picard’s lawyers called the settlement “a fair and reasonable compromise of the trustee’s claims against the defendants and the related customer claim against the BLMIS estate.”

Merkin in June 2012 had reached a separate $410 million settlement with Eric Schneiderman, then New York’s attorney general.

Schneiderman accused Merkin of “recklessly” feeding $2.4 billion of investor cash to Madoff, while falsely claiming he had been actively managing the money.

Picard challenged that settlement, saying it infringed his right to recoup money for Madoff customers. But U.S. District Judge Jed Rakoff said the trustee took too long to get involved.

Schneiderman’s predecessor Andrew Cuomo, now New York’s governor, had sued Merkin in April 2009.

Feeder fund investors normally cannot recoup money from Picard’s efforts because they did not invest directly with Madoff.

A separate, more than $4 billion fund created by the U.S. government allows recoveries by such investors. Roughly $1.28 billion has been distributed from that fund.

Madoff, 80, pleaded guilty to fraud in March 2009 and is serving a 150-year prison sentence.

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Read Comments (3)  —  Post Yours »


 Jun 13, 2018 at 09:40 PM PaulinSaudi Says:

Certainly, this is better than we could have hoped for. It is remarkable how many businessmen in expensive suits have fought so hard to keep their dirty money.


 Jun 14, 2018 at 09:50 AM Goldberger Says:

To this day, I can't understand, how so many intelligent people, including many high profile Jews, and Jewish institutions, could have been scammed by that greedy thief, Bernard Madoff? Also, I can't understand why his wife was allowed to keep $2,000,000, of which she had the gall to complain that it was not enough, and that she had to live very modestly! I really feel for her. She should not have received more than $500,000, maximum. Many people in the USA, live on far less than that amount.


 Jun 14, 2018 at 01:31 PM PaulinSaudi Says:

She was not allowed to keep two million. As for people, they thought he was insider trading and they wanted a piece of it.


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