Madoff Ponzi Scheme Victims Receiving More Than $500 Million In Repayments, Feds Say
Topline
The Justice Department on Thursday started doling out payments to reimburse more than 30,000 victims of Bernie Madoff’s Ponzi scheme, more than 12 years after Madoff admitted his hedge fund was the biggest known fraud scheme in history.
In this Jan. 5, 2009 file photo, Bernard Madoff, right, leaves U.S. District Court in Manhattan … [+]
ASSOCIATED PRESS
Key Facts
Around $568 million in forfeited funds is set to be returned to investors who used Madoff to manage their money, marking the seventh round of repayments from the federal government.
After this round, more than $3.7 billion of the $4.05 billion Madoff Victim Fund will have been distributed, according to the Justice Department.
The largest sources of the fund are around $2.2 billion that was collected in a civil forfeiture from Jeffry Picower—a major beneficiary in the Ponzi scheme—along with $1.7 billion JPMorgan Chase paid as a penalty after prosecutors said the bank failed to alert authorities of suspicious actions by Madoff.
Madoff pleaded guilty to 11 felonies in 2009, admitting his business—Bernard L. Madoff Investment Securities—was a Ponzi scheme.
Crucial Quote
“This distribution provides nearly 31,000 victims additional financial recovery from the egregious crimes committed by Bernard Madoff,” said Acting Assistant Attorney General Kenneth A. Polite Jr., who serves as the top prosecutor in the DOJ’s Criminal Division.
Key Background
Madoff’s scheme unraveled during the financial crisis of the late 2000s, infuriating the American public amid the nation’s biggest economic downturn since the Great Depression. Wealthy and influential investors, including celebrities like Steven Spielberg and Kevin Bacon, brought further attention to the case. Madoff started his investment firm in 1960, but it’s unclear when he started the Ponzi scheme and exactly how much money he swindled investors out of. Madoff said the scheme started in the 1990s, but prosecutors believe it likely started in the 1970s and may have defrauded $65 billion from investors. Following his 2009 guilty pleas, Judge Denny Chin sentenced Madoff to 150 years in prison for crimes he described as “extraordinarily evil” and unlike any other white-collar case in history. In the years before his death at FMC Butner prison in North Carolina, Madoff had sought an early release, saying he was suffering from kidney disease. Madoff at one point in 2019 petitioned former President Donald Trump to commute his sentence.
Big Number
11%. That’s around the rate of annual returns Madoff falsely claimed his investors made, with little volatility. The financial crisis of the late 2000s managed to expose Madoff’s long standing lies.
Tangent
Madoff’s scheme was discovered by his two sons in December of 2008, when they turned their father over to the police. Mark Madoff committed suicide in his Manhattan apartment on December 11, 2020, two years after his father was arrested. Andrew Madoff died in 2014 of lymphoma, blaming the return of cancer on the stress caused by his father’s crimes.
Further Reading
Bernie Madoff Dies In Federal Prison At 82 (Forbes)
Fraudster Bernie Madoff Denied Early Release From 150-Year Prison Sentence (Forbes)
Bernie Madoff’s $50 Billion Ponzi Scheme (Forbes)
Bernie Madoff’s Billionaire Victims (Forbes)
Comments