Madoff Ponzi Scheme Victims Receive Over $ 500 Million In Refunds, Federal Government Says


Top line

The Department of Justice On Thursday, he began making 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.

Highlights

About $ 568 million in confiscated funds are expected to be returned to investors who used Madoff to manage their money, marking the seventh round of federal government refunds.

After this round, more than $ 3.7 billion of the $ 4.05 billion Madoff Victim Fund will have been distributed, according to the Department of Justice.

The main sources of the fund are around $ 2.2 billion which was collected in a civil confiscation of Jeffry Picower, a major beneficiary of the Ponzi scheme, as well as the $ 1.7 billion that JPMorgan Chase paid as a penalty after prosecutors said the bank failed to alert authorities to Madoff’s suspicious actions.

Madoff pleaded guilty to 11 felonies in 2009, admitting that his company, Bernard L. Madoff Investment Securities, was a Ponzi scheme.

Crucial quote

“This distribution provides nearly 31,000 victims with additional financial recovery from the egregious crimes committed by Bernard Madoff,” said Acting Deputy Attorney General Kenneth A. Polite Jr., who is the senior prosecutor in the Criminal Division of the Department of Justice.

Key context

Madoff’s scheme collapsed during the financial crisis of the late 2000s, infuriating the American public amid the country’s biggest economic downturn since the Great Depression. Wealthy and influential investors, including celebrities like Steven Spielberg and Kevin Bacon, have drawn attention to the case. Madoff started his investment firm in 1960, but it’s unclear when he started the Ponzi scheme and how much money he scammed from investors. Madoff said the program started in the 1990s, but prosecutors believe it likely started in the 1970s and may have defrauded investors $ 65 billion. Following his guilty pleas in 2009, Judge Denny Chin sentenced Madoff to 150 years in prison for crimes he described as “extraordinarily bad” and unlike any other white collar case in history. In the years leading up to his death at FMC Butner prison in North Carolina, Madoff had requested early release, claiming he suffered from kidney disease. Madoff at one point in 2019 asked former President Donald Trump to commute his sentence.

Large number

11%. That’s roughly the annual rate of return Madoff falsely claimed his investors made, with little volatility. The financial crisis of the late 2000s succeeded in exposing Madoff’s long-standing lies.

Tangent

Madoff’s scheme was discovered by his two sons in December 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’s arrest. Andrew Madoff died in 2014 of lymphoma, blaming the return of cancer to the stress caused by his father’s crimes.

Further reading

Bernie Madoff dies in federal prison at 82 (Forbes)

Fraudster Bernie Madoff refused early release from 150 years in prison (Forbes)

Bernie Madoff’s $ 50 billion Ponzi scheme (Forbes)

The billionaire victims of Bernie Madoff (Forbes)


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