Madoff victims may soon get another $2.35 billion

Mon Nov 18, 2013 4:57pm EST
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By Jonathan Stempel

NEW YORK (Reuters) - Thousands of victims of Bernard Madoff's fraud, including many who have so far recovered nothing, may start pursuing an additional $2.35 billion to cover some of their losses, U.S. Attorney Preet Bharara in New York said on Monday.

The sum represents money obtained by federal prosecutors through criminal and civil forfeiture actions since Madoff's massive Ponzi scheme was uncovered in December 2008.

It is being held in a Madoff Victim Fund and overseen by special master Richard Breeden, a former U.S. Securities and Exchange Commission chairman.

Breeden's fund is separate from money recovered by Irving Picard, the court-appointed trustee who is liquidating the bankrupt Bernard L. Madoff Investment Securities LLC.

Picard has said he has distributed more than $5.4 billion of the $9.5 billion he has recovered so far.

Breeden's fund is different because, under criteria approved by the U.S. Department of Justice, people who lost money by investing indirectly in Madoff through "feeder funds," investment groups and other pooled vehicles will for the first time be eligible to recover, Bharara said.

Picard has denied 10,921 "third party" claims, according to his website, though some claimants continue to challenge his methods in court.

"We expect approximately 12,000 direct and indirect investors will be eligible for a recovery, compared to approximately 1,000 remaining claimants in the bankruptcy proceedings," Breeden said in a statement. "Today's announcement brings fairness and justice for thousands of victims a giant step closer to reality."   Continued...

A booking mug shot of Bernard Madoff released to Reuters on March 17, 2009. REUTERS/US Marshall Service/Handout