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Thursday, June 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

Compensation Finally Comes for Bernie Madoff Victims

Victims of Bernie Madoff are finally eking out restitution nearly nine years after the hedge fund maven’s $64.8 billion Ponzi scheme crumbled, prosecutors said Thursday.

MANHATTAN (CN) – Victims of Bernie Madoff are finally eking out restitution nearly nine years after the hedge fund maven’s $64.8 billion Ponzi scheme crumbled, prosecutors said Thursday.

“We have recovered billions of dollars from third parties – not Mr. Madoff – and are now returning that money to tens of thousands of victims,” Deputy Attorney General Rod Rosenstein said in a statement.

“This is the largest restoration of forfeited property in history,” Rosenstein boasted.

Still, the initial $772.5 million distribution that the Justice Department announced today barely scratches the surface of the more than $4 billion recovered by the Madoff Victim Fund and scheduled for disbursement to victims in 136 countries.

Criticism over the delay in compensating Madoff’s victims has reached a crescendo in recent days.

Though Madoff has been serving a 150-year sentence in a North Carolina federal prison since 2009, victims of the disgraced financier have been waiting almost a decade to be made whole since Madoff’s arrest on Dec. 11, 2008.

Many of those victims offered wrenching testimony at Madoff’s sentencing in 2009, where U.S. District Judge Denny Chin denounced the defendant’s “extraordinary evil” to a smattering of applause.

“Life has been a living hell,” New Jersey resident Carla Hirshhorn said at the time. “It feels like the nightmare we can’t wake from.”

Fellow victim Tom Fitzmaurice emphasized that his crime stretched across class boundaries.

“He stole from the rich,” Fitzmaurice said. “He stole from the poor. He stole from the in-between. He had no values.”

Chin has since been joined the Second Circuit U.S. Court of Appeals, and Madoff became one of the most notable inmates at Federal Correction Center Butner.

Acting Manhattan U.S. Attorney Joon Kim, who was not involved in the criminal case against Madoff, noted that his office’s work on forfeiture has been ongoing.

“To date, this office has recovered more than $9 billion for the innocent victims of Madoff’s fraud, and today’s distribution of $770 million, the single largest distribution of forfeited funds in the department’s history is part of our ongoing commitment to not only prosecute criminals but also find relief for victims,” Kim said.

The company tapped by the Justice Department to distribute the funds, RCB Fund Services LLC, has been paid $38.8 million for its work, according to an investigation by Bloomberg News learned under the Freedom of Information Act.

At the time of Bloomberg’s report in May, the company had not yet paid Madoff’s victims a penny, and political pressure mounted for the timetable to move faster.

Rep. Vern Buchanan, a Republican from Florida, wrote to Attorney General Jeff Sessions following Bloomberg’s revelations to urge action.

Madoff was forced to forfeit more than $170 billion as part of his sentence, but most of the $4.05 billion fund for victims comes from other sources.

Roughly $2.2 billion comes from the estate of deceased investor Jeffry Picower.

Another $1.7 billion came through a deferred prosecution agreement with JPMorgan Chase Bank, and the remaining amount came from civil forfeiture actions against investor Carl Shapiro and other co-conspirators.

As of Thursday, Madoff Victim Fund’s website was inactive.

Categories / Consumers, Financial, Government

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