$280M settlement reached with Merkin in Madoff scheme

Amelia Camurati
Victims of Bernard Madoff, who was behind the largest Ponzi scheme in American history, will see over $378 million distributed by the Department of Justice.  (Photo courtesy of Wikimedia Commons)

A new settlement announced Wednesday with one of Bernard Madoff’s earliest investors will give victims a chance to regain more than 75 percent of the funds lost in his Ponzi scheme.

Securities Investor Protection Corporation Trustee Irving Picard said in a statement Wednesday that a $280 million settlement was reached with hedge fund manager J. Ezra Merkin and his companies Ascot Partners and Gabriel Capital Corporation, representing 100 percent of the transfers Ascot Partners received from Madoff’s Bernard L. Madoff Investment Securities Customer Fund in the two years before Madoff was arrested.

With Merkin’s settlement, recovered funds for Madoff’s former customers comes $12.98 billion, Picard said, of the $17.5 billion that was misused in Madoff’s fraud, which was discovered in December of 2008.

“This agreement embodies two goals of the SIPA Trustee: It first provides an immediate, substantial benefit to the BLMIS customer estate through the recovery of $280 million,” BakerHostetler partner Lan Hoang said in a statement. “And second, it provides a significant distribution to Ascot Partners and the right to fully participate in future distributions, which benefits the indirect investors.”

The settlement allows Ascot Partners to file a claim in the Madoff liquidation but all payouts must go to the investors that were defrauded and not to Merkin, who also lost money through Madoff’s scheme.

Last June, more than $23 million in assets were recovered from the estates of Madoff’s late sons Mark and Andrew as well as Mark’s widow Stephanie Mack, and another $600 million was distributed among 2,625 approved claims who were defrauded by the $17 billion Ponzi scheme run by Madoff, now 79, through his investment firm.

Madoff, who was arrested Dec. 11, 2008, pleaded guilty to 11 federal felonies in March of 2009, admitting he had turned his wealth management business into the world’s largest Ponzi scheme to benefit himself, his family and select friends.

Reach reporter Amelia Camurati by email at acamurati@theislandnow.com, by phone at 516-307-1045, ext. 215, or follow her on Twitter @acamurati.

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