Feds: Fund to compensate Madoff victims, making final $131.4M payment

A government-created fund to compensate those defrauded by Ponzi-scheme swindler Bernie Madoff has begun making its 10th and final payment to some of his victims — $131.4 million — bringing the total payouts to more than $4.3 billion, the U.S. Department of Justice announced Monday.

The final payments are to be sent to more than 23,000 victims of Madoff worldwide, the department wrote in a news release. More than 40,000 victims in 127 countries will have recovered about 93.71% of their fraud losses once the latest payments are received. Most were small investors who lost less than $500,000.

In 2008, Madoff was exposed for running a $50 billion Ponzi scheme — the biggest in history — enriching himself, his family and selected investors, from a fund he founded in 1960 that boasted remarkable returns. In an instant, he transformed from a sage statesman of Wall Street, who once headed Nasdaq, to a villain symbolizing the sort of deception, self-dealing and avarice that helped precipitate the Great Recession.

There were nearly 2,000 Long Island accounts listed as having invested with Madoff, Newsday reported at the time the scandal broke, with the largest cluster in Nassau, mainly along the North Shore. Victims included several charities and nonprofits on Long Island, who said at the time that the swindling affected their missions.

Pleading guilty in 2009 to 11 federal felonies and later sentenced to 150 years, Madoff died in 2021 at age 82 in a federal prison hospital in North Carolina.

In 2020, he said in a court filing seeking early release that he had fewer than 18 months to live and was entering the last stages of kidney disease.

He told The Washington Post that he’d "made a terrible mistake."

"I’m terminally ill," Madoff said. "There’s no cure for my type of disease. So, you know, I’ve served. I've served 11 years already, and, quite frankly, I've suffered through it."

Of the total being paid out to Madoff’s victims from the fund, about $2.2 billion came from civil forfeiture recovered from the estate of deceased Madoff investor Jeffry Picower, who over two decades involved with Madoff took out more than $7 billion in Madoff investors’ money. About $1.7 billion came from a deferred prosecution agreement and other legal action from against JPMorgan Chase Bank, which was accused of failing to report suspicions of Madoff’s fraud. The balance came from other sources implicated in the scandal.

In a statement accompanying Monday's news release, James E. Dennehy, assistant director in charge of the FBI’s New York field office, said: "These victims implicitly trusted Madoff with their investments only to ultimately lose significant monies to his selfish plan."

The fund is overseen by Richard Breeden, former chairman of the U.S. Securities and Exchange Commission, who serves as special master.

In addition to the money distributed by the fund, an additional $14.72 billion was recovered by Irving Picard, the trustee who liquidated Madoff’s firm following its bankruptcy, the news agency Reuters reported.

By Matthew Chayes

matthew.chayes@newsday.comchayesmatthew

Matthew Chayes, a Newsday reporter since 2007, covers New York City.