Saturday, December 18, 2010

Somewhat Good News for Madoff Victims

by Gary Snyder

With recent developments, there is good reason to believe that the victims of Bernard Madoff's schemes will see more money than they possibly could have expected.

Jeffry Picower’s widow, Barbara, agreed to return a staggering $7.2 billion that her husband reaped from the giant Madoff Ponzi scheme. U.S. Attorney Preet Bharara called the forfeiture the largest in Justice Department history and a "game changer" for those swindled by Madoff. "We will return every penny received from almost 35 years of investing with Bernard Madoff," Barbara Picower said in a statement. "I believe the Madoff Ponzi scheme was deplorable, and I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering." A huge charitable foundation that Picower had created closed in 2009 after its assets were wiped out in the Madoff fraud. It had donated hundreds of millions to colleges, libraries and other groups.

The Picower settlement means roughly half of the $20 billion that investors entrusted to Madoff has now been recovered, authorities said.

The trustee representing victims of Bernard Madoff’s fraud has filed more than two dozen lawsuits in recent weeks against foundations and charities that invested directly with Madoff and allegedly profited from the scheme. Some charities and individuals that profited—by getting back more than they put in, before the fraud was uncovered—have entered into settlements to avoid lawsuits. The lawsuit, which is typical of the latest claims filed against foundations and nonprofit groups, states that $5.32-million of the $6.68-million withdrawn by the cultural organization from 2002 to 2008 was “fictitious profit” from the Ponzi scheme. Recently, the Jewish women’s charity Hadassah announced that it had struck an agreement to give back $45-million, slightly less than half of its profit from investing with Madoff. Also, Carl Shapiro, a Boston investor and philanthropist and close friend of Bernard Madoff’s, agreed to return $625-million to the trustee. The trustee, Irving Picard, had maintained that Mr. Shapiro, an early investor with Madoff, withdrew more than $1-billion in the six years preceding the exposure of the fraud. Tax forms for the Carl and Ruth Shapiro Foundation listed assets of $345-million in 2007 but just $112-million at year-end 2008. JTA gives some insight as to a few of the organizations that are being asked to give back some money:
• America-Israel Cultural Foundation, $5 million
• The American Committee for Shaare Zedek Medical Center in Jerusalem, $7 million
• United Congregations Mesorah, $16 million

Foundations established by Bernard Madoff’s sons were also among those that were targets in the latest round of clawback suits. On December 8, the trustee sued the Mark and Stephanie Madoff Foundation and the Deborah and Andrew Madoff Foundation for $2-million each to recover transfers that were made to the foundation from Bernard Madoff accounts. “This action is brought to recover the fictitious profit amount so that this customer property can be equitably distributed among all of the victims.” (Chronicle of Philanthropy) Mark Madoff was found dead as a result of an apparent suicide on December 11, the second anniversary of his father’s arrest.

The trustee recovering money for investors who lost billions of dollars in jailed financier Bernard Madoff's fraud filed civil racketeering charges against an Austrian banker and 55 other defendants, demanding they give up nearly $20 billion and accusing the banker of being Madoff's "criminal soul mate." Court-appointed trustee Irving Picard used tough language to portray a 23-year relationship between banker Sonja Kohn and Madoff, saying she "masterminded a vast illegal scheme" as she and others engaged in money laundering, mail and wire fraud, and financial institution fraud in support of the Madoff's scheme. He also accused her of accepting at least $62 million in secret kickbacks from Madoff for soliciting investors for the fraud. (AP)
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