Madoff Victims are Finally Getting Their $1 Billion Payout

November 19, 2015, 3:05 PM UTC
Bernard L. Madoff leaves US Federal Cour
Bernard L. Madoff leaves US Federal Court after a hearing regarding his bail on January 14, 2009 in New York. Madoff will remain free on bail, a US judge ruled Wednesday, rejecting a bid by prosecutors to detain Madoff pending trial. AFP PHOTO / TIMOTHY A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
Photograph by Timothy A. Clary — AFP/Getty Images

Victims of Bernard Madoff‘s Ponzi scheme can expect to soon receive about $1.42 billion to help cover their losses, after two U.S. judges on Wednesday authorized the payouts.

In the first payout, customers who invested directly with Madoff will receive about $1.18 billion from Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC.

Separately, former customers of J. Ezra Merkin, a New York money manager who funneled their money to Madoff through his Ariel and Gabriel Capital “feeder funds,” will receive nearly $236 million, court papers show.

The payouts were approved less than a month before the seventh anniversary of Madoff‘s fraud being uncovered in December 2008.

In a statement, Picard said U.S. Bankruptcy Judge Stuart Bernstein in Manhattan on Wednesday authorized him to release $1.5 billion from reserves.

Picard said $1.18 billion will go to former Madoff customers in a payout expected to begin this year, with the remainder held back pending the outcome of separate litigation over the fraud.

Individual distributions would range from $1,287 to $200.4 million, Picard has said.

Once the payout, Picard’s sixth, is finished, eligible recipients will have recouped about $9.13 billion.

This includes full payment on 1,264 of the 2,227 Madoff accounts with valid claims, including everyone owed $1.16 million or less, the trustee said.

Picard has recovered or reached agreements to recover roughly $10.91 billion, about three-fifths of the $17.5 billion of principal he has said Madoff customers lost.

In the Merkin case, New York State Supreme Court Justice Richard Lowe approved the nearly $236 million payment, the 10th payout by Bart Schwartz, the Merkin funds’ receiver.

Schwartz said the payout became possible after he settled claims with Picard over the Madofffirm’s estate.

It boosts the recovery by Merkin investors to more than $1.4 billion, the receiver said.

Picard’s payout became possible after the U.S. Supreme Court last month refused to hear an appeal by Madoff victims who sought inflation and interest adjustments on sums they lost.

Lower courts had accepted Picard’s decision not to grant those adjustments.

Madoff, 77, pleaded guilty to fraud in March 2009 and is serving a 150-year prison term.