The trustee who has been charged with recovering funds and distributing them to the victims of imprisoned Ponzi schemer Bernard Madoff has recovered $550 million in a settlement with some of Madoff’s feeder funds and early investors.

Irving Picard, a partner with Baker & Hostetler LLP, who is acting as the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC joined with the Securities Investor Protection Corporation in announcing Tuesday that he has entered into a $550 million settlement agreement with the family of Carl Shapiro.

Shapiro was one of BLMIS’s earliest investors. He maintained accounts with BLMIS in his own name, in the name of family members and various trusts, limited liability companies, partnerships, and corporate entities, some of which were established in the early 1960s. 

The agreement resolves the Madoff trustee’s potential claims against the Shapiro family and its related entities. The $550 million will be added to the fund of customer property being assembled by Picard for equitable distribution to customers of BLMIS with valid claims.

A motion for approval of the settlement was filed today with the United States Bankruptcy Court for the Southern District of New York. The filing states that $38 million of the $550 million settlement payment represents the full amount that the trustee demanded from Robert Jaffe in connection with his role with Cohmad Securities Corporation, a feeder fund for Madoff, as well as all amounts he withdrew from Madoff since the 1980s. Jaffe was Shapiro’s son-in-law and began working for Cohmad in the late 1980s.

“This agreement represents a financially rewarding outcome and it is a strong example of the progress we are making in assembling the largest fund possible for the benefit of BLMIS customers with valid claims,” said Picard in a statement.

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