Irving Picard, the trustee overseeing the liquidation of Bernard Madoff’s old investment firm, scored his biggest coup yet with the announcement that the widow of Jeffry Picower has agreed to forfeit $7.2 billion in profits from the Madoff Ponzi scheme to its victims.
Picower had been one of Madoff’s long-time associates going back to the 1970s, when he met the confessed fraudster through his accountant, according to The Wall Street Journal. The self-made billionaire investor died in October 2009 from a heart attack, and his widow Barbara found him lying at the bottom of their swimming pool. The trustee had filed suit against Picower’s estate, claiming that as a sophisticated investor he should have been suspicious of the purported returns of up to 100 percent claimed by Madoff.
Unlike many of the other Madoff investors from whom Picard is seeking to claw back profits, Picower’s 67-year-old widow apparently felt that she and her children had enough money from her late husband’s estate, and she wanted to clear his name
“I am absolutely confident that my husband Jeffry was in no way complicit in Madoff's fraud and want to underscore the fact that neither the Trustee nor the U.S. Attorney has charged him with any illegal conduct,” she said in a statement quoted by the Journal.
Picard, for his part, was only too happy to receive his share of the settlement and help clear the Picower name, which bears an uncanny resemblance to his own. Under the terms of the settlement, as trustee he will receive $5 billion, while the U.S. government will get $2.2 billion. The money is expected to be distributed to Bernard L. Madoff Investment Securities’ many defrauded investors.
“Every penny of the $7.2 billion recovered through these two settlements will be distributed to BLMIS customers with valid claims,” said Picard in a statement.
He estimated that the $7.2 billion makes up more than one-third of the total principal lost in the Madoff Ponzi scheme. Picard plans to ask the bankruptcy court to approve an initial distribution to Madoff’s defrauded investors “as soon as is practicable” after the court has approved the settlement.
He and a fellow partner at the law firm where he works, Baker & Hostetler, took pains to thank Mrs. Picower.
“As we have often stated, those who have received other people’s money, irrespective of their knowledge of the fraud, should return the monies to the Trustee for payment to those Madoff customers with valid claims who have recovered little or none of their original deposits,” said trustee counsel David Sheehan. “Mrs. Picower embraced this concept and has set the appropriate high standard going forward.”
“I want to thank Mr. Picower’s widow, Barbara, the other Picower family members and the legal, business and other advisors who worked with us to arrive at this agreement,” said Picard. “This resolution sets a positive example for negotiation and settlement, versus litigation, because Mrs. Picower fully understood the impact of Madoff’s crime and wanted to do the best she could to help BLMIS customers.”
Mrs. Picower also tried to set the record straight. “It is a great tragedy that my husband Jeffry's sudden and untimely death last fall prevented him from seeing the timely and full restoration of his reputation for honesty, integrity and professional achievement and the resumption of his life's work of caring for others and giving back to society through philanthropy,” she said. “He was committed to overcoming the devastation resulting from Bernard Madoff's fraud by reaching a fair and generous settlement with Mr. Picard and also by continuing the important charitable work that had been the focus of our lives for so many years.”
Coming only days after the news of Madoff’s eldest son Mark committing suicide, Mrs. Picower’s decision to grant billions of dollars in relief to Madoff’s defrauded investors, many of whom are barely managing to pay their living expenses these days, demonstrates that there is some good news to emerge out of the scandal, thanks to a widow who wanted to honor her late philanthropic husband’s memory.