The victims of the man behind one of the biggest schemes on Wall Street, Bernard Madoff, are set to receive an additional $504 million. This money is a result of the government selling the assets from Madoff’s financial firm, which went under 10-years earlier.
The Justice Department said that this is the second in a series of payouts to the approximate 21,000 victims, who will now have received combined compensations totaling over $1.2 billion. An entity created by the government to help those who lost money when Madoff’s long-running Ponzi scheme was revealed, called the Madoff Victim Fund, has been distributing the payments.
According to The New York Times, “The government said it could return more than $4 billion to victims who lost their savings to Mr. Madoff and his firm, Bernard L. Madoff Investment Securities. But that number is still small compared with the imaginary profits the firm had promised investors and the real losses it incurred. When Mr. Madoff confessed to his crime, he estimated that he had lost about $50 billion. Later estimated losses were even higher: about $65 billion in paper wealth and $17.5 billion in cash. Mr. Madoff spent client money on family and friends, rather than investing it, and then took in money from additional clients to pay out early investors and cover up the fraud. Half of the $4 billion the Justice Department hopes to distribute to victims comes from the government’s aggressive move to seize the assets not only of Mr. Madoff and his family, but also of the wealthy investors who over the years cashed out billions from the fund, profits that turned out to be fictions. The other half came from J.P. Morgan Chase, which was accused of ignoring red flags while it acted as Mr. Madoff’s bank.”
Under Attorney General Jeff Sessions, civil asset forfeiture, which is the government seizing of assets, has become a more common practice which has brought criticism from liberals and conservatives alike. However, the victims of Madoff’s financial scheme aren’t complaining, since this has helped benefit them in the recovery of the millions of dollars they lost in the scam.
In a statement, Sessions said, “In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle. We continue to work to compensate those he defrauded.”
Madoff was sentence to 150 years in prison, after admitting to his sons in December 2008, that his investment advisory business of nearly half-a-century was a giant fraud. His family notified authorities and Madoff eventually pled guilty to 11 counts of criminal financial activity. Since the horrid revelation, both Madoff’s sons have died, and his wife Ruth remains estranged.
NYT reports, “The firm’s collapse claimed thousands of victims including pension funds, foundations, a philanthropy established by the Holocaust survivor Elie Wiesel, and wealthy individuals like the actors Kevin Bacon and Kyra Sedgwick. The Justice Department has approved more than 39,000 petitions for compensation.”
Another approximate $11 billion has been paid out to victims who filed a separate class-action lawsuit against Madoff.
By Rebecca Gold