Victims of Bernard Madoff's fraud will soon receive $2.48-billion (U.S.) to help cover their losses, more than tripling their total recovery to about $3.63-billion, the trustee liquidating the imprisoned swindler's firm said.
Cheques ranging from $1,784 to $526.9-million were mailed on Wednesday to 1,230 former customers of Bernard L. Madoff Investment Securities LLC, according to trustee Irving Picard. The average payout is $2.02-million.
Mr. Madoff's victims earlier recovered $1.15-billion, including sums committed by the Securities Investor Protection Corp, which helps customers of failed brokerages.
U.S. Bankruptcy Judge Burton Lifland in Manhattan authorized the latest distribution last month following two legal victories for the trustee.
In June, the U.S. Supreme Court let stand a lower court decision that endorsed Mr. Picard's methods for calculating losses. In July, a former Madoff customer dropped a court challenge to a $7.2-billion forfeiture by the estate of Madoff investor Jeffry Picower. Of that sum, $5-billion would go to the Madoff firm's estate, and the rest to the U.S. government.
Mr. Picard has recovered $9.15-billion, or 53 per cent of the $17.3-billion he believes was lost in Mr. Madoff's Ponzi scheme.
The trustee is holding some funds in reserve as some Mr. Madoff victims pursue their own cases to recover more money.
Mr. Picard said this litigation is delaying further distributions. The trustee is also appealing court decisions that have limited his claims against banks such as JPMorgan Chase & Co. that did business with Mr. Madoff.
A spokeswoman for Mr. Picard was not immediately available to comment on the latest distribution.
The market for trading claims on potential recoveries from Mr. Madoff's estate will adjust for the distribution, according to Joseph Sarachek, managing director of claims trading at CRT Capital Group LLC, a Stamford, Connecticut-based broker-dealer.
He said claims that recently traded at around 69 cents on the dollar will likely soon trade in the 30s. "The Madoff market is fairly volatile," Mr. Sarachek said. "The real question is when people think the next distribution will be."
Judge Lifland has authorized Mr. Picard and his law firm, Baker & Hostetler, to bill $321.2-million of legal fees to pursue Madoff cases for the period ended January 31, 2012.
Mr. Madoff was arrested in December 2008 and pleaded guilty three months later. The 74-year-old is serving a 150-year sentence in a North Carolina federal prison.
The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, U.S. Bankruptcy Court, Southern District of New York, No. 08-ap-01789.