The court-appointed trustee for the victims of Bernie Madoff’s fraud scheme delivered some good news yesterday. He worked out a settlement with the estate of Madoff’s friend, Jeffry Picard, that will add $7.2 billion to the pot to be distributed to fraud victims. The $7.2 billion — yes, that is billion, with a b — represents every penny of Picard’s profit from his investment with Madoff. It is the largest forfeiture recovery in U.S. history, and it demonstrates that, in most financial fraud schemes, the ill-gotten gains can be traced and, in some cases, recovered.
It has now been two years since Madoff was arrested, and still his story remains intriguing. It is amazing that so many people were gulled by Madoff’s trickery, and it is appalling that regulators ignored so many danger signs about the nature and extent of his fraud. (People who have unreasoning confidence that federal regulation will prevent problems should be mindful of the Madoff story). And it is astonishing that Madoff would prey so extensively on the Jewish community and on charities. How did he sleep at night?
The fact that Picard made $7.2 billion investing with Madoff is staggering. Picard’s widow denies that he had any involvement in the scheme, however, and says that she hopes the agreement to refund the profits will help ease the victims’ suffering. Adding $7.2 billion in the pot is certain to add some cheer to the victims’ holiday season.