A US government fund established to compensate victims of Bernie Madoff's Ponzi scheme is nearing completion of its final round of payments, nearly covering all losses incurred by those scammed. The Madoff Victim Fund has recently distributed over $131.4 million in its 10th and last payment cycle, totaling $4.3 billion dispersed among nearly 41,000 victims from 127 countries.
Each victim is set to receive compensation for approximately 94% of their proven losses, marking a significant milestone in the decade-long process of identifying victims worldwide and untangling complex financial transactions.
Bernie Madoff orchestrated a $20 billion fraud scheme through his wealth management firm, which collapsed during the 2008 global financial crisis. The Ponzi scheme involved using new investors' money to pay off older investors, rather than investing it as promised, causing widespread devastation to individuals and organizations, including charities and schools.
Contrary to common assumptions, the majority of victims assisted by the Madoff Victim Fund were small investors, with average losses of around $250,000, dispelling the misconception that only large institutions and high-net-worth individuals were affected.
In 2009, Madoff was sentenced to 150 years in prison after pleading guilty to 11 federal felonies, including multiple counts of fraud. He passed away in 2021 at the age of 82.
The Madoff Victim Fund commenced compensating victims in 2017, with a significant portion of the funds, approximately $2.2 billion, recovered from the estate of Jeffry Picower, a Madoff investor. Additionally, victims have received compensation through Irving Picard, the court-appointed trustee in the Madoff case, who has distributed nearly $14 billion to former Madoff customers.
Most of the funds collected by Picard's team resulted from settlements with former investors who withdrew more money from Madoff's firm than they deposited, despite many claiming ignorance of the Ponzi scheme. The trustee has pursued legal action against these investors for benefiting from the fraudulent scheme.
