A U.S. bankruptcy judge has approved a $7.2 billion settlement between the trustee overseeing the dissolution of Bernard L. Madoff’s investment advisory firm and the estate of investor Jeffry Picower, an investor. Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, sued Picower in May 2009, claiming he withdrew $7.2 billion more than he invested and that he should have known Madoff was running a Ponzi scheme. It should be noted that Picower died in October 2009. The trustee says he hopes to recover enough money to pay all of Madoff’s victims, including those who withdrew more money from their Madoff accounts than they invested.
The settlement agreement brought the amount collected by authorities over the Madoff fraud to $9.8 billion. Under the agreement, the Picower estate agreed to pay $5 billion to the trustee for distribution to Madoff’s creditors. It also agreed to pay the government $2.2 billion, which will be distributed to victims, under the trustee’s supervision. The settlement resolved a lawsuit filed by the trustee in May 2009. In the suit, it was alleged that Picower knew or should have known that Madoff’s investments were phony.
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