People scammed out of their money by Ponzi scheme mastermind Bernie Madoff are set to receive a final payout of $131.4 million from a recovery fund run by the Justice Department, which said that the last compensation tranche brings the total recoveries to over $4.3 billion, or nearly 94 percent of the victims’ fraud losses.
Most of the victims—who total 40,930 across the globe—were small investors who lost less than $500,000 in a Ponzi scheme that Madoff concocted on the basis of a wealth management business he founded.
“With this 10th and final distribution, we have succeeded in compensating 40,930 victims with close to 94 [percent] of their losses,” Acting U.S. Attorney Edward Kim for the Southern District of New York said in a statement.
For decades, Madoff used his position at the helm of the investment advisory business he founded in the 1960s—called Bernie L. Madoff Investment Securities—to steal billions of dollars from unwitting clients. Madoff collected money from victims through his company on the false promise of investing it, and in so doing he spun up the world’s largest known Ponzi scheme.
In 2009, Madoff pleaded guilty to 11 felonies for his role in the swindle—including fraud, money-laundering, and perjury—and was sentenced to 150 years in prison. Madoff died in 2021 while incarcerated from what his lawyers said were natural causes.
The restitution effort, led by the DOJ’s Money Laundering and Asset Recovery Section (MLARS), sought to compensate victims using funds forfeited from Madoff, his associates, and complicit entities. A significant portion of the recovery came from a $2.2 billion civil forfeiture from the estate of Madoff investor Jeffry Picower and $1.7 billion collected through a deferred prosecution agreement with JPMorgan Chase.
The Madoff Victim Fund (MVF), under the auspices of MLARS and led by Richard Breeden, a former chairman of the U.S. Securities and Exchange Commission, played a key role in evaluating over 66,000 claims from tens of thousands of victims in 127 countries.
In a statement, Berdeen said he was “delighted” that the fund was paying out its 10th and final distribution, bringing the total number of direct payments to victims to over 246,000 since the fund made its first payout eight years ago.
“Since MVF’s founding, it has traced the contours of the fraud, calculated the amount stolen, and then returned as much as was possible directly to the people and entities from whom the money was stolen,” Berdeen said in a statement, in which he called Madoff’s scheme “one of the most monstrous financial crimes ever committed.”
In the 1980s, Madoff’s company operated as a legitimate brokerage business in New York. Behind the scenes, however, Madoff secretly ran a Ponzi scheme, using funds from new investors to pay returns to earlier ones, creating the illusion of steady, double-digit profits, even in market downturns. In reality, no securities were ever traded. Madoff’s chief financial officer, Frank DiPascali, said in a 2009 guilty plea that the statements detailing the trades were “all fake.”
Victims of Madoff—who became so hated for the fraud that he wore a bulletproof vest to court—ranged from everyday retirees to celebrities like actor Kevin Bacon and film director Steven Spielberg.
When Madoff pleaded guilty for his crimes in 2009, he said he was “deeply sorry and ashamed” for what he had done.
