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BUSINESS
New York

Madoff victims may share in $2.35B federal fund

Kevin McCoy
USA TODAY
  • New fund is open to Madoff%27s direct investors and those who invested indirectly via feeder funds
  • Application deadline is Feb. 28
  • Prosecutors seeking additional Madoff funds for burned investors
File photo shows Ponzi scheme architect Bernard Madoff leaving federal court in 2009

NEW YORK — Victims of Bernard Madoff's infamous Ponzi scheme have a chance to make claims for a share of a $2.35 billion federal recovery fund, Manhattan U.S. Attorney Preet Bharara said Monday.

The fund is open to applications from burned customers who invested with Madoff indirectly through financial feeder funds, investment groups and other pooled investment vehicles, said Bharara.

The federal fund is separate from the recovery and repayment process being pursued on victims' behalf by Irving Picard, a court-appointed trustee. Courts have ruled that indirect Madoff investors are not allowed to seek recovery from the trustee, who so far has recovered more than $9.5 billion of the estimated $20 billion investors lost in the fraud.

"The process we have put in place opens the door for thousands of defrauded victims who otherwise might never have recovered anything," said Bharara. "We have made eligibility to recover far more inclusive, and more equitable, than ever before."

Madoff's decades-long scam collapsed in Dec. 2008 when he confessed that he had been using money from some customers to pay others. The 75-year-old disgraced financier pleaded guilty without standing trial and is now serving a 150-year federal prison term.

Five of Madoff's former employees are now standing trial in New York on charges that they knowingly facilitated the fraud and received millions of dollars from Madoff. All have said they were victims of the scam architect.

Since the scam collapsed, federal prosecutors and Picard have independently pursued efforts to recover funds from Madoff, his relatives and a variety of others, including investors who benefited financially before the scam collapsed.

Approximately $2.2 billion of the new victim fund announced by prosecutors came via a Dec. 2010 civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower, said Bharara. The remaining funds were collected via civil forfeiture actions against investor Carol Shapiro and separate actions against Madoff, his brother, Peter and accused co-conspirators.

According to the Monday's announcement by prosecutors, nearly anyone who lost funds invested with Madoff and who can document their net loss will be eligible to seek recovery from the new victim fund. Claims must be received by Feb. 28, 2014.

Detailed information about the fund, including eligibility criteria and instructions for filing claims can be found at www.madoffvictimfund.com.

Additional questions about eligibility or filing procedures may be directed to the office of a special master overseeing the fund at 866-624-3670 or at info@madoffvictimfund.com. Richard Breeden, a former chairman of the Securities and Exchange Commission, is serving as the special master under a Department of Justice appointment.

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