Pi­cower Es­tate agrees to for­feit $7.2b to ben­e­fit Mad­off's Vic­tims

The Pak Banker - - Company& -

WASHINGTON: The es­tate of Jef­fry Pi­cower, an in­vestor with im­pris­oned con man Bernard Mad­off, has re­port­edly agreed to pay $7.2 bil­lion to re­cover money he made from the fraud. Pi­cower's es­tate will pay $5 bil­lion to Irv­ing Pi­card, the trustee over­see­ing the liq­ui­da­tion of Mad­off's firm, and $2.2 bil­lion to U.S. au­thor­i­ties, ac­cord­ing to two peo­ple fa­mil­iar with the mat­ter. Bloomberg's Jon Er­lich­man re­ports. (Source: Bloomberg)

The es­tate of Jef­fry Pi­cower agreed to for­feit $7.2 bil­lion that the in­vestor got from Bernard L. Mad­off's Ponzi scheme, bring­ing the amount col­lected by au­thor­i­ties for vic­tims of the fraud to $9.8 bil­lion.

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. Pi­cower died in Oc­to­ber 2009 at age 67. Pi­card and U.S. At­tor­ney Preet Bharara, who is prob­ing the Mad­off fraud, yes­ter­day an­nounced the set­tle­ment with Pi­cower's widow, Bar­bara.

"I com­mend Bar­bara Pi­cower for agree­ing to turn over this truly stag­ger­ing sum, which re­ally was al­ways other peo­ple's money," Bharara said at a news con­fer­ence in New York. "This set­tle­ment pro­vides a sig­nif­i­cant mea­sure of hope to the many vic­tims of Bernard Mad­off's hor­rific crimes."

Pi­card said that in­vestors in Mad­off's Ponzi scheme, the largest in U.S. his­tory, lost $20 bil­lion in prin­ci­pal. Ac­count state­ments at the time of Mad­off's ar­rest in De­cem­ber 2008 showed to­tal bal­ances of $65 bil­lion. Pi­card, who filed hun­dreds of law­suits seek­ing $50 bil­lion, has now re­cov­ered $9.8 bil­lion.

Pi­cower be­gan in­vest­ing with Mad­off in the late 1970s, con­trol­ling dozens of ac­counts. He had a heart at­tack and drowned in his swim­ming pool in Palm Beach, Florida.

The set­tle­ment "hon­ors what Jef­fry would have wanted," Bar­bara Pi­cower said in a state­ment by her lawyer, Wil­liam Za­bel of Schulte Roth & Za­bel LLP.

"I am ab­so­lutely con­fi­dent that my hus­band Jef­fry was in no way com­plicit in Mad­off's fraud," she said. "The Mad­off Ponzi scheme was de­plorable, and I am deeply sad­dened by the tragic im­pact it con­tin­ues to have on the lives of its vic­tims. It is my hope that this set­tle­ment will ease that suf­fer­ing."

Pi­card, who was ap­pointed trustee by a bank­ruptcy judge in Man­hat­tan, ap­proved 2,363 in­vestor claims for re­cov­ery as of Dec. 10 and re­jected 13,189. Rea­sons for re­jec­tion in­clude that the claimants with­drew more money from their ac­counts than they in­vested. The Pi­cower set­tle­ment, which must be ap­proved by the bank­ruptcy court be­fore it can take ef­fect, cov­ers all the money claimed by Pi­card.

"They're get­ting the whole thing?" said Mad­off in­vestor Ti­mothy Mur­ray, 58, of Minneapolis. "Wow. That's great. That's won­der­ful. I'm be­gin­ning to think that there's a real pos­si­bil­ity that Pi­card could pay all the claims he ap­proved and there could be ex­tra money."

Mur­ray said he and his fam­ily in­vested $12 mil­lion over two decades and are among those re­jected.

Pi­cower, his fam­ily and re­lated en­ti­ties, be­gin­ning in the 1970s, de­posited $619.4 mil­lion with Mad­off and took out $7.8 bil­lion, ac­cord­ing to a for­fei­ture com­plaint filed yes­ter­day by Bharara in fed­eral court in New York. The es­tate ad­mit­ted no wrong­do­ing in set­tling the case.

In his will, dated 10 days be­fore he died, Pi­cower left $200 mil­lion in cash to his wife. He also left $25 mil­lion to his daugh­ter, Gabrielle Pi­cower, and about $15 mil­lion to 20 other ben­e­fi­cia­ries. The un­spec­i­fied re­main­der is to go to char­ity.

"My late hus­band was a tal­ented and ac­tive in­vestor who had ex­tra­or­di­nary suc­cesses in busi­ness in­vest­ments dur­ing his ca­reer, which will al­low me to make this set­tle­ment and re­turn to the phil­an­thropic work that was so im­por­tant to Jef­fry and me," Bar­bara Pi­cower said in the state­ment. Bharara de­clined to say yes­ter­day whether pros­e­cu­tors had con­cluded that Pi­cower was com­plicit in Mad­off's fraud.

In the suit, Pi­card said Pi­cower knew or should have known he was reap­ing bil­lions of dol­lars from a fraud.

"Pi­cower's ac­counts were rid­dled with bla­tant and ob­vi­ous fraud," Pi­card said in Septem­ber 2009, in le­gal pa­pers op­pos­ing Pi­cower's at­tempt to have part of the claim dis­missed.

In a state­ment yes­ter­day, Pi­card said that, when he sued in 2009, "the records avail­able led us to al­lege that Mr. Pi­cower might have or should have known of Mr. Mad­off's fraud. With the ben­e­fit of ad­di­tional records, I have de­ter­mined that there is no ba­sis to pur­sue the com­plaint against Mr. Pi­cower, and we have ar­rived at a busi­ness so­lu­tion in­stead."

Za­bel re­leased a let­ter from Eric S. Lane, a Gold­man Sachs Group Inc. man­ag­ing di­rec­tor, that Pi­cower was a client of the bank's in­vest­ment man­age­ment di­vi­sion for al­most three decades. -Bloomberg

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