$342M payout set for Madoff victims

Bernard Madoff ’s victims are set to receive a $342 million payout from the trustee unwinding his epic Ponzi scheme, financed in part by a settlement with the estate of one of the con man’s oldest friends, the late Beverly Hills billionaire Stanley Chais.

The distribution, if approved by a judge, would be the eighth since Madoff’s arrest on Dec. 11, 2008. Trustee Irving Picard’s lawsuits and settlements with banks and wealthy investors have recovered about $11.5 billion for thousands of victims who lost $17.5 billion in principal.

The latest round of checks is being funded by settlements reached in recent months with investors who profited from the scam, including Chais’ estate, which agreed in October to pay $277 million to resolve claims against the money manager who funneled cash from his own customers into Madoff’s Ponzi scheme. Chais, who died in 2010, wasn’t charged with wrongdoing.

The proposed distribution will be considered for approval at a Jan. 12 hearing in U.S. Bankruptcy Court in Manhattan, according to a statement Wednesday from Picard, a bankruptcy lawyer with Baker & Hostetler LLP in Manhattan.

“The settlement of major litigation prior to trial makes this expedited payment possible,” Stephen Harbeck, president of the industry-financed Securities Investor Protection Corp., which pays Picard’s costs and fees, said in the statement.

The payout comes as a separate, $4 billion government fund set up more than three years ago to repay victims is still processing tens of thousands of claims by investors in Madoff feeder funds in anticipation of making its first distribution.

Richard Breeden, the fund’s administrator hired by the Justice Department, estimated in February that as many as 40,000 victims may get initial payments by the end of 2016, though no update on the timing has been provided. The Justice Department declined to comment Wednesday on the timing, and a call to Breeden wasn’t returned.