In a historical bankruptcy settlement, bankruptcy trustee Irving Picard is set to recover $7.2 billion from the estate of deceased billionaire Jeffry Picower. Picard had sued Picower in a so-called clawback litigation, alleging his earnings from Madoff consisted of money stolen from other investors. However, Picower's widow, Barbara, has insisted he was in the dark about the fraud and he was never charged with a crime.
The $7.2 billion represents "every cent Picower ever received" from the fraud, Sheehan told the judge. Authorities have said the Picower deal, combined with smaller seizures and settlements, means that half of the $20 billion has now been recovered and could be returned to victims. But it's unclear who will end up benefiting and when: Picard has authorized payments to fewer than 2,400 of the nearly 16,500 Madoff customers who filed a claim for a share of recovered money.
Many investors will not be allowed to collect from the bankruptcy settlement because they only invested indirectly with Madoff or withdrew more money than they originally invested. Unfortunately with the bankruptcy settlement it is likely that smaller investors who did not have the capital to invest directly with Madoff will be left penniless. But many of them have vowed to appeal the bankruptcy settlement to the chagrin of the bankruptcy court. The bankruptcy judge warned that it is unlikely the ruling will be changed in an appeal and that more lawsuits will only serve to delay the repayment of swindled investors.
Investors have also been barred by the bankruptcy court from bringing their own lawsuits against the Picower estate saying that the bankruptcy trustee is representing all of the investors in this case.