Bernard Madoff $50 Billion Ponzi Scheme

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Judge Approves Madoff Settlement, New Deal Reached

Millions to Flow to Victims of Bernard Madoff’s Ponzi Scheme

By Sara Randazzo
Updated Nov. 18, 2014 3:25 p.m. ET
http://online.wsj.com/articles/judge-approves-multimillion-dollar-madoff-settlement-1416327515?KEYWORDS=madoff

An investment fund that parked all of its money with Bernard Madoff has agreed to give up $95 million for the benefit of Mr. Madoff’s victims in the second major settlement announced this week by the court-appointed official tracking down money tied to the biggest Ponzi scheme ever.

The settlement with Senator Fund SPC, announced Tuesday, follows a $497 million deal announced Monday that will collect money from Herald Fund SPC and Primeo Fund, two other funds that invested with Mr. Madoff, who is currently serving a 150-year prison sentence. Both deals are subject to bankruptcy-court approval.

Also Tuesday, Judge Stuart Bernstein of the U.S. Bankruptcy Court in Manhattan signed off on a settlement with real-estate developer Edward Blumenfeld and related parties, who have agreed to pay $32.75 million in cash and to surrender a $29.35 million claim against Mr. Madoff’s investment firm.

Irving Picard , the official who in December 2008 was tasked with paying back Mr. Madoff’s victims, has to date collected or reached deals to collect approximately $10.5 billion of the $17.3 billion in principal investors lost upon the collapse of the Ponzi scheme. Of the recovered funds, nearly $6 billion has been returned to investors.

The Senator agreement represents 100% of the principal Senator withdrew from Mr. Madoff’s investment firm. Because Senator put in more money than it took out, the fund will receive a $238.75 million claim against Mr. Madoff’s firm. The first $95 million it is in line to receive as a creditor will go toward paying the amount due under the settlement.

A representative for Senator said Tuesday that the fund is “glad to have reached a resolution” and “looks forward to putting the litigation behind it.” As part of the deal, Senator has also agreed to split with Mr. Picard any proceeds it receives from other Madoff-related claims.

In the Blumenfeld deal, Howard Simon, an attorney for Mr. Picard, said in court Tuesday that reaching the agreement “has been an arduous two-year process of mediations and negotiations resulting in a heavily negotiated but ultimately very beneficial settlement.”

That settlement, Mr. Simon said, is the best way to ensure the money can be collected from Mr. Blumenfeld, his New York real-estate company and his family. The deal resolves litigation that Mr. Picard brought in December 2010 to recover the $88 million Mr. Blumenfeld and the other defendants received from Mr. Madoff in the six years before his arrest, including $27 million in false profits. The lawsuit also sought to knock out the claims the defendants brought against Mr. Madoff’s firm.

Mr. Blumenfeld and his fellow defendants disputed the lawsuit and denied they received the payments from Mr. Madoff’s investment firm with any knowledge or suspicion of fraud.

The defendants’ release of their $29.35 million in claims against Mr. Madoff’s investment firm gives Mr. Picard the right to collect on those claims and turn over the proceeds to investors.

—Jacqueline Palank contributed to this article.

Write to Sara Randazzo at [e-mail]

http://online.wsj.com/articles/judge-approves-multimillion-dollar-madoff-settlement-1416327515?KEYWORDS=madoff