Madoff fraud victims get $4.3bn as fund completes payouts

A fund created by the US government to help compensate victims of the late Bernard Madoff fraud has begun making final payments, according to a statement from the Department of Justice (DoJ).

The Madoff Victim Fund (MVF) settlement totals $131.4m (£104.6m) and will bring the total amount recovered from the 40,930 claimants to $4.3bn.

Madoff, the Wall Street financier shamed after admitting to the biggest fraud in US financial history, He died in prison in 2021.

He was serving a 150 year sentence after being sued in 2009 for operating a so-called Ponzi scheme, which provided investors with money from new customers rather than actual profits.

“MVF’s distribution solves one of the most dangerous cases ever,” said Richard C Breeden, who runs MVF.

Mr. Breeden is the former chairman of the US Financial Regulator, the Securities and Exchange Commission (SEC).

“We have brought thousands of people to recovery as much as possible,” he added.

Madoff’s victims were a mix of rich people, poor people and companies – big and small – as well as schools, charities and pension funds.

MFV estimates that it will recover about 94% of the confirmed damages when it completes its operation in 2025.

Another $14.7bn has been returned through bankruptcy proceedings to Madoff’s clients.

Madoff’s company collapsed in the 2008 financial crisis.

Founded in 1960, Bernard L Madoff Investment Securities became one of the largest brokers on Wall Street – matching buyers and sellers of stocks – and Madoff served as chairman of the Nasdaq platform.

Over the years, the company was investigated eight times by the SEC because of its extraordinary profits.

But it was the global economic downturn that led to the collapse of the company when Madoff’s investors, who fell through the cracks, tried to withdraw about $7bn and could not find the money to buy it.

The list of victims includes actor Kevin Bacon, Hall of Fame football player Sandy Koufax and film director Steven Spielberg’s charitable foundation, Wunderkinder.

UK banks were also among the losers, with HSBC Holdings saying it had posted around £1bn. Other companies involved include Royal Bank of Scotland and Man Group and Japan’s Nomura Holdings.