Some Madoff victims recoup 94% of losses as process concludes
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Bernie Madoff, heading into court in 2009. Photo: Mario Tama/Getty Images
The Justice Department said its tenth and final distribution of funds to eligible victims of Bernie Madoff would bring their total recovery to 93.7% of their losses.
Why it matters: The fraud was the largest Ponzi scheme in history, with nearly 41,000 recipients ultimately qualified for payments from the Madoff Victim Fund.
How it works: The funds were recovered by the Justice Department's Money Laundering and Asset Recovery Section, which pursues the profits made by criminal enterprises in order to recover them return them to victims.
- These funds were recovered from major investors in Madoff's scheme, his family and from a deferred prosecution agreement and civil action against JPMorgan Chase Bank, according to a release by the Department of Justice.
- Most of the people paid by the Victim Fund had relatively smaller losses, under $500,000.
Catch up fast: Madoff pled guilty to 11 federal crimes in 2009, acknowledging that he had turned his company into a massive fraudulent scheme.
- He was sentenced to 150 years in prison later that year, and died in prison in 2021.
Victims were lured into believing his returns were legitimate because his staff prepared statements about profitable trades it had made on their behalf, backdating the transactions to line them up with the high and low points of various assets.
- Notable victims of the scheme included Hollywood power couple Kevin Bacon and Kyra Sedgwick, the late Nobel prize-winning author Elie Wiesel and the late broadcasting legend Larry King.
- Madoff also took in numerous notable charitable organizations.
The bottom line: Sam Bankman-Fried's FTX fraud trumped Madoff as the top financial fraud of all time, and — thanks to a large amount of luck with crypto prices and the AI boom — a similar recovery looks likely, in much less time.
