Madoff victims closer to relief: 7.2-billion deal approved

Jan 14, 2011, 17:58 GMT

Washington - A federal judge has signed off on an agreement that will recover a major chunk of the losses sustained by victims of disgraced financier Bernard Madoff, according to media reports Friday.

US bankruptcy judge Burton Lifland in Manhattan signed off Thursday on the pact under which the widow of one of Madoff's investors, Barbara Picower, will hand back 7.2 billion dollars, The Wall Street Journal reported.

Picower's late husband, Jeffrey, had received the money in return for investments made with Madoff over two decades. When details of the deal were announced in December, a civil lawsuit was dropped that alleged Picower, who died last year, may have known about the fraud.

Picower was one of the top beneficiaries of Madoff's Ponzi scheme, in which Madoff paid impossibly high returns to clients using money taken from new investors. On paper, the investments had grown to 65 billion dollars by the time Madoff was arrested in 2008.

Madoff is serving a 150-year jail sentence for his crime.

The Picower settlement brought to nearly 10 billion dollars the money recovered from investors that made a profit with Madoff. Victims hope to reclaim more than 20 billion dollars in principal investments lost as a result of the biggest financial fraud in US history.

Irving Picard, a court-appointed trustee in the Madoff case, has pledged that 'every penny' of the settlement money would go to the victims of Madoff's fraud.

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