Madoff fraud victims receive $4.3 billion as fund completes payments

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

The payments being made by the Madoff Victims Fund (MVF) amount to $131.4 million (£104.6 million) and will bring the total amount it has handed out to 40,930 claimants to $4.3 billion.

Madoff, a Wall Street financier disgraced after admitting to one of the biggest frauds in American financial history, died in prison in 2021.

He had been serving a 150 year sentence after pleading guilty in 2009 to running a so-called Ponzi scheme, which paid investors with money from new clients rather than actual profits.

“MVF’s distributions make up for one of the most monstrous financial crimes ever committed,” said Richard C. Breeden, who heads MVF.

Breeden is the former chairman of the US financial regulator, the Securities and Exchange Commission (SEC).

“We have brought tens of thousands of victims to the greatest recovery we could achieve,” he added.

Madoff’s victims were a mix of wealthy people, less well-off people and businesses – both large and small – as well as schools, charities and pension funds.

The MFV estimates that it will have recovered almost 94% of victims’ proven losses when it completes its mission in 2025.

Another $14.7 billion has been returned through bankruptcy proceedings to Madoff clients.

Madoff’s investment firm collapsed during the 2008 financial crisis.

Founded in 1960, Bernard L. Madoff Investment Securities became one of Wall Street’s largest market makers (matching buyers and sellers of stocks) and Madoff served as president of the Nasdaq stock trading platform.

Over the years, the SEC investigated the company eight times because it delivered exceptional returns.

But it was the global recession that caused the company’s demise when Madoff’s investors, affected by the crisis, tried to withdraw some $7 billion and he couldn’t find the money to cover them.

The list of scammers included actor Kevin Bacon, Hall of Fame baseball player Sandy Koufax and film director Steven Spielberg’s charitable foundation, Wunderkinder.

UK banks were also among those that lost money, with HSBC Holdings saying it had an exposure of around $1 billion. Other corporate victims were Royal Bank of Scotland and Man Group and Japan’s Nomura Holdings.