Nine hundred and forty-four days after Bernard Madoff was arrested on suspicion of orchestrating the largest Ponzi scheme on record that drastically changed the lives of thousands of loyal investors, a New York Judge approved the first distribution of funds that have been recovered to date. Following a hearing on the matter this morning, United States Bankruptcy Judge Burton Lifland signed an order this morning approving trustee Irving Picard's motion to make an interim distribution of a portion of funds recovered to date and not encumbered by pending appeals. Picard, the court-appointed trustee overseeing the liquidation of Madoff's failed brokerage institution, was appointed shortly after the unraveling of Madoff's scheme and has since filed over 1,000 lawsuits in efforts to recover funds.
The motion, filed in May and previously covered in detail by Ponzitracker here, sought to make a first interim distribution of approximately 4.1% of each customer's allowed claim, along with money advanced by the Securities Investor Protection Corporation ("SIPC"). Under SIPC, a customer of a failed brokerage institution is entitled to reimbursement for up to $500,000 of verified losses. While Picard initially intended to distribute over $7 billion, he was forced to drastically reduce the amount available for payment to investors due to a large amount of the settlements he had reached being under appellate review. Among these settlements pending appellate review was the $5 billion settlement reached with the estate of Jeffrey Picower.
While Picard noted the receipt of nearly $2 billion in claims from secured creditors, only investors will receive payments under the first interim distribution. Per the terms of Judge Lifland's order, Picard will begin making payments to the 2,300 investors affected by the scheme based on an initial $272 million available for distribution. This equates to an average investor distribution of $222,511 each. According to Picard, investors can expect the distributions to begin arriving in September.