According to a Bloomberg report, a US bankruptcy court judge has given his approval of the $543 million settlement proposed by JPMorgan Chase & Co for the trustee of the defunct firm of Bernard Madoff. US Bankruptcy Judge Stuart Bernstein in New York, who oversees the liquidation of the firm, ushered the end of the monumental case wherein thousands of investors had claimed that the Wall Street bank turned a blind eye to the biggest Ponzi scheme ran in the US.
A Ponzi scheme, named after Boston-based clerk who first orchestrated such scheme, is a fraudulent investing scam which promises older investors high returns through the acquisition of new investors.
Bloomberg said the accord was reached January, of which the deal involved lawsuits filed by trustee Irving Picard and two other related cases by victims of Madoff.
Bernstein said about the accord, "The settlements are fair, reasonable and in the best interest of the Madoff estate. (The deals provide) substantial benefit (to victims)."
The JPMorgan deal will have Picard pick up $10 billion on behalf of Madoff's victims, said Bloomberg. The amount is 59% of the principal $17 billion investment deemed to have been lost in total by thousands of customers in the investment advisory business of Madoff's. Picard claimed that the bank allegedly helped Madoff in running the scam by ignoring signs pointing to fraud.
The money received from new customers had been placed by Madoff into an account to pay back old investors, as opposed to investing it in securities, Bloomberg said. Madoff's confession and subsequent arrest led to the collapse of the Ponzi scheme in 2008.
Under the terms of the settlement, JPMorgan agreed to pay $325 million to Picard in settlement of his lawsuit, and another $218 million to settle two two related class-action lawsuits that Picard had assistance in filing.
