(Bloomberg News) The liquidator of Bernard Madoff's brokerage may have $5 billion more by next month to increase a planned payout from a $2.3 billion fund for victims of the Ponzi scheme if no further court challenges are filed.
Madoff trustee Irving Picard announced the possible increase in a statement after the U.S. Supreme Court yesterday refused to hear an appeal by investors seeking compensation for lost profit. That decision frees most of a $2.3 billion customer fund by reducing the scheme's calculated total to about $17 billion covering only lost investments and excluding so-called fake profit that would have raised the total to $57 billion.
Another $5 billion may be available from a 2010 settlement with Jeffry Picower's estate if that deal isn't challenged again by July 16, Picard said.
Adele Fox, the main challenger to the Picower deal, doesn't plan another appeal to the key court ruling that restricted Picard's access to the $5 billion, said Fox's lawyer, Jim Beasley.
"Picard gets the money," Beasley said yesterday in a phone interview. "I don't know the time frame."
Picard, who so far has paid the con man's investors $333 million in 3 1/2 years, said yesterday he would ask a judge to approve a second distribution "within an expedited time frame."
Escrow Agent
Most of the $9 billion that Picard has won in settlements, including Picower's $5 billion, has been unavailable for disbursement because of court challenges. Picard has set aside $2.3 billion for customers, not including the Picower money. The escrow agent holding the money forfeited by Picower will release it if shown a final non-appealable court order upholding the deal, according to court filings by Picard that detail the 2010 settlement.
Picower, one of the largest of Madoff's investors, may have suspected the con man was running a Ponzi scheme, according to Picard's lawsuit against him. Picower drowned in 2009, and his estate forfeited $2.2 billion to the U.S. and $5 billion to Picard. Fox, after losing her latest bid to reverse the forfeiture, had until July 16 to ask the Supreme Court to let her appeal again. She won't make the request, Beasley said.
In a separate case, Fox, acting for herself and others who have little prospect of getting paid by Picard, will continue to challenge the Picower deal, which is the trustee's biggest settlement with a former Madoff investor, Beasley said. If successful, she may still get some of the Picower money back, he said.
"These are people who suffered real damages and have valid claims," Beasley said. "Picard has determined that they shouldn't get paid."