Victims of Bernard Madoff's Ponzi scheme were mailed approximately $2.5 billion in checks on Wednesday by the Securities Investor Protection Corporation (SIPC), the organization said today, as part of the liquidation of Madoff's company, Bernard L. Madoff Investment Securities LLC (BLMIS).

Approximately $17.3 billion in principal is estimated to have been lost in Madoff's fraudulent investments. When combined with the funds already returned to customers of Madoff's firm, the SIPC said the second distribution satisfies more than 50 percent of the total Madoff accounts with allowed claims. Nearly 1,100 accounts were covered by yesterday's second SIPC distribution.

Madoff was arrested by federal authorities on December 10, 2008, and his scheme is considered the largest financial fraud in U.S. history. He pleaded guilty to 11 federal felony counts in March 2008 and he is currently serving a 150-year prison sentence.

SIPC President Stephen Harbeck applauded Irving H. Picard, the court appointed trustee seeking to recover money for victims, and his attorneys in reaching the new milestone.

"This shows that the customer protection program created by Congress works," said Harbeck in a prepared statement. "Trustee Picard has been tireless in his efforts to recover monies and distribute them in a fair and equitable way to all customers with allowed claims at the failed BLMIS brokerage."

The SIPC, funded by the securities industry, acts as a trustee or works with an independent court-appointed trustee in brokerage insolvency cases to recover funds for investors. (It was created by Congress in 1970.) To date, it has advanced over $800 million to pay customer claims and an additional $621 million to fund the Madoff liquidation proceeding. The SIPC has recovered more than $9.147 billion in funds.

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities -- such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities held in custody with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash.