Widow of longtime Madoff investor to return money
Friday, December 17, 2010; 10:54 PM
Before his death, Jeffry M. Picower had benefited more than anyone from Bernard Madoff's fraud. A longtime investor with the disgraced money manager, he had withdrawn more than $7 billion in other people's money before the Ponzi scheme was revealed in December 2008. And federal prosecutors, securities regulators and the Internal Revenue Service were investigating whether he was complicit in the fraud.
Twenty-four stories above Manhattan, in a law office just one block from Madoff's old headquarters, his widow, Barbara Picower, had a decision to make about what to do with the fortune that had been amassed by her husband, a financier and philanthropist.
He was gone, having drowned in the swimming pool of their Palm Beach home after suffering a heart attack in October 2009.
Barbara Picower was told by her lawyers they could successfully preserve most of his wealth by fighting for it in court - perhaps all but $2 billion.
But about three months ago, she told them she wanted to give back all the money they made made through the Madoff fraud.
On Friday, Picower agreed to turn over $7.2 billion to Madoff's victims, the largest settlement to date related to the scheme.
When combined with other Madoff-related settlements, the Picower agreement brings Madoff's victims halfway toward being fully compensated for their losses in the scheme, according to officials overseeing the victims fund.
"We will return every penny received from almost 35 years of investing with Bernard Madoff," Picower said in a statement.
"I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering."
The vast majority of the money being returned to Madoff investors would have otherwise gone to charitable groups. And neither Picower nor her family is left wanting by the settlement. She will receive $200 million from her husband's estate, their only daughter will receive $25 million and a collection of close family friends and charitable associations will receive $25 million - all money unrelated to the Madoff case, according to her lawyer.
An unspecified amount will go to fund a new philanthropic foundation. The Picowers shuttered their last foundation, which backed causes ranging from Alzheimer's disease research to the nonprofit anti-poverty group Harlem Children's Zone, after the disclosure of the Madoff fraud.
"Barbara Picower has done the right thing," said Preet Bharara, the top federal prosecutor in Manhattan, who is investigating Madoff accomplices.
Irving Picard, a federally appointed lawyer overseeing the process of compensating Madoff victims, acknowledged that while he had earlier suspected that Jeffry Picower "might have or should have known of Mr. Madoff's fraud," he had concluded that "there is no basis to pursue the complaint."
Picard has sued hundreds of investors to reclaim money on behalf of victims.
This month, he sued Vienna-based Bank Medici and its founder Sonja Kohn and dozens of other groups seeking $19.6 billion.
The Madoff fraud was the largest Ponzi scheme in history, wiping out tens of billions of dollars of wealth for thousands of investors, including the elderly, universities and philanthropic groups.
Madoff is serving a 150-year prison sentence. His son, Mark Madoff, committed suicide last Saturday.
In an interview, William Zabel, the Picowers' longtime lawyer, said it was "extremely important" for Barbara Picower to see her husband's name be cleared if she were going to settle.
He said with the death of her husband, "she concentrated her energy even more in doing charitable work."
"It was becoming more and more stressful with all the confrontation with" different authorities, he said.
She wanted to give all the money back "so nobody could say that they kept any of it and so she get on with life."
Zabel said Barbara Picower was a private person and would not be giving any interviews.