Madoff Victim Fund Makes Final Payout | Chief Investment Officer

The Madoff Victim Fund has made its 10th and final distribution payment, bringing its total recovery amount to $4.3 billion paid out to nearly 41,000 victims of Bernie Madoff’s massive fraud that was uncovered more than 15 years ago.

The fund, which has exhausted the money available for distribution since beginning payments in 2017, will close down once those final finds are distributed.

The final installment consisted of $131.4 million to 23,408 victims, representing an average payment increase of 2.71% to each victim. According to the fund, the latest installment raised the total amount recovered for the 40,930 eligible victims to close to 94% of their aggregated losses, up from 91% prior to the final distribution.

While the $4.3 billion of eligible recoveries is just a fraction of the estimated $64 billion in losses stemming from Madoff’s Ponzi scheme, MVF Special Master Richard Breeden said the fund doled out as much as was legally possible.

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“While applicable law sets limits on what can be done, we hoped to assist everyone as much as possible,” Breeden said in a statement. “Bringing 41,000 victims to a 93.71% recovery is the fulfillment of our greatest hopes.”

“The losses of ‘direct investors’ had been carefully studied in bankruptcy, but the losses of ‘indirect investors,’ who aren’t eligible for bankruptcy recoveries, had not been analyzed,” prior to the Madoff fraud and creation of the victims’ fund, Breeden’s statement continued. “As it turned out, ‘direct investors’ represented only about 6% of Madoff’s known victims.”

According to the MVF, it has approved more than 2,000 institutional investors’ petitions for recovery, of which 864 were charities or nonprofit organizations, in addition to at least 108 universities, colleges, professional schools or secondary schools. Another 633 institutional investors were corporations. Approximately 74% of the institutions petitioning for funds were organized in the U.S., with the rest from 23 other countries.

According to the fund, 742 (3.2%) of the 23,408 victims approved for distributions in the final installment incurred losses of more than $1 million. Another 1,594 (6.8%) had fraud losses of more than $500,000, and 3,950 (approximately 17%) experienced losses of between $100,000 and $500,000, while 17,864 (more than 76%) suffered losses of less than $100,000.

Breeden said that following the flow of funds from Madoff to his victims “was an arduous effort, but it had to be done.” He said to determine how much the fund should pay out and to whom, it measured how much the investors invested in, or took out, of the fraudulent scheme and its proceeds. He said this involved reviewing millions of pages of documentation regarding hundreds of thousands of financial transactions and mailing more than 1 million notices, collateral recovery updates and checks to victims over the past decade.

“In 2025, eight years after our first distribution, MVF will complete its work,” Breeden said. “We have brought tens of thousands of victims to the greatest recovery we could achieve.”