By Jonathan Stempel
NEW YORK (Reuters) – Roughly 11,000 additional victims of Bernard Madoff’s Ponzi scheme may recover some of their losses, and the number could double as an official overseeing a $4.05 billion compensation fund set up by the U.S. government reviews more claims.
In an update this week, the Madoff Victim Fund’s special master, Richard Breeden, said he would recommend that the U.S. Department of Justice approve payments on the 11,000 claims, comprising about $1.3 billion of losses, once all have proper signatures.
It is likely the number of “approved” claims will at least double, Breeden said.
As of May 15, Breeden said, his office had reviewed 34,257, or 54 percent, of the 63,737 claims it received, which came from 135 countries and alleged $77.3 billion of losses.
Breeden said he has so far deemed $18.5 billion of these claims “excessive” and expects this sum to grow.
“MVF can’t increase the $4 billion it has available in resources,” said Breeden, a former chairman of the U.S. Securities and Exchange Commission. “By identifying excessive claims we are able to increase significantly the percentage of loss that will be paid on real losses.”
Breeden said it is too soon to say when payouts will begin.
The $4.05 billion fund is separate from payments being made to Madoff fraud victims by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC.
It also differs because Picard is making payments only to people who invested directly with Madoff. Breeden in contrast is letting “indirect” investors who had accounts at “feeder funds,” hedge funds, banks and other entities that sent their money to Madoff try to recoup their losses.
Picard has paid out roughly $7 billion of the $10.7 billion he has recouped, and this week said he hopes at a July 29 court hearing to win approval to distribute $1.25 billion more.
About $1.7 billion of Breeden’s fund came from JPMorgan Chase & Co, Madoff’s bank for two decades. Another $2.2 billion came of the estate of Jeffry Picower, a Florida investor. Picower’s estate paid another $5 billion to Picard.
Madoff, 77, is serving a 150-year prison term.
(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)