Madoff victim fund receives over 9,000 claims, extends deadline

NEW YORK Fri Feb 21, 2014 12:09pm EST

NEW YORK Feb 21 (Reuters) - More than 9,000 claims from people who say they were defrauded by Bernard Madoff have been submitted to a $4.05 billion fund set up by the U.S. government, and victims of the swindler's Ponzi scheme were given two more months to seek compensation.

Richard Breeden, a special master who oversees the Madoff Victim Fund, and U.S. Attorney Preet Bharara in New York on Friday extended the claims deadline to April 30 from Feb. 28.

Breeden said the pace of claims has "accelerated dramatically" as more people learn about his fund, which was collected by the U.S. Department of Justice and established in November. He also said many claims are complex, often involving investments that flowed through three or more intermediaries.

"Thousands of additional claimants will benefit from having a bit more time," he said in a statement.

Breeden's fund lets people who held cash in "feeder funds," investment groups and other middleman vehicles that invested their money with Madoff to seek to recoup their losses.

These "indirect investors" represent the bulk of all claims filed after the 2008 collapse of Bernard L. Madoff Investment Securities LLC but have been ineligible to recover from Irving Picard, the court-appointed trustee liquidating that firm.

More than 70 percent of claimants to Breeden's fund have recovered nothing, and about 94 percent have come from individuals whose claims were denied as indirect investors or did not file claims in the bankruptcy process.

Claims have been submitted from roughly 75 countries, with 40 percent of the claims coming from outside the United States.

Breeden is a former U.S. Securities and Exchange Commission chairman. He was not immediately available for further comment.

The size of Breeden's fund was originally $2.35 billion, but grew to $4.05 billion in January when JPMorgan Chase & Co , Madoff's main bank for two decades, contributed $1.7 billion in a civil forfeiture.

That was part of the bank's overall $2.6 billion payout to resolve regulatory probes, and litigation by Picard and private investors.

Another $2.2 billion of Breeden's fund came from the estate of Jeffry Picower, a Florida investor and large beneficiary of Madoff's scheme. The estate paid another $5 billion to Picard.

Some other sums in the Madoff Victim Fund came from auctions of Madoff belongings such as luxury homes, boats and 14 pairs of boxer shorts. Madoff's underwear fetched $200.

Picard allowed about 15 percent of the 16,519 claims he reviewed. Most denied claims came from indirect investors.

People who withdrew more money from their Madoff accounts than they put in, known as "net winners," are ineligible to recover from Breeden and Picard.

Madoff, 75, was arrested in December 2008, pleaded guilty three months later and is serving a 150-year sentence in a federal prison in North Carolina.

Five former employees of Madoff's firm are on trial in Manhattan federal court for allegedly helping advance the fraud.

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