(Adds Madoff trustee statement, paragraph 12)
By Jonathan Stempel
NEW YORK May 13 A U.S. fund to compensate
victims of Bernard Madoff's Ponzi scheme has received roughly
51,700 claims seeking to recoup more than $40 billion, totals
far higher than expected, the official in charge of the fund
said on Tuesday.
Richard Breeden, appointed by the U.S. Department of Justice
to oversee the $4.05 billion Madoff Victim Fund, said it
appeared at least twice as many investors as previous thought
lost money in Madoff's fraud.
He said he expects to deem a "substantial" number of claims
ineligible, duplicative or inflated, and that it was too soon to
provide a timetable for distributions. Claimants came from 119
countries as disparate as Kazakhstan, Madagascar and Vietnam.
"The volume was surprisingly large," Breeden, a former
chairman of the U.S. Securities and Exchange Commission, said in
a phone interview. "The fact we have victims in 119 countries
makes this a very unique process. I can't think of any situation
where there has been such a widespread distribution of a fraud."
Breeden is allowing "indirect" investors who had accounts at
so-called "feeder funds," hedge funds, banks and other entities
that sent their money to Madoff to try to recoup their losses.
In contrast, Irving Picard, a court-appointed bankruptcy
trustee winding down Bernard L. Madoff Investment Securities
LLC, has allowed only direct investors to recover.
Picard has recouped $9.8 billion, roughly 56 percent of the
$17.5 billion in principal he said was lost by those who
submitted claims, and distributed nearly $6 billion. The trustee
said he accepted 2,518 of the 16,519 claims he received.
Breeden said he received more than 43,500 claims ahead of an
April 30 deadline from people who did not file claims in the
bankruptcy case, and more than 36,000 from people who said they
have recouped none of their losses.
He said the United States accounted for 58 percent of
claimed losses and 38 percent of claimants, with Germany, Italy
and France providing the next most claimants. About 78 percent
of claimants reported losses of $500,000 or less.
Breeden said claims would be reviewed individually, and that
a different law lets him compensate more victims than Picard.
"Our first distribution will go to people who have recovered
very little or nothing," he said. "Our message is, there is hope
here. Help is coming, if you meet the eligibility standards."
A spokeswoman for Picard said the trustee found about 4,000
active customer accounts at Madoff's firm at the time the Ponzi
scheme was uncovered, and the trustee is ready to help Breeden.
About $1.7 billion of Breeden's fund came from JPMorgan
Chase & Co, which was Madoff's bank for two decades, and
$2.2 billion came of the estate of Jeffry Picower, a Florida
investor who benefited from Madoff's scheme. Picower's estate
paid another $5 billion to Picard.
Madoff, 76, was arrested in December 2008, pleaded guilty
three months later, and is now serving a 150-year prison term.
(Reporting by Jonathan Stempel in New York; Editing by Andrew
Hay and Lisa Shumaker)