A former general counsel at the U.S. Securities and Exchange Commission has settled a lawsuit accusing him and two brothers of receiving money derived improperly from Bernard Madoff's Ponzi scheme.
David Becker and his brothers agreed to pay $556,017 to settle the case brought by Irving Picard, the trustee seeking money for former customers of Bernard L. Madoff Investment Securities LLC.
The payout represents roughly all of the so-called fictitious profits that the Beckers received after inheriting money from their mother Dorothy, who died in 2004. Madoff's fraud was uncovered in December 2008.
Lawrence West, a partner at Latham & Watkins, which represents Becker, declined to comment. Becker is now a partner at Cleary Gottlieb Steen & Hamilton.
The settlement follows a November decision by the U.S. Department of Justice not to pursue an investigation into whether Becker had a conflict of interest by joining SEC discussions over payouts to Madoff victims, despite having a financial stake in the outcome.
Two months earlier in September, the SEC's inspector general, David Kotz, had accused Becker of having a conflict of interest for getting involved, after he and his brothers had inherited roughly $2 million in Madoff funds.
Becker has maintained he did nothing wrong, and had disclosed his financial stake to the SEC's chief ethics officer and its chairman, Mary Schapiro.
In September, Schapiro told Congress she wished the matter were handled differently, and agreed to a new Commission vote on the payout formula.
Amanda Remus, a spokeswoman for Picard said the settlement avoids the cost of litigation and reopening of Dorothy Becker's estate, and the uncertainties of Massachusetts probate law. A hearing to approve the settlement has been scheduled for April 3 in Manhattan bankruptcy court.
The case is Picard v. Estate of Dorothy Becker, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04620.
(Reporting By Jonathan Stempel in New York; Editing by Tim Dobbyn)