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Statement by U.S. Attorney on Picower Settlement

Statement by U.S. Attorney on Picower Settlement

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Published by DealBook
Statement by Preet Bharara, the United States attorney for the Southern District of New York, announcing the $7.2 billion settlement over Madoff claims.
Statement by Preet Bharara, the United States attorney for the Southern District of New York, announcing the $7.2 billion settlement over Madoff claims.

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Categories:Types, Business/Law
Published by: DealBook on Dec 17, 2010
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12/17/2010

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United States Attorney Southern District of New York 
FOR IMMEDIATE RELEASECONTACT:U.S. ATTORNEY'S OFFICEDECEMBER 17, 2010ELLEN DAVIS,EDELI RIVERA,JESSIE ERWINPUBLIC INFORMATION OFFICE(212) 637-2600FBISIPCJIM MARGOLIN, RICHARD KOLKOAILIS AARON WOLF(212) 384-2720, 2715(703) 276-3265IRSSIPA TRUSTEEJOE FOYKEVIN McCUE(212) 436-1032(216) 861-7576
 MANHATTAN U.S. ATTORNEY ANNOUNCES AGREEMENT TO RECOVER $7.2 BILLION FOR VICTIMS OF BERNARD L. MADOFF’S PONZISCHEME FROM ESTATE OF JEFFRY M. PICOWER 
Multi-Billion Dollar Settlement To Benefit Madoff’s Victims IsLargest Single Forfeiture Recovery InU.S. History 
PREET BHARARA, the United States Attorney for theSouthern District of New York, ORLAN JOHNSON, the Chairman of theSecurities Investor Protection Corporation ("SIPC"), IRVINGPICARD, the Securities Investor Protection Act ("SIPA") Trustee,JANICE K. FEDARCYK, the Assistant Director-in-Charge of the NewYork Field Division of the Federal Bureau of Investigation("FBI"), and CHARLES R. PINE, the Special Agent-in-Charge of theNew York Field Office of the Internal Revenue Service ("IRS"),Criminal Investigation Division, announced today that the estateof JEFFRY M. PICOWER has agreed to forfeit $7,206,157,717 to theUnited States, representing all the profits that PICOWER withdrewover the years from Bernard L. Madoff Investment Securities LLC("BLMIS"), the fraudulent investment advisory business owned andoperated by BERNARD L. MADOFF. The distribution of funds tovictims will be administered by IRVING H. PICARD in his dualcapacities as the newly-appointed Department of Justice SpecialMaster to assist the Department of Justice in connection with thevictim remission proceedings and as the court-appointed trusteeoverseeing the liquidation of BLMIS under SIPA. The more than$7.2 billion forfeiture announced today constitutes the largestsingle forfeiture in U.S. history, and will be used to compensatevictims of MADOFF’s fraud.
 
Mr. BHARARA said: "Today’s truly historic settlementwith the estate of Jeffry Picower is a game-changer for Madoff’svictims. By returning every penny of the $7.2 billion her latehusband received from BLMIS to help those who have suffered most,Barbara Picower has done the right thing. We will continue towork tirelessly with our partners from SIPC, the SIPA Trustee,the FBI, the IRS, and the U.S. Marshals Service to track down anyand all proceeds of Madoff’s Ponzi scheme and return them tovictims."SIPC Chairman ORLAN JOHNSON said: "Since the discoveryof the Madoff fraud, the United States Attorney, as well as theTrustee, Mr. Picard, his counsel, represented here by Mr.Sheehan, and SIPC personnel have worked relentlessly on theMadoff case. They have committed constant time, energy, andresources to benefit the victims of that fraud. The settlementannounced today is an extraordinary achievement by all concerned.More than $7 billion dollars will be distributed to the victims.We will seek to distribute these proceeds as quickly as possible.This is by far the largest asset settlement in the 40 yearhistory of SIPC. The result we see today shows that SIPC and theSecurities Investor Protection Act can meet the challenges theyface. Prior to today, SIPC had already advanced over $760million to the Madoff victims. SIPC has also provided thefinancial wherewithal to conduct the research, investigation, andlegal proceedings that led to this recovery, and, I am sure, willlead to other recoveries in the future."SIPA Trustee IRVING PICARD said: "The importance ofthis settlement cannot be overstated, as it shows significantprogress in our efforts to assemble the largest Customer Fundpossible. Every penny of this $7.2 billion settlement will bedistributed to BLMIS customers with valid claims."FBI Assistant Director-in-Charge JANICE K. FEDARCYKsaid: "Among the thousands of investors in the Bernard Madoffscheme were individuals so taken in by his confidence game thatthey invested the bulk of their net worth with him. Theunprecedented settlement announced today means people who twoyears ago faced the devastating prospect of losing everything nowstand to recover a significant portion of their investment."IRS Special Agent-in-Charge CHARLES R. PINE said: "IRSCriminal Investigation has a unique role in Ponzi scheme relatedinvestigations. Our Special Agents come to the table withspecialized talent and the ability to pour through transactionalrecords, such as bank and brokerage account statements, and traceillegally earned income to other assets, such as cars, real-2-
 
estate, jewelry, and other highly valued items. IRS CriminalInvestigators and its law enforcement partners will continue towork diligently in recovering assets to their rightful owners inillegal financial schemes."According to the Stipulation and Order of Settlement,and accompanying civil forfeiture Complaint, filed in Manhattanfederal court today:The investment advisory business of BLMIS was operatedas a massive Ponzi scheme from at least as early as the 1980s,defrauding investors of billions of dollars. Rather than useclient funds to invest in securities, as promised, BLMIS divertedthose funds to (a) pay other clients’ redemption requests; (b)fund transactions to disguise BLMIS’s fraud; and (c) enrichMadoff, his family, and his associates. In order to support thelie that BLMIS was operating a legitimate investment advisorybusiness, BLMIS created and disseminated fictitious accountstatements that, among other things, showed trades that neveractually took place. During the course of the fraud, MADOFF’sclients lost approximately $20 billion in funds they investedwith BLMIS.Since at least the late 1970s, JEFFRY M. PICOWER was aninvestor in BLMIS, holding an account in his own name andcontrolling accounts held by various individuals and entities.Over the course of his 30-plus year relationship with BLMIS,PICOWER withdrew a net total of $7,206,157,717 in profits fromBLMIS. When MADOFF was arrested in December 2008 and his fraudwas revealed, it became clear that PICOWER - like all of BLMIS’sinvestors who withdrew more money than they invested - hadprofited at the expense of more recent BLMIS investors.PICOWER died in October 2009. In his will, PICOWERsought to establish a charitable foundation, which was to receivethe overwhelming majority of his fortune, and continue hislifelong dedication to philanthropy and to funding medicalresearch. In order to resolve potential civil claims by theGovernment against PICOWER’s estate, and to enable the creationof the foundation called for in PICOWER’s will, the estate,through PICOWER’s widow BARBARA PICOWER, has agreed to give upthe entire net total of any and all funds that PICOWER or anyrelated entity received from BLMIS. The Settlement contains nofinding or admission of fault against PICOWER, and his estate hasclaimed that neither PICOWER nor any of the related entitiesparticipating in the settlement had any involvement in, orknowledge of, MADOFF’s fraud.-3-

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