Another $860 million recovered for Madoff customers in Kingate settlement: trustee By Reuters

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Another $860 million recovered for Madoff customers in Kingate settlement: trustee

By Jonathan Stempel

NEW YORK (Reuters) – The court-appointed trustee liquidating Bernard Madoff’s firm on Wednesday said another $860 million may soon be returned to the swindler’s customers, under a settlement with offshore funds that funneled money to Madoff for 14 years.

Irving Picard, the trustee, said the settlement with liquidators for the Kingate Global Fund and Kingate Euro Fund Ltd, which were based in the British Virgin Islands, covers 93% of the $926.4 million they withdrew from their accounts at the former Bernard L. Madoff Investment Securities LLC.

The settlement is one of the largest in Picard’s decade-long effort to recoup money for customers of Madoff, who was arrested in December 2008 and is serving a 150-year prison term.

Court approval is required and a hearing before a U.S. bankruptcy judge is scheduled for Aug. 8.

Kingate’s funds were among the “feeder funds” that supplied client money to Madoff, which he used to fuel his Ponzi scheme. Picard has said the Kingate funds sent Madoff more than $1.7 billion.

The accord would boost Picard’s recovery for former Madoff customers to $14.26 billion, which is more than 81% of the $17.5 billion the trustee has said was lost.

About $12.38 billion of that total has been distributed, with some money held back because of ongoing litigation.

The federal government has a separate $4 billion fund to compensate Madoff’s victims.

Picard granted the Kingate liquidators permission to pursue their own customer claims in the Madoff bankruptcy case, and receive “catch-up” payments when he next makes a payout.

The Kingate case is Picard v Ceretti et al, U.S. Bankruptcy Court, Southern (NYSE:) District of New York, No. 09-ap-01161. The main Madoff case is In re Bernard L Madoff Investment Securities LLC in the same court, No. 08-01789.

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