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    Statement by U.S. Attorney On Picower Settlement

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    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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    Statement by U.S. Attorney On Picower Settlement

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    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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    Statement by U.S. Attorney on Picower Settlement

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    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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    Statement by U.S. Attorney On Picower Settlement

    Uploaded 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.

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    of 4

    United States Attorney

    Southern District of New York


    FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY'S OFFICE
    DECEMBER 17, 2010 ELLEN DAVIS,
    EDELI RIVERA,
    JESSIE ERWIN
    PUBLIC INFORMATION OFFICE
    (212) 637-2600

    FBI SIPC
    JIM MARGOLIN, RICHARD KOLKO AILIS AARON WOLF
    (212) 384-2720, 2715 (703) 276-3265

    IRS SIPA TRUSTEE


    JOE FOY KEVIN 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 PONZI
    SCHEME FROM ESTATE OF JEFFRY M. PICOWER

    Multi-Billion Dollar Settlement To Benefit Madoff’s Victims Is


    Largest Single Forfeiture Recovery In
    U.S. History

    PREET BHARARA, the United States Attorney for the


    Southern District of New York, ORLAN JOHNSON, the Chairman of the
    Securities Investor Protection Corporation ("SIPC"), IRVING
    PICARD, the Securities Investor Protection Act ("SIPA") Trustee,
    JANICE K. FEDARCYK, the Assistant Director-in-Charge of the New
    York Field Division of the Federal Bureau of Investigation
    ("FBI"), and CHARLES R. PINE, the Special Agent-in-Charge of the
    New York Field Office of the Internal Revenue Service ("IRS"),
    Criminal Investigation Division, announced today that the estate
    of JEFFRY M. PICOWER has agreed to forfeit $7,206,157,717 to the
    United States, representing all the profits that PICOWER withdrew
    over the years from Bernard L. Madoff Investment Securities LLC
    ("BLMIS"), the fraudulent investment advisory business owned and
    operated by BERNARD L. MADOFF. The distribution of funds to
    victims will be administered by IRVING H. PICARD in his dual
    capacities as the newly-appointed Department of Justice Special
    Master to assist the Department of Justice in connection with the
    victim remission proceedings and as the court-appointed trustee
    overseeing the liquidation of BLMIS under SIPA. The more than
    $7.2 billion forfeiture announced today constitutes the largest
    single forfeiture in U.S. history, and will be used to compensate
    victims of MADOFF’s fraud.
    Mr. BHARARA said: "Today’s truly historic settlement
    with the estate of Jeffry Picower is a game-changer for Madoff’s
    victims. By returning every penny of the $7.2 billion her late
    husband received from BLMIS to help those who have suffered most,
    Barbara Picower has done the right thing. We will continue to
    work tirelessly with our partners from SIPC, the SIPA Trustee,
    the FBI, the IRS, and the U.S. Marshals Service to track down any
    and all proceeds of Madoff’s Ponzi scheme and return them to
    victims."

    SIPC Chairman ORLAN JOHNSON said: "Since the discovery


    of the Madoff fraud, the United States Attorney, as well as the
    Trustee, Mr. Picard, his counsel, represented here by Mr.
    Sheehan, and SIPC personnel have worked relentlessly on the
    Madoff case. They have committed constant time, energy, and
    resources to benefit the victims of that fraud. The settlement
    announced 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 year
    history of SIPC. The result we see today shows that SIPC and the
    Securities Investor Protection Act can meet the challenges they
    face. Prior to today, SIPC had already advanced over $760
    million to the Madoff victims. SIPC has also provided the
    financial wherewithal to conduct the research, investigation, and
    legal proceedings that led to this recovery, and, I am sure, will
    lead to other recoveries in the future."

    SIPA Trustee IRVING PICARD said: "The importance of


    this settlement cannot be overstated, as it shows significant
    progress in our efforts to assemble the largest Customer Fund
    possible. Every penny of this $7.2 billion settlement will be
    distributed to BLMIS customers with valid claims."

    FBI Assistant Director-in-Charge JANICE K. FEDARCYK


    said: "Among the thousands of investors in the Bernard Madoff
    scheme were individuals so taken in by his confidence game that
    they invested the bulk of their net worth with him. The
    unprecedented settlement announced today means people who two
    years ago faced the devastating prospect of losing everything now
    stand to recover a significant portion of their investment."

    IRS Special Agent-in-Charge CHARLES R. PINE said: "IRS


    Criminal Investigation has a unique role in Ponzi scheme related
    investigations. Our Special Agents come to the table with
    specialized talent and the ability to pour through transactional
    records, such as bank and brokerage account statements, and trace
    illegally earned income to other assets, such as cars, real

    -2-
    estate, jewelry, and other highly valued items. IRS Criminal
    Investigators and its law enforcement partners will continue to
    work diligently in recovering assets to their rightful owners in
    illegal financial schemes."

    According to the Stipulation and Order of Settlement,


    and accompanying civil forfeiture Complaint, filed in Manhattan
    federal court today:

    The investment advisory business of BLMIS was operated


    as a massive Ponzi scheme from at least as early as the 1980s,
    defrauding investors of billions of dollars. Rather than use
    client funds to invest in securities, as promised, BLMIS diverted
    those funds to (a) pay other clients’ redemption requests; (b)
    fund transactions to disguise BLMIS’s fraud; and (c) enrich
    Madoff, his family, and his associates. In order to support the
    lie that BLMIS was operating a legitimate investment advisory
    business, BLMIS created and disseminated fictitious account
    statements that, among other things, showed trades that never
    actually took place. During the course of the fraud, MADOFF’s
    clients lost approximately $20 billion in funds they invested
    with BLMIS.

    Since at least the late 1970s, JEFFRY M. PICOWER was an


    investor in BLMIS, holding an account in his own name and
    controlling 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 from
    BLMIS. When MADOFF was arrested in December 2008 and his fraud
    was revealed, it became clear that PICOWER - like all of BLMIS’s
    investors who withdrew more money than they invested - had
    profited at the expense of more recent BLMIS investors.

    PICOWER died in October 2009. In his will, PICOWER


    sought to establish a charitable foundation, which was to receive
    the overwhelming majority of his fortune, and continue his
    lifelong dedication to philanthropy and to funding medical
    research. In order to resolve potential civil claims by the
    Government against PICOWER’s estate, and to enable the creation
    of the foundation called for in PICOWER’s will, the estate,
    through PICOWER’s widow BARBARA PICOWER, has agreed to give up
    the entire net total of any and all funds that PICOWER or any
    related entity received from BLMIS. The Settlement contains no
    finding or admission of fault against PICOWER, and his estate has
    claimed that neither PICOWER nor any of the related entities
    participating in the settlement had any involvement in, or
    knowledge of, MADOFF’s fraud.

    -3-
    The United States Attorney’s Office will use funds
    forfeited in the settlement announced today to compensate victims
    of MADOFF’s fraud. Last week, in connection with a $625 million
    settlement involving the Office, the SIPA Trustee, and CARL
    SHAPIRO and his family, MR. BHARARA announced that the Department
    of Justice had appointed IRVING H. PICARD as Special Master to
    oversee the process of remission or mitigation under the
    forfeiture laws. PICARD is already serving as the court-
    appointed trustee for BLMIS under SIPA. Under the terms of
    today’s settlement, and a related settlement submitted to the
    United States Bankruptcy Court for the Southern District of New
    York, PICARD will administer $5.0 billion of the funds being
    returned to Madoff’s victims by the PICOWER estate through the
    SIPA liquidation proceedings. He also will administer the
    remaining approximately $2,206,157,717 through the Department of
    Justice’s remission or mitigation process.

    Mr. BHARARA praised the work of SIPC and the SIPA


    Trustee. He also thanked the Federal Bureau of Investigation,
    the Internal Revenue Service, Criminal Investigation Division,
    the Securities and Exchange Commission, and the United States
    Marshals Service. Mr. BHARARA also thanked the U.S. Department
    of Labor’s Employee Benefits Security Administration and Office
    of the Inspector General for their work in this matter. Finally,
    he thanked the Department of Justice’s Asset Forfeiture and Money
    Laundering Section for their assistance.

    This case was brought in coordination with President


    BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which
    Mr. BHARARA serves as a Co-Chair of the Securities and
    Commodities Fraud Working Group. President OBAMA established the
    interagency Financial Fraud Enforcement Task Force to wage an
    aggressive, coordinated, and proactive effort to investigate and
    prosecute financial crimes. The task force includes
    representatives from a broad range of federal agencies,
    regulatory authorities, inspectors general, and state and local
    law enforcement who, working together, bring to bear a powerful
    array of criminal and civil enforcement resources. The task force
    is working to improve efforts across the federal executive
    branch, and with state and local partners, to investigate and
    prosecute significant financial crimes, ensure just and effective
    punishment for those who perpetrate financial crimes, combat
    discrimination in the lending and financial markets, and recover
    proceeds for victims of financial crimes.

    Assistant United States Attorneys LISA A. BARONI,


    JULIAN J. MOORE, BARBARA A. WARD, and MATTHEW L. SCHWARTZ are in
    charge of the case.

    10-404

    -4-

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