NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a U.S. Court of Appeals for the Second Circuit ruling on Friday that will allow for the distribution of $410 million to victims who invested with Bernard Madoff.
In 2012, Schneiderman's office reached a $410 million settlement with J. Ezra Merkin, who invested more than $2 billion with Madoff on behalf of hundreds of investors. Irving Picard, the trustee for the liquidation of Madoff's estate, attempted to block Schneiderman's efforts from distributing the proceeds directly to Madoff's victims. The court denied Picard's effort, which will allow victims to receive the money in the coming months.
“This ruling is a victory for justice and accountability," Schneiderman said. "Many New Yorkers entrusted their investments to Mr. Merkin, who then steered money to Madoff and received millions of dollars in management and incentive fees. By paving the way for my office to disburse the proceeds of this $410 million settlement to the investors and charities harmed by Mr. Merkin’s actions, this ruling will help bring justice for these people and institutions that lost millions of dollars.”
In April 2009, Schneiderman's office sued Merkin for allegedly concealing Madoff's control of funds and for breaches of his fiduciary duty to manage the funds prudently. After reaching a $410 million settlement with Merkin in June 2012, Picard attempted to prevent Schneiderman from returning the money to the victims, alleging he had priority over Merkin's assets. The court rejected the argument on Friday.
Under the terms of the 2012 agreement, Merkin agreed to pay $405 million to compensate investors over a three-year period and $5 million to the state for costs and fees.