Madoff trustee Irving Picard and federal prosecutors announced they reached a settlement today that would add $7.2 billion to the cash available to compensate victims of Bernie Madoff’s global Ponzi scheme.  Details of the agreement with the estate of Jeffry M. Picower, the Palm Beach philanthropist who died in October 2009, were released Friday at a news conference in Lower Manhattan. 

In a statement made through her lawyer, William D. Zabel of Schulte Roth & Zabel, Barbara Picower, Mr. Picower's widow and Executor of his estate, said:  The settlement “will return every penny received from almost 35 years of investing with Bernard Madoff."  [See full statement in the next BTN story.]

The $7.2 billion will greatly expand the $2.3 billion sum that trustee Irving Picard had already collected through asset sales and other settlements in the Madoff bankruptcy.  The amount represents the difference between the cash that Mr. Picower put into his Madoff account and the amount that he withdrew over the life of the fraud, according to litigation filed last year by Mr. Picard.

People briefed on the negotiations say that it will be the largest civil forfeiture payment in American judicial history.

The complicated negotiations, which conclude the trustee’s case against Mr. Picower, involved lawyers for Mr. Picard, federal prosecutors working for the U.S. attorney in Manhattan, Preet Bharata, and lawyers at the firm of Schulte Roth & Zabel.  Settlement talks had started in 2009, before Mr. Picower was found dead in the swimming pool of his oceanfront Palm Beach mansion on Oct. 25, 2009.  He had suffered from Parkinson’s disease and had a history of heart ailments.

    Enormous Amount Involved.   According to NYT Dealbook, the amount is certainly plausible.  A confidential letter from Goldman Sachs, requested as part of the protracted settlement talks, confirmed that Mr. Picower had been "a valued client of our Investment Management Division for nearly three decades,” and that during that time, he had generated legitimate investment returns "in excess of $2 billion," primarily through "self-directed investments in public securities."

A person with knowledge of the Goldman Sachs research said that there were $4.5 billion in “unrealized gains” in Mr. Picower’s account at the firm at the time of his death.  Before he appeared as one of Bernie Madoff's largest clients, Mr. Picower was known in financial circles primarily for his medical technology investments.  In 2004, a few years after he took control of Alaris Medical Systems with a stake of roughly $86 million he sold the company to Cardinal Health for more than $1 billion.

With this settlement, Irving Picard has raised nearly $10 billion - roughly half the $20 billion is cash that Madoff investors lost - a figure computed by Mr. Picard. 

For further details, click onto:   [NYTimes Dealbook, "$7.2 Billion Settlement ...", 12/17]