The $800 million settlement between one of the largest investors in the Bernard Madoff Ponzi scheme and the trustee covering funds for Madoff investors has fallen apart.
Financial News reported that the Justice Department decided earlier this week that the deal between Kingate Management, a feeder fund to Madoff’s firm, and bankruptcy trustee Irving Picard should not be included from payouts of the agency’s $2.35 billion Madoff Victim Fund. British Virgin Islands-based hedge fund firm Kingate invested about $1.73 billion in Madoff’s firm from 1994 to 2008.
The Madoff bankruptcy trustee has recovered about $9.51 billion so far from the scheme, which bilked as much as $65 billion from its numerous victims.
The article said that the Justice Department’s decision caught officials at Picard’s office by surprise, while Richard Breeden, who oversee the Madoff Victim Fund, defended the move, explaining that he prioritized returning money to Madoff’s victims over Picard's negotiations with various feeder funds.
Madoff is currently serving a 150-year term in a North Carolina federal prison.