The famous Bernie Madoff ponzi scheme is still affecting victims as none of them have received repayments from the company the Department of Justice, tapped to distribute $4 billion recovered from the notorious fraud.
Nearly 8½ years after Bernie Madoff was arrested, RCB Fund Services LLC is still working to finalize reviews and recommendations for 63,580 claims covering $67.8 billion in reported losses.
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In a January update posted on the fund’s website, special master Richard Breeden, whose company was hired to distribute the funds, wrote: “We were unable to initiate our first payout in 2016 as we had hoped because of the volume and complexity of claims.”
“However, we now expect that the initial distribution will take place sometime in 2017 and will be larger than we had anticipated,” wrote Breeden, a former chairman of the Securities and Exchange Commission. He added that the fund was expected to make “two or more cash distributions for approved claims.”
Although fraud victims have received nothing from the fund, Breeden’s company has been paid $38.8 million for its work, Bloomberg News reported Tuesday, citing records released by the government in response to a Freedom of Information Act request.
RCB Fund Services did not immediately respond to a message seeking comment.
As of January, the company similarly had not yet distributed hundreds of millions of dollars earmarked for investors hurt by misrepresentations from BP after the explosion of its Deepwater Horizon oil rig in the Gulf of Mexico and an unrelated case in which JPMorgan Chase settled allegations that it misstated some financial results.
The delays highlight the challenges in verifying compensation claims filed by people and companies who say they lost money in complex cases of alleged wrongdoing.
The Department of Justice appointed Breeden as special master for identifying and repaying Madoff scam victims fund in 2012. The fund largely consists of $2.2 billion seized in 2010 from the estate of deceased investor Jeffry Picower, one of Madoff’s favored clients, and $1.7 billion JPMorgan paid for failing to alert authorities to warning signs of fraud in his account at the bank.
In contrast with the repayment delay, a separate effort launched by the investment industry-financed Securities Investor Protection Corporation has amassed nearly $11.6 billion in Madoff-related recoveries and agreements and has distributed just over $9 billion to burned investors so far. That effort is led by court-appointed trustee Irving Picard, whose law firm has received millions of dollars from SIPC for the recovery work.
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A 2014 court order created the $525 million BP Fair Fund and appointed Breeden’s firm to serve as the distributor of the money, which came from a settlement the energy giant reached with the SEC.
A January 2017 case status update posted on the fund’s website said more than 70,000 investor claims had been received. “As with all such distributions, we must know the final amount of all claims before we can determine the actual payout percentage on eligible losses,” the posting stated. “Once that is determined, cash distributions can commence.”
The JPMorgan Fair Fund was created in 2013 as the bank agreed to a $200 million SEC settlement of allegations that it misstated financial results and lacked effective internal controls to detect and prevent traders from overvaluing investments.
A January 2017 update posted on the fund’s website announced the completion of nearly 125,000 compensation claim reviews and said determination notices would be sent to each claimant.
“Upon receipt and review of any responses to the Determination Notices, we will be closer to determining the final amount of all claims, which is required before we can determine the actual payout percentage on eligible losses,” the posting stated.
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