A US appeals court on Tuesday backed the trustee recovering money for victims of Bernard Madoff's Ponzi scheme over his method for dividing the funds.
The victory for the court-appointed trustee, Irving Picard, means he can continue to allot payments according to "net equity," meaning the sum investors entrusted to the fraudster, minus the money they withdrew from their account prior to his arrest.
A group of former Madoff investors had sought to be reimbursed the amount on their accounts at the time of his arrest. However Picard said those figures were artificial, since they included fake profits concocted by Madoff.
In his opinion, US Circuit Judge Dennis Jacobs said:
"Mr. Picard has been charged with sorting out decades of fraud. The question presented by this appeal is whether the method Mr. Picard selected for carrying out his responsibilities under SIPA is legally sound under the language of the statute. We hold that it is."
Amanda Remus, spokeswoman for Picard, said that "upholding the Trustee’s definition of net equity as applied to the Madoff Ponzi fraud is an important step forward for customers with allowed claims."
The "net-equity" method was "the fairest approach," she said in a statement.
Madoff claimed to have grown investors' money to some $60 billion, but most of that was fictitious, resulting from a decades-long scheme in which he skimmed investors' principle to pay phony returns.
Madoff, 73, was arrested in December 2008 and is serving a 150-year prison term.
His thousands of victims included charities, major banks, Hollywood moguls and savvy financial players.