US makes first payments to victims of Bernie Madoff's fraud

Thousands of victims of Bernie Madoff's multi-billion-dollar fraud, who lost their savings and were ruined when the investment scheme collapsed in 2008, have been paid compensation, officials announced Thursday.

The Madoff Victim Fund paid out $772.5 million to 24,631 victims around the world in the first payments to those who lost their money with Madoff, the Justice Department said in a statement.

The fund, established by the Justice Department to handle victim complaints, was tasked with returning $4 billion seized by American authorities. It has received 65,000 complaints from 136 countries from investors who lost a total of $40 billion to Madoff, according to the fund.

"No amount of money in the world could ever reverse the catastrophic effects Madoff's historic Ponzi scheme had on individuals and businesses alike," said William Sweeney, assistant director of the Federal Bureau of Investigation's New York Division.

"But now, nearly a decade after this crime was exposed, it is our hope that victims will finally be able to see the light at the end of a long, dark tunnel."

The Madoff scheme was revealed during the financial crisis in 2008 when he was unable to satisfy growing client demands to withdraw their investments.

Madoff currently is serving a 150-year prison sentence for orchestrating the world's largest Ponzi scheme, which bilked investors of an estimated at $65 billion when principal and lost interest are counted.

The victim fund is separate from efforts overseen by attorney Irving Picard, a court-appointed trustee chosen to recover assets from Bernard L. Madoff Investment Securities. Those efforts already have collected and returned billions invested by Madoff clients.

A pyramid, or Ponzi scheme is a form of fraud in which returns on investments are generated only by bringing in from fresh investments from new victims. Cash from new clients is used to pay existing clients until the scheme eventually collapses.

Source: AFP