The Right and Painful Thing

It’s a widely held belief that the people who were bilked by Bernard Madoff’s Ponzi scheme lost everything. Thanks to the widow of an early Madoff investor, a sizeable chunk of the lost $20 billion will be returned to the victims.

The estate of Jeffry Picower, a major investor in Bernard Madoff's Ponzi scheme, has agreed to repay $7.2 billion to victims of the fraud in a settlement with the trustee overseeing the investment firm's bankruptcy and federal prosecutors in Manhattan, according to people familiar with the situation.

With such a large sum at stake, Mrs. Barbara Picower could have stalled this case for a long time. Given the fungibility of money and the length of their association with Bernard Madoff, an attempt to trace what part of the Picower estate was the fruit of the poisoned tree would have taken years. However, she quickly agreed to restitution.

"The trustee as a result of today's settlement will be in a position to make a distribution of approximately 50% of the estimated allowed claims in the liquidation proceeding," said David Sheehan, Mr. Picard's counsel. "Mrs. Picower is to be commended for coming forward and returning every cent she received from [Bernard L. Madoff Investment Securities] to the trustee and the U.S. attorney."

The 2009 Forbes 400 list pulls a number out of the air--$1 billion—as the estimate of the late Jeffry Picower’s wealth. It was obviously well below the actual number. Nevertheless, $7.2 billion had to represent the bulk of the Picower estate.

It’s convenient to say that when we become rich we will do the right thing, but somehow many people never do. Wealthy people’s lifestyles, social standing, and identities become tied up with their net worth. Signing away 70-90% of that net worth likely was difficult for Mrs. Picower, but it renews our hope in humanity to witness someone rich and powerful doing the right and painful thing. © 2010 Stephen Yuen