October 20, 2015 / 2:50 PM / in 2 years

Madoff trustee seeks release of $1.5 bln for fraud victims

NEW YORK, Oct 20 (Reuters) - The trustee recouping money for victims of Bernard Madoff’s multibillion-dollar Ponzi scheme sought approval on Tuesday to release $1.5 billion from legal reserves, potentially boosting the total payout to $9.13 billion.

Irving Picard, the trustee appointed to oversee the liquidation of Bernard L. Madoff Investment Securities LLC, said the request was made possible after the U.S. Supreme Court on Oct. 5 declined to hear an appeal by victims seeking inflation or interest adjustments on the money they lost.

The decision ended litigation that had delayed nearly $1.25 billion from being dispersed to Madoff’s former customers, paving the way for Tuesday’s request to a federal bankruptcy judge in New York.

If approved at a Nov. 18 hearing, payouts would go to fraud victims who had accounts at Madoff’s firm.

Madoff, 77, pleaded guilty to fraud in March 2009 and is serving a 150-year prison term.

Under Picard’s plan, the trustee will allocate $1.5 billion, with $1.18 billion available for immediate distribution and another $320 million held in reserve for claims deemed determined pending the resolution of litigation.

That would bring the total amount distributed to eligible Madoff customers to about $9.13 billion and mean nearly 57 percent of losses will be returned to customers, the trustee said.

Recoveries to date total $10.9 billion of the $17.5 billion of principal he estimates that Madoff’s victims lost.

Picard said payouts would range from $1,286 to nearly $200.4 million and would result in claimants on 1,264 of the 2,564 accounts he found with valid claims being fully paid, including everyone owed $1.16 million or less. (Reporting by Nate Raymond in New York, editing by G Crosse)

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