If any of the investors who lost part of the US$17.5 billion defrauded by Bernie Madoff over a 10-year period were unaware of what a "feeder fund" is, it is likely that the definition will remain with them for life if a U.S. bankruptcy judge approves the recovery of $10.3 billion on December 17. According to court-appointed trustee Irving Picard, who has been recovering settlement amounts in relation to the Madoff case since December 2008, the latest settlement, if approved, is his largest to date and is the result of transactions made by two Cayman Islands-based feeder funds with Madoff's company prior to his downfall. However, until the settlement is approved by Manhattan's Judge Stuart Bernstein, the media continues to report on a potential outcome, as claimants still await a conclusive decision.
As stated in the November 17 press release on the "Madoff Recovery Initiative" website, published by Picard's office, the settlement with Herald Fund SPC and Primeo Fund required "complex negotiations conducted across international borders". The press release then explains that the latest settlement was made possible by an involved process, whereby Picard first needed to fulfill claims made by the two feeder funds so that one of the payouts, worth $497 million, can be made available for "equitable distribution" to all parties whose claims have not yet been finalized. In the words of Picard's lead counsel, Oren Warshavsky, every account "must first be brought to a level playing field".
Both Herald and Primeo are in liquidation, and are entitled to claims because they deposited amounts into Madoff's fraudulent scheme that were greater than the amounts they withdrew before Madoff's arrest on December 11, 2008. Herald will receive a total sum of $1.64 billion, in addition to "catch-up payments."
The latest announcement in the recovery process occurs two months after Madoff's son Andrew died from lymphoma, leaving his family members with over $15 million in property. Bernie Madoff, now aged 76 years, continues to serve his maximum penalty of 150 years imprisonment.
