Bankruptcy Judge Approved Santander to Pay $235 Million in Madoff Case

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Banco Santander of Spain, which fed $3 billion of its clients’ money to Bernard L. Madoff before his Ponzi scheme was exposed, received approval from a federal bankruptcy judge to pay $235 million for potential legal claim.

The settlement originally was announced on May 26, but was subject to court approval.   The settlement between Santander’s hedge fund Optimal Investment Services, which is based in Geneva, and the court-appointed trustee, Irving H. Picard, who is winding down Mr. Madoff’s brokerage firm.   In exchange, the settlement frees the Optimal funds from any future claims by Mr. Picard and also allows the funds to go forward with their own claims against the Madoff estate, which total around $1.5 billion.   The funds will get an initial distribution of $500,000 for their claims – the maximum allowed under the Securities Investor Protection Act.

Judge Burton Lifland of the Bankruptcy Court in Manhattan said he approved the settlement because it would increase recoveries for victims of Mr. Madoff’s $65 billion worldwide fraud.  So far, the trustee has recovered $1.225 billion.

The Santander payment represents money withdrawn just before Mr. Madoff’s fraud was revealed in December. The trustee has been seeking the return of funds from big investors to reimburse other victims of the money manager’s fraud.   Mr. Madoff pleaded guilty to fraud, money laundering, false filings and perjury in March and will be sentenced at the end of the money.   He is in jail awaiting sentencing on June 29 and faces up to 150 years in prison.

Anna Timone (195 Posts)

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