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US Justice Department's Madoff fund inches closer to victim payouts

[WASHINGTON] The US government fund to repay Bernard Madoff's fraud victims is preparing to recommend approval of more than 25,000 claims covering almost US$4 billion in losses, but the Justice Department didn't say how much it would pay or when checks might go out.

Thousands of victims who lost US$17.5 billion in principal have been trying to tap the US$4 billion fund since it was set up three years ago, though no payments have been made.

By comparison, the trustee unwinding Mr Madoff's fraud and repaying victims in bankruptcy court has paid out about US$9 billion since Madoff's arrest in December 2008. The two funds are administered separately under different US laws.

"I would love to see every eligible Madoff victim receive a cash recovery," Richard Breeden, the administrator of the Justice Department fund, said in an update on his website.

"However, we can't complete the process and actually pay claims until we resolve the incomplete claims one way or the other."

Mr Breeden said the fund is set to recommend denial of 7,540 claims covering about US$25.7 billion in losses that don't satisfy the requirements of the plan.

There are also about 30,750 incomplete or deficient claims covering about US$27 billion in losses from Mr Madoff's Ponzi scheme, he said. Those amounts include fake profits that Mr Madoff reported to investors for years, as well as the cash they invested with him.

"We don't yet know how many of these claims will be finalised successfully, and how many will eventually be denied due to incomplete documentation," he said on the website.

"The initial claim review process is now substantially complete." Mr Breeden has been analysing 64,000 claims from around the world, and didn't begin the process until after his appointment in December 2012.

His review involves many more claimants than those eligible for payments by the bankruptcy trustee, Irving Picard, who has a team of 200 lawyers. They are also using different methods, with Mr Breeden accepting claims from third- party investors who were turned away by Mr Picard.

Mr Breeden didn't immediately return a call Wednesday seeking comment.

BLOOMBERG