New payout for victims of Madoff Ponzi scheme

[WASHINGTON] Victims of Bernie Madoff's multi-billion-dollar fraud, who lost their savings when the Ponzi scheme collapsed in 2008, are receiving additional compensation, bringing the total payout so far to nearly US$2 billion, US officials announced Thursday.

The Madoff Victim Fund paid out another US$695.4 million to over 27,000 victims of the investment scam, the Justice Department said in a statement.

It was the third payment in a series that the Justice Department said will eventually return over US$4 billion to Madoff's victims.

"While today's distribution of funds is indeed significant in scope, we understand no amount of money could ever restore the damage done by Madoff as a result of his selfish behaviour and unforgivable financial crimes," said William Sweeney Jr, FBI assistant director in charge of the New York Field Office.

"To all of his many victims and their families, we realise this gesture may not provide the consolation necessary to remove the pain and suffering you have been brought to bear, but we are hopeful it provides some sense of relief," Mr Sweeney said in a statement.

The Madoff Victim Fund has received over 65,000 petitions from victims in 136 countries, according to the Justice Department.

The Madoff scheme was revealed during the financial crisis in 2008 when he was unable to satisfy growing client demands to withdraw their investments.

Madoff is serving a 150-year prison sentence for orchestrating the world's largest Ponzi scheme, which bilked investors of an estimated US$65 billion when principal and lost interest are counted.

A pyramid, or Ponzi scheme, is a form of fraud in which returns on investments are generated only by bringing in fresh investments from new victims. Cash from new clients is used to pay existing clients until the scheme eventually collapses.

AFP