US: Judge rules in favour of $7bn settlement in Madoff case

A BANKRUTCY court judge has approved a $7.2 billion (£4.5bn) settlement to compensate people defrauded by corrupt financier Bernard Madoff.

Judge Burton Lifland made the ruling yesterday despite the objections of some investors, who did not agree with the terms of the deal between the estate of Jeffry Picower, a Madoff friend and investor, and a trustee liquidating the Madoff firm.

The trustee and the US Department of Justice announced the settlement on 17 December with Mr Picower's wife, Barbara. Mr Picower died of a heart attack in Florida at the age of 67 in October 2009.

The objection to the settlement, the biggest since the December 2008 revelation of Madoff's decades-long fraud - described as a Ponzi scheme - was made on behalf of a putative class of investors whose claims had not been recognised by the trustee, lawyer Irving Picard. Mr Picard has put the amount lost at about $20bn. So far, Mr Picard and his team of lawyers have made settlements worth about $10bn.

Madoff, 72, is serving a 150-year prison sentence after pleading guilty in March 2009 to orchestrating a Ponzi scheme.

A Ponzi scheme is one in which no actual trades in securities take place and early investors are paid with the money of new clients.

Madoff's eldest son Mark, 46, took his own life in December last year, after "succumbing to two years of unrelenting pressure from false accusations and innuendo," his lawyer said at the time.

Mark Madoff had worked at his father's investment company during the fraud, and those who lost out found it hard to believe that he, and other Madoff family members, were not aware of the extent of the financier's dishonest enterprise.