Friday, 1 July 2016
Last updated 3 hours ago
Dec 11 2012 | 9:37am ET
Four years ago today, Bernard Madoff was arrested for running a $65 billion Ponzi scheme, one of the longest-running and most audacious frauds in history and one that shook the hedge fund industry to its core.
But while Madoff continues to work off his 150-year prison sentence—he pleaded guilty in 2009—the case is far from at an end. The court-appointed trustee in the case is still seeking to recover assets for victims, and five former employees are set to go on trial for their role in the fraud next year. Madoff's brother, Peter, a longtime executive at Madoff's firm, pleaded guilty this summer and will be sentenced five days before Christmas.
Madoff's arrest, after he confessed to his two sons—one of whom took his own life two years ago today—led to major changes in the hedge fund industry. Investors began to clamor for increased transparency after several funds of hedge funds—many of which had made their names as Madoff feeder funds—lost millions or billions in the scam.
Receiver Irving Picard has since recovered more than half of the $17.5 billion in principal invested with Madoff over the decades. He hopes to gather at least $3 billion more, and has already returned $3 billion to victims.
But only clients who invested directly with Madoff are entitled to a share. Those who lost money through feeder funds have to battle it out with those firms for their fair share.
Four years in, Picard's top lawyer, David Sheehan, told The Wall Street Journal that he and his team "had to reconstruct this from ground zero and put it back together again."
"I don't think either of us thought we could achieve these results," Sheehan said. "There's never been any case like this."