The Department of Labor reached a settlement on behalf of victims of Bernard ‘Bernie’ Madoff‘s Ponzi scheme that provides for payment of more than $34 million. This follows an earlier settlement for $9 million, bringing more than $43 million to plan investors in funds managed by Austin Capital.
“This settlement will benefit thousands of workers and retirees whose hard-earned retirement savings and health plans were affected by Bernard Madoff,” Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi said in a press release.
The settlement was with Austin Capital Management Ltd. and its general partner Austin Capital Management GP Corp. The settlement money is to compensate employee benefit plans for losses suffered through investments in funds managed by Autin Capital Management, which indirectly ingested in Madoff’s scheme. The earlier settlement was with KeyCorp, Austin Capital’s parent company.
The Department of Labor investigation found that Austin Capital violated the Employee Retirement Income Security Act by allowing funds to invest the assets of ERISA-covered plans with Madoff through investments in the Rye Select Broad Market Prime Fund LP offered by Tremont Partners Inc, which was 100 percent invested with Bernie Madoff.
The Madoff investment scandal was first revealed in December of 2008. Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 and operated the wealth management arm of his company as an elaborate Ponzi scheme. In early 2009, Madoff plead guilty to operating the largest Ponzi scheme in history, and by the summer he was sentenced to 150 years in prison.
Prosecutors placed the size of Madoff’s fraud at $65 billion. Bernie Madoff’s Ponzi scheme victims included many banks, hedge funds, charities, universities, and wealthy individuals.