NEW YORK — The trustee recovering money for Bernard Madoff’s burned investors has reached a $7.2 billion settlement with the estate of a Florida philanthropist and businessman who had been the single-largest beneficiary of the fraud.

Court-appointed trustee Irving Picard planned an announcement today in Manhattan about the estate of Jeffry Picower, who drowned after suffering a heart attack in the swimming pool of his Palm Beach, Fla., mansion on Oct. 25, 2009.

The amount of the settlement was not immediately made public, but the figure was provided to The Associated Press by a person familiar with the civil case against the estate. The person was not authorized to speak publicly about the settlement and spoke on condition of anonymity.

A recovery of that size would mean that a sizeable number of Madoff’s victims could get at least half of their money back – a remarkable turnaround for people and institutions that thought two years ago that they had lost everything.

A spokeswoman for the estate had no immediate comment.

Picower, who was 67 when he died, invested many years ago with Madoff. Picard’s investigators said that, over time, he withdrew about $7 billion in bogus profits from his accounts. That amounts to more than a third of the dollars that disappeared in the scandal.

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That money was supposedly made on stock trades, but authorities said that in reality it was simply stolen from other investors.

Picower’s lawyers claimed he knew nothing about the scheme, but the trustee argued in court papers that he must have known that his returns were “implausibly high” and based on fraud.

Lawyers for Picower’s estate have been in negotiations with the trustee for some time.

After Picower drowned, his will revealed that he had earmarked most of his fortune for charity, but his widow said in a statement that the family wished to return some of it to Madoff’s victims through “a fair and generous settlement.”

A huge charitable foundation that Picower had created with part of his fortune closed in 2009 after its assets were wiped out in the Madoff fraud.

It had donated hundreds of millions of dollars to colleges, libraries and other nonprofit groups.

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Thousands of people, banks and hedge funds that invested money with Madoff saw their savings wiped out when the fraud was revealed to be a hoax. Many, though, like Picower, had been drawing bogus profits from their Madoff accounts for years and wound up walking away from the scheme having taken out more money than they put in.

Picard has been involved in a two-year effort to claw back those false profits and return the stolen money to people who were net-losers in the scheme.

It is those people, who lost more than they withdrew, who could now be poised to recover half of their original investment.

The person said Picower’s estate would pay $5 billion to settle the civil lawsuit brought by Picard and other $2.2 billion to resolve a civil forfeiture claim by federal prosecutors investigating Madoff’s crimes. All the money will go to victims of the fraud.


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