A settlement has been reached that includes the payment of nearly $220 million to compensate employee benefit plans and other investors that suffered losses through investments in Bernard L. Madoff's Ponzi scheme.
The settlement is pending approval by the U.S. District Court for the Southern District of New York and resolves U.S. Department of Labor (DOL) litigation, actions brought by New York's attorney general, and several private lawsuits and class actions brought on behalf of plans and other investors that invested with Madoff.
The settlement was reached with Ivy Asset Management LLC, J.P. Jeanneret Associates Inc., Beacon Associates Management Corp., Andover Associates Management Corp., and their current and former owners and officers.
A measure of justice
"The settlement agreement we're announcing today provides a measure of justice for those Americans who worked hard to prepare for their retirement and then saw hoped-for stability disappear," said Secretary of Labor Hilda L. Solis. "My department is committed to ensuring that workers and retirees receive the benefits they've earned and deserve. If approved by the court, this settlement, combined with expected payments from the Madoff bankruptcy estate, will allow worker benefit plans impacted by Bernard Madoff's illegal and reprehensible scheme to recover all, or nearly all, of the money they invested with him."
DOL sued Ivy, Jeanneret, Beacon, Andover and their owners and officers Oct. 21, 2010, for alleged violations of the Employee Retirement Income Security Act. The suit alleged that they breached their fiduciary duties to a number of benefit plans by recommending, making and maintaining investments with Madoff, thus losing hundreds of millions of dollars in assets needed for the pension and health benefits of thousands of workers.
"Nothing can make up for the years-long agony that plan administrators and participants, and individual investors were put through by these defendants and Madoff," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "But this settlement should go a long way toward making victims financially whole and, hopefully, closing a painful chapter for many workers and families."
Under the settlement agreement, Ivy and its principals have agreed to pay a total of $210 million. Jeanneret and its owners, John P. Jeanneret and Paul Perry, have agreed to pay $3 million. Beacon and Andover and their owners, Joel Danziger and Harris Markhoff, have agreed to pay $3.5 million and relinquish a claim of more than $3.3 million for management fees.
The settlements resulted from investigations conducted by the New York and Boston regional offices of the Employee Benefits Security Administration, an agency of the Labor Department. Litigation was conducted by the Plan Benefits Security Division of the department's Office of the Solicitor in Washington, DC.
Workers in employer-sponsored health and retirement benefit plans who feel that they have been denied a benefit inappropriately, or have questions about benefits laws, can contact an EBSA benefits adviser here or by calling 866-444-EBSA (3272).