Victims of Madoff Ponzi Scheme to Receive Millions More in Compensation

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Half of the $4 billion the Justice Department hopes to distribute to victims comes from the government’s aggressive move to seize the assets not only of Mr. Madoff and his family, but also of the wealthy investors who over the years cashed out billions from the fund, profits that turned out to be fictions. The other half came from J.P. Morgan Chase, which was accused of having ignored red flags while it acted as Mr. Madoff’s bank.

The practice of seizing assets, known as civil asset forfeiture, has become more prevalent under Attorney General Jeff Sessions, a practice that has drawn criticism from the left and the right. But it has benefited victims of Mr. Madoff’s financial scam.

“In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle,” Mr. Sessions said in a statement. “We continue to work to compensate those he defrauded.”

In December 2008 Mr. Madoff told his sons that the investment advisory business he founded in 1960 had been a massive fraud. After his family notified the authorities, he ultimately pleaded guilty to 11 counts of criminal financial activity and was sentenced to 150 years in prison. Both of his sons have since died and his wife, Ruth, is estranged.

The firm’s collapse claimed thousands of victims including pension funds, foundations, a philanthropy established by the Holocaust survivor Elie Wiesel, and wealthy individuals like the actors Kevin Bacon and Kyra Sedgwick.

The Justice Department has approved more than 39,000 petitions for compensation.

In a separate effort, a court-appointed trustee, Irving Picard, has repaid about $11 billion to victims who filed a class-action lawsuit against Mr. Madoff. Much of that money has come from the process of winding down the financial firm and redistributing the assets to customers.

Not long after Mr. Madoff was arrested, Mr. Picard began liquidating the disgraced financier’s firm. Mr. Picard cannot give investors the fake profits they had been misled to believe they had earned, but he hopes to return most of their principal.

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