Philanthropist got $1b in fake profit, Madoff trustee says

The Boston Globe reports:

The trustee in the Bernard Madoff case is accusing Boston philanthropist Carl Shapiro and his family foundation of reaping $1 billion in fictitious profits from investments over 40 years, calling the Shapiros among the “largest beneficiaries’’ of Madoff’s Ponzi scheme.

The trustee, Irving Picard, made the allegations in a court filing last week, after months of private negotiations between his office and lawyers for the 96-year-old Shapiro broke down.

In a letter filed with Judge Burton R. Lifland in US Bankruptcy Court in New York, Picard’s office said Shapiro, during his long relationship with Madoff, enjoyed “unrealistically and consistently purported high rates of return and remarkable purported trading success.’’

Those high rates of return were allegedly false profits invented by Madoff, who at least since 1980 did not invest his clients’ money. Instead, he used money from new investors to pay off others. The Shapiros said in the court filing that Picard is likely to demand the family return several hundred million dollars to Madoff’s estate, for the trustee to redistribute to other victims who lost money.