Nearly two years after the sweeping Ponzi scheme operated by financier Bernard Madoff was exposed, Boston investor and philanthropist Carl Shapiro has agreed to return $625 million that Madoff paid out to him over the years, the Boston Globe reports.
The legal settlement is the largest to date in the Madoff bankruptcy case and resolves the government's civil claims against the 97-year-old Shapiro and his extended family. The sum includes $38 million from Robert M. Jaffe, Shapiro's son-in-law and a former broker for Madoff, as well as millions from trusts set up for Shapiro's children and grandchildren. Initially, Irving Picard, the court-appointed trustee in the case, had sought $1 billion from the Shapiros.
Shapiro built his fortune on his Kay Windsor dress business, which he sold for $21 million in 1971. But he had been investing with Madoff since the early 1960s. Just before Madoff confessed his fraud to authorities in December 2008, he requested, and received, $250 million from Shapiro. At the time of Madoff's confession, the Shapiros believed that they had $545 million invested with the New York City financier.
Shapiro and his family have a long tradition of philanthropy in the Boston area. In the wake of the announcement, however, many worry that the family will be forced to scale back its giving. Indeed, the settlement apparently will claim the remaining assets of the Carl and Ruth Shapiro Family Foundation.
"Boston has a lot of wealth, but it doesn't have many large foundations, particularly foundations like Shapiro that have regularly made seven-figure gifts to major cultural, higher ed, and medical institutions," said Paul S. Grogan, president and CEO of the Boston Foundation. "These are institutions that are vitally important to Boston's identity and quality of life."