Investors burned by Bernard Madoff's massive Ponzi scheme will be getting back a $7.2 billion chunk of the money they lost after a settlement announced Friday with a dead Florida businessman's estate, the largest forfeiture of its kind. 
 
 The trustee recovering the money for Madoff's victims settled with the estate of Jeffry Picower, a Florida philanthropist and businessman who had been the single-largest beneficiary of the fraud. 
 
 The agreement, which may be the largest civil forfeiture ever, was detailed in court papers filed Friday in Manhattan. 
 
 Court-appointed trustee Irving Picard was among officials who held a news conference to discuss the settlement. Barbara Picower, representing the estate of her late husband, entered into the agreement with the U.S. attorney's office. 
 
 U.S. Attorney Preet Bharara called the forfeiture the largest in Justice Department history and a "game changer" for those swindled by Madoff. He commended Picower's widow "for agreeing to turn over this truly staggering sum, which really was always other people's money." 
 
 Barbara Picower said in a written statement: "We will return every penny received from almost 35 years of investing with Bernard Madoff. 
 
 "I believe the Madoff Ponzi scheme was deplorable and I am deeply saddened by the tragic impact it continues to have on the lives of its victims," she said. "It is my hope that this settlement will ease that suffering." 
 
 Barbara Picower said she was "absolutely confident that my husband Jeffry was in no way complicit in Madoff's fraud and want to underscore the fact that neither the trustee, nor the U.S. attorney, has charged him with any illegal act." 
 
 Jeffry Picower drowned after suffering a heart attack in the swimming pool of his Palm Beach, Fla., mansion on Oct. 25, 2009. 
 
 Madoff, 72, is serving a 150-year prison sentence after pleading guilty to orchestrating the massive fraud over decades. U.S. prosecutors initially estimated the fraud took in about $65 billion. 
 
 Picard has put the amount of investor money lost at about $20 billion, considered the biggest investment fraud in history. 
 
 The New York Times said Friday that prosecutors have said privately that the settlement will be the largest civil forfeiture payment in American judicial history. A recovery of the size mentioned 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. 
 
 The settlement will come just days after the body of Bernie Madoff's son, Mark Madoff, was found in his Soho apartment after he had hung himself. 
 
 Madoff's burned clients greeted the news warily. 
 
 Willard Foxton, a British journalist whose father committed suicide after losing his life savings, said he was stunned that a major investor decided to return so much money. 
 
 "I don't think he would have killed himself if he thought a few years down the line that he was going to be getting a good amount of his money back," he said. 
 
 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. 
 
 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. 
 
 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. 

 Jeffrey Langlois/Palm Beach Daily News 
 
 A scandal flush with superlatives added yet another on Friday with a $7.2 billion legal settlement, the largest single forfeiture in American judicial history, to benefit the victims of Bernard L. Madoff’s global fraud. 
 
 The total amount available for compensating Madoff victims is now just under $10 billion, far more than expected when Mr. Madoff’s Ponzi scheme — the largest ever — fell apart after his confession and arrest two years ago this month. 
 
 Cash losses in the fraud are estimated at $20 billion, but Irving H. Picard, the trustee gathering assets for victims, cautioned that the losses — like the amount recovered — could rise as he continued his negotiations with Mr. Madoff’s investors. Whether or not those investors suspected the fraud, Mr. Picard is entitled to sue to recover the fictional profits that were withdrawn so that they can be distributed to those whose cash disappeared in the scheme. 
 
 For people who left most, if not all, of their savings in Mr. Madoff’s hands through the life of his fraud, the settlement significantly raises the prospect that at least some of their money will be recovered. Mr. Picard said he hoped to start distributing a portion of the money to eligible victims in the first three months of next year. 
 
 The payment is part of a global settlement of claims lodged against the estate of Jeffry M. Picower, who died in October 2009 and who had quietly accumulated an enormous fortune built on legitimate Wall Street trading. 
 
 His widow, Barbara, authorized the settlement on behalf of his estate, saying that she intended to use the bulk of her inheritance from him to continue the couple’s philanthropic work. 
 
 “Today’s truly historic settlement with the estate of Jeffry Picower is a game-changer for Madoff’s victims,” said Preet Bharara, the United States attorney in Manhattan. 
 
 The settlement amount represents the difference between the cash withdrawn from Madoff accounts by Mr. Picower, who was one of Mr. Madoff’s largest investors, and the cash originally invested, estimated at just under $620 million. 
 
 Mr. Bharara noted that Mrs. Picower was “returning every penny” her late husband received from his Madoff accounts so that the money could be used “to help those who have suffered most.” He added: “Barbara Picower has done the right thing.” 
 
 Mrs. Picower, who lives in Palm Beach, said in a statement, “I am absolutely confident that my husband, Jeffry, was in no way complicit in Madoff’s fraud.” She emphasized that neither federal prosecutors nor the trustee gathering assets for Madoff victims had charged him with any illegal conduct. 
 
 That Mr. Picower’s widow is able to agree to such a large forfeiture reflects her late husband’s utterly unheralded career as a private investor on Wall Street, where he amassed a fortune that certainly made him one of the richest men in the country. 
 
 Mr. Picower was among the wealthiest individual clients at Goldman Sachs. Executives who ran the firm’s exclusive private wealth management business, with clients including Ralph Lauren and Bill Gates, were amazed that Mr. Picower had become so wealthy yet managed to stay out of the public spotlight. 
 
 In the late 1990s, Mr. Picower’s personal brokerage accounts at Goldman were worth about $10 billion, according to two people with direct knowledge of the account. 
 
 “It was amazing,” said a former Goldman executive. “The guy was worth $10 billion, just at Goldman, and that alone would have made him one of the richest men in the country, yet he wasn’t in the Forbes 400,” the magazine’s annual roster of the rich and super-rich, until after the Madoff scandal. 
 
 An aggressive investor with an appetite for risk, Mr. Picower also borrowed heavily at Goldman to trade stocks, amplifying his profits. At one point, his Goldman accounts had more than $5 billion in margin loans against them, according to the people familiar with his account history. 
 
 The Madoff trustee asserted in a complaint filed in May 2009 that Mr. Picower was equally successful with his Madoff accounts — but that the “profits” he withdrew from those accounts over the years came from money that Mr. Madoff had stolen from other investors. 
 
 The two men met in the late 1960s, when Mr. Picower’s brother-in-law, Michael Bienes, joined the accounting firm operated by Mr. Madoff’s father-in-law, Saul Alpern. Mr. Picower became an early investor with Mr. Madoff and had nearly three dozen separate accounts with him by the time the fraud collapsed. 
 
 Over the years, Mr. Picower had withdrawn billions in cash from those accounts to make substantial charitable gifts, including $50 million in 2002 to establish the Picower Institute for Learning and Memory at the Massachusetts Institute of Technology. 
 
 In his complaint, Mr. Picard asserted that Mr. Picower, as a supremely sophisticated investor, should have recognized all the red flags that indicated Mr. Madoff was conducting an enormous fraud. Lawyers for Mr. Picower rejected that assertion, saying he had been victimized by a fraud so elaborate that it fooled regulators, hedge fund managers and major accounting firms for decades. 
 
 The estate will pay $5 billion to Mr. Picard to settle the complaint he filed in bankruptcy court, which is subject to approval at a hearing set for Jan. 13. On Friday, a Federal District Court judge approved a settlement by the estate to pay $2.2 billion to the Justice Department, which had filed civil forfeiture claims against the estate earlier that day. 
 
 Regardless of the route the money travels, all of it will wind up in the hands of eligible Madoff victims, according to both Mr. Bharara and Mr. Picard. 
 
 The settlement provides relief only to those Madoff investors who withdrew less from their accounts over the years than they originally invested. These “net winners,” investors who took out more cash than they put in, will not be eligible to share in the recovery unless a federal appeals court determines that their claims are valid. A ruling on that issue is expected next year. 
 
 But the Picower payment will almost certainly affect the growing speculative market for Madoff claims, where professional investors have been quietly buying up claims approved by the trustee at a substantial discount to their face value. In recent months, traders have offered Madoff victims 20 to 34.5 cents on the dollar for their claims. 
 
 Now, it seems increasingly likely that claims bought for that amount will wind up being worth considerably more, perhaps as much as 50 cents on the dollar — a nice profit for the speculators who took the risk of buying them. 
 
 Peter Lattman contributed reporting. 
 
 Statement of Barbara Picower, widow of Jeffry M. Picower 
 
 Complaint Against Picower Estate Over Madoff Claims 
 
 Agreement by Picower Estate to Pay $7.2 Billion 
 
 Statement by U.S. Attorney on Picower Settlement
– The pool of funds available to Bernie Madoff's victims is about to expand by $7.2 billion, thanks to a deal with the biggest beneficiary of the Ponzi scheme. The estate of Florida philanthropist Jeffry Picower has agreed to “return every penny received from almost 35 years of investing with Bernard Madoff,” it said in a statement. Insiders say it’s the “largest civil forfeiture payment in American judiciary history,” the New York Times notes. Picower’s wife called Madoff’s scheme “deplorable,” noting that she was sure her husband wasn’t in on it. “This settlement honors what Jeffry would have wanted, which is to return this money so that it can go directly to the victims.” Trustee Irvin Picard says cash losses totaled $20 billion; he had already pulled together $2.3 billion. With the Picower money, investors who took less from their Madoff accounts than they put in could now get nearly half their losses back.