Carl Shapiro, family agree to return $625m in Madoff funds

By Globe Staff
December 7, 2010

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Boston philanthropist Carl Shapiro and his family have agreed to return $625 million they received from Bernard Madoff to help repay other victims of the convicted swindler, according to a federal court filing made today.

Shapiro was one of Madoff's early investors and held an account with Bernard L. Madoff Investment Securities LLC beginning in 1961. The $625 million was held in numerous accounts Shapiro and family members kept at JPMorgan Chase Bank that they had funded with proceeds from Madoff, according to the US Attorney filing in New York today.

The Shapiros agreed to surrender the funds after the US government moved to seize it, alleging that under federal law they were not entitled to proceeds made during the commission of a crime.

Shapiro sold his Kay Windsor Inc. dress business in 1971 for $21 million, and, with Madoff's help, managed to parlay that into a fortune exceeding $1 billion. Over the years, Shapiro invested hundreds of millions of dollars with Madoff, and received hundreds of millions back in what has since been determined to be fictitious profits, according to the US Attorney filing. Government officials have gone after Shapiro and other wealthy Madoff clients to settle victim losses.

Through a spokesman, Shapiro, 97, declined comment. Shapiro has maintained that he had no idea Madoff was stealing from some investors to pay off others.

The Shapiros have claimed losing at least $545 million to Madoff, including $250 million Carl Shapiro gave Madoff just days before the Wall Street financier admitted to running a fraud in December 2008.

Shapiro, through his family foundation, has given away large chunks of his fortune, with numerous buildings and wings bearing his name, including at Beth Israel Deaconess Medical Center and the Museum of Fine Arts. Because of the Madoff scandal, Shapiro family members have said they might not be able to continue such a high level of charitable giving.

Other family members' accounts named in today's agreement included one controlled by his son-in-law Robert Jaffe who helped steer Boston-area clients to Madoff.

Madoff pled guilty to running the biggest Ponzi scheme in history in last year and is serving a 150-year prison sentence.

More: Read previous coverage of the Madoff Ponzi scheme