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Jeffry Picower

Jeffry Picower

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By Jake Bernsteinupdated 2:53 p.m.

ET June 28, 2009It is rare these days to see Bernard Madoff's name in print unaccompanied by the word "Ponzi." Yet recent allegations raise the possibility of one key difference between Madoff's crimes and those of legendary con artist Charles Ponzi.

While Ponzi's scam was under way, Ponzi himself was its biggest beneficiary.

It now appears that the biggest winner in Madoff's scheme may not have been Madoff at all, but a secretive businessman named Jeffry Picower.

Between December 1995 and December 2008, Picower and his family withdrew from their various Madoff accounts $5.1 billion more than they invested with the self-confessed swindler, according to a lawsuit filed by the trustee who is trying to recover money for those Madoff defrauded.

In contrast, shortly after he confessed, Madoff declared his household net worth to be between $823 million and $826 million, according to court documents.

While the Madoffs clearly lived opulently, no evidence has emerged that their combined assets and expenditures approached the amount the Picower family is alleged to have withdrawn from the scheme.

Story continues below â†"advertisement | your ad hereIn an era when billions of dollars are being tossed about in financial collapses and government bailouts, remarkably little attention has been paid to Jeffry Picower's extraordinary success with Bernie Madoff.

If Picower has penetrated the popular consciousness at all, it is as a Madoff victim.

The victim narrative is buoyed by testimonials from the nonprofits who received funding from his charitable foundation — which quickly closed on the heels of the swindler's confession.

For this reason, ProPublica decided to take a closer look at both Jeffry Picower and the complaint filed against him by Madoff trustee Irving Picard.

Click for related contentMadoff lawyer seeks 12-year sentence SEC: Firm funneled billions to MadoffLong Island Madoff victims seek helpFortunately for the trustee and the federal investigators presently swarming over the case, Madoff apparently kept detailed notes of communications between his office and his clients.

But despite this documentary evidence, which is cited but not provided in court documents, Picard's complaint raises more questions than it answers.

Above all, what was the exact relationship between the two men? The complaint is larded with the legal catch-all phrase, "knew or should have known," to describe Picower's cognizance of Madoff's fraud, but the intricacies of the relationship are left to the imagination.

The complaint states that the Picowers were beneficiaries of the Ponzi scheme for more than 20 years.

The withdrawals listed between 1995 and 2008 reveal a pattern of large quarterly disbursements, transferred to Picower-controlled accounts by check or sometimes wire, that peak in 2003.

Three years later something happens that causes the amount to drop precipitously.

It recovers slightly the following year, but the highest-flying days are over for good.

One question is the role that Picower's charitable giving played in all of this.

The amount Picower withdrew for his foundation is separate from the quarterly withdrawals for his personal accounts.

From 1995 to 2008, Picower took out about $291 million from Madoff for the foundation account.

During the same period, the foundation doled out a little under $207 million in donations, according to tax forms.

Perhaps the most pertinent question: If Picower withdrew $5.1 billion in "profit" from Madoff, where did all the money go? The Picowers own a home in Palm Beach, Fla., that is appraised at a little over $28 million.

They also have a 28.4-acre compound in Connecticut valued at $4.5 million.

A search of numerous online sources, both aggregate databases and county property records for the couple, their daughter, and the companies named in the complaint, reveals few other major assets.

If someone needed the skills to hide billions of dollars, few would be better equipped than Picower, an attorney and accountant who has been described as a "tax shelter expert." Even so, it's curious our search did not even uncover a boat or plane under the Picower name.

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