Madoff Victims to Receive More than $43 Million in Settlement

A Department of Labor investigation showed that Austin Capital Management mishandled retirement and benefit plan funds by indirectly investing with Bernie Madoff.

The Department of Labor has finalized plans to pay more than $34 million to compensate funding for employee benefit plans that was invested indirectly into Bernard L. Madoff’s Ponzi scheme. Austin Capital’s parent company, Keycorp has already agreed to pay $9 million to compensate benefit fund losses, making the total recovery more than $43 million.

According to the DOL, Austin Capital violated the Employee Retirement Income Security Act, based on findings from the investigation.

"This settlement will benefit thousands of workers and retirees whose hard-earned retirement savings and health plans were affected by Bernard Madoff," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi, in a statement on the Department of Labor website.

Funds from Austin Capital were invested into Rye Select Broad Market Prime Fund offered by Tremont Partners Inc. From there, the funds were invested with Madoff.

The instigation determined that retirement funds were imprudently invested. 

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