Jeffry Picower
Encyclopedia
Jeffry M. Picower was an American investor and noted philanthropist
involved in the Madoff investment scandal
. He appears to have been the largest beneficiary of Madoff's Ponzi scheme
, and his estate settled the claims against it for $7.2 billion.
and lawyer, but made most of his fortune by investing with Madoff.
As an accountant at Laventhol & Horwath in the 1980s, Picower set up questionable tax shelter
s. When the IRS challenged their validity, one of Picower's clients sued him and the firm. The case was quietly settled out of court.
In 1983, Picower was rebuked by the Securities and Exchange Commission for late disclosure of his greater than 5% position in a company involved in a merger.
In 1991, Picower and Anthony Cerami
established a charity, the Picower Institute for Medical Research, with an initial endowment of $10 million. Researchers there, led by Kevin J. Tracey
, made a potentially valuable discovery, with possible applications in the treatment of rheumatoid arthritis
, Crohn's disease
, and multiple sclerosis
. It was spun off into a for-profit company, Cytokine Networks, which was later merged with privately-held PharmaSciences to form Cytokine PharmaSciences. However, it was revealed that Picower owned 76% of PharmaSciences stock and actually controlled 86.2%, putting him in a conflict of interest
in the merger negotiations.
After Physician Computer Network, Inc., went bankrupt, Picower, the chairman of the board and 45% shareholder, had to give $21 million to other shareholders in 2000 after it was discovered that company executives had falsified financial statements.
Alaris Medical Systems, 65% owned by Picower, was taken over by Cardinal Health
in 2004 for $1.6 billion.
Picower was listed by Forbes
magazine as one of the 400 richest people in the United States for 2009, his only time on the list. Forbes, which listed Picower at no. 371, placed his net worth at $1 billion, although the magazine acknowledged that the former lawyer and accountant is "likely worth billions more."
. Longtime friend Bernard Madoff
managed foundation assets listed at over $1 billion. It distributed over $268 million in grants to various American organizations, including Human Rights First
and the New York Public Library
. In 2002, it granted $50 million to the Massachusetts Institute of Technology
neuroscience research center, which was subsequently renamed the Picower Institute for Learning and Memory
. However, the Picower Foundation was forced to close in 2009 due to losses arising from the uncovering of Madoff's Ponzi scheme
.
In June 2009, Irving Picard
, the trustee liquidating Madoff's assets, filed a lawsuit against Picower in the U.S. Bankruptcy Court for the Southern District of New York (Manhattan), seeking the return of $7.2 billion in profits, alleging that Picower and his wife knew or should have known that their rates of return were "implausibly high", with some accounts showing annual returns ranging from 120% to more than 550% from 1996 through 1998, and 950% in 1999. According to a June 28, 2009, MSNBC
article, that would make the Picowers the biggest beneficiaries of Madoff's scam, exceeding even Madoff himself. The Picowers' lawyer, William D. Zabel of Schulte Roth & Zabel, responded that, "They were totally shocked by his fraud and were in no way complicit in it."
On November 1, 2009, an additional court filing from the Madoff trustee documented an apparently fraudulent gain benefiting Picower.
"According to the new filing, Mr. Picower opened an account with Mr. Madoff on April 18, 2006, by wiring a check for $125 million, more than a quarter of the entire sum he invested with Mr. Madoff over time. Within two weeks, the $125 million deposit had purportedly grown to $164 million because of a dramatic ‘gain’ on the securities held in the account—all of which supposedly had been purchased three months earlier ... Five months later, Mr. Picower withdrew his original $125 million, leaving $81 million in the account. There is no legitimate explanation for these events nor any possibility that they escaped Picower’s notice."
On 17 December, 2010, it was announced that a settlement of $7.2 billion had been reached with the Picower estate to resolve the Madoff trustee suit, and repay losses in the Madoff fraud. Madoff has suggested that Picower was allowed to remain as a client because he was "the Ponzi equivalent of a bank too big to fail: an investor too big to fire." It would have been impossible for Madoff to find enough cah to completely redeem his multi-billion account.
, told dispatchers she found him "at the bottom of their swimming pool" at their oceanfront estate shortly after noon, Palm Beach police said. He was taken to Good Samaritan Hospital
, where he was pronounced dead about 80 minutes later.
According to the Palm Beach Police Department, "An autopsy of the body of Jeffry M. Picower was performed this morning. The Palm Beach County Medical Examiner's Office determined that Mr. Picower suffered a massive heart attack while in the swimming pool resulting in accidental drowning."
He was buried on October 27, 2009, in Mount Ararat Cemetery in Farmingdale, New York
.
Philanthropy
Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
involved in the Madoff investment scandal
Madoff investment scandal
The Madoff investment scandal broke in December 2008 when former NASDAQ chairman Bernard Madoff admitted that the wealth management arm of his business was an elaborate Ponzi scheme....
. He appears to have been the largest beneficiary of Madoff's Ponzi scheme
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
, and his estate settled the claims against it for $7.2 billion.
Business dealings
Picower was a certified public accountantCertified Public Accountant
Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
and lawyer, but made most of his fortune by investing with Madoff.
As an accountant at Laventhol & Horwath in the 1980s, Picower set up questionable tax shelter
Tax shelter
Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments...
s. When the IRS challenged their validity, one of Picower's clients sued him and the firm. The case was quietly settled out of court.
In 1983, Picower was rebuked by the Securities and Exchange Commission for late disclosure of his greater than 5% position in a company involved in a merger.
In 1991, Picower and Anthony Cerami
Anthony Cerami
-Biography:Anthony Cerami is a member of the National Academy of Sciences and the Institute of Medicine. He is the founder and Chairman of the Board of Warren Pharmaceuticals, and the founder and chairman of the Board and CEO of Araim Pharmaceuticals. He received a Ph.D...
established a charity, the Picower Institute for Medical Research, with an initial endowment of $10 million. Researchers there, led by Kevin J. Tracey
Kevin J. Tracey
Kevin J. Tracey, a scientist and inventor, was born in Fort Wayne, Indiana on 10 December 1957. He is President of the Feinstein Institute for Medical Research and Professor and President of the Elmezzi Graduate School of Molecular Medicine in Manhasset, New York.-Education:Kevin J. Tracey...
, made a potentially valuable discovery, with possible applications in the treatment of rheumatoid arthritis
Rheumatoid arthritis
Rheumatoid arthritis is a chronic, systemic inflammatory disorder that may affect many tissues and organs, but principally attacks synovial joints. The process produces an inflammatory response of the synovium secondary to hyperplasia of synovial cells, excess synovial fluid, and the development...
, Crohn's disease
Crohn's disease
Crohn's disease, also known as regional enteritis, is a type of inflammatory bowel disease that may affect any part of the gastrointestinal tract from mouth to anus, causing a wide variety of symptoms...
, and multiple sclerosis
Multiple sclerosis
Multiple sclerosis is an inflammatory disease in which the fatty myelin sheaths around the axons of the brain and spinal cord are damaged, leading to demyelination and scarring as well as a broad spectrum of signs and symptoms...
. It was spun off into a for-profit company, Cytokine Networks, which was later merged with privately-held PharmaSciences to form Cytokine PharmaSciences. However, it was revealed that Picower owned 76% of PharmaSciences stock and actually controlled 86.2%, putting him in a conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
in the merger negotiations.
After Physician Computer Network, Inc., went bankrupt, Picower, the chairman of the board and 45% shareholder, had to give $21 million to other shareholders in 2000 after it was discovered that company executives had falsified financial statements.
Alaris Medical Systems, 65% owned by Picower, was taken over by Cardinal Health
Cardinal Health
Cardinal Health, Inc., is a Fortune 500 health care services company based in Dublin, Ohio. Cardinal Health specializes in health care supply chain services, providing pharmaceuticals and medical products to more than 40,000 locations each day. The company is also a manufacturer of medical and...
in 2004 for $1.6 billion.
Picower was listed by Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
magazine as one of the 400 richest people in the United States for 2009, his only time on the list. Forbes, which listed Picower at no. 371, placed his net worth at $1 billion, although the magazine acknowledged that the former lawyer and accountant is "likely worth billions more."
Involvement with Bernard Madoff
The Jeffry M. and Barbara Picower Foundation was created in 1989 by Picower and his wife Barbara. Barbara Picower was listed as Executive Director and trustee, with both Picowers being members of the board of directorsBoard of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
. Longtime friend Bernard Madoff
Bernard Madoff
Bernard Lawrence "Bernie" Madoff is a former American businessman, stockbroker, investment advisor, and financier. He is the former non-executive chairman of the NASDAQ stock market, and the admitted operator of a Ponzi scheme that is considered to be the largest financial fraud in U.S...
managed foundation assets listed at over $1 billion. It distributed over $268 million in grants to various American organizations, including Human Rights First
Human Rights First
Human Rights First is a nonprofit, nonpartisan human rights organization based in New York City and Washington, D.C....
and the New York Public Library
New York Public Library
The New York Public Library is the largest public library in North America and is one of the United States' most significant research libraries...
. In 2002, it granted $50 million to the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
neuroscience research center, which was subsequently renamed the Picower Institute for Learning and Memory
Picower Institute for Learning and Memory
The Picower Institute for Learning and Memory is, along with the McGovern Institute for Brain Research and the Department of Brain and Cognitive Sciences, one of the three neuroscience groups at MIT...
. However, the Picower Foundation was forced to close in 2009 due to losses arising from the uncovering of Madoff's Ponzi scheme
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
.
In June 2009, Irving Picard
Irving Picard
Irving H. Picard is a partner in the law firm Baker Hostetler. He graduated from the Wharton School, University of Pennsylvania, with a B.S. degree , from Boston University School of Law with a J.D. degree , and from the New York University School of Law with an LL.M. degree in 1967, and was...
, the trustee liquidating Madoff's assets, filed a lawsuit against Picower in the U.S. Bankruptcy Court for the Southern District of New York (Manhattan), seeking the return of $7.2 billion in profits, alleging that Picower and his wife knew or should have known that their rates of return were "implausibly high", with some accounts showing annual returns ranging from 120% to more than 550% from 1996 through 1998, and 950% in 1999. According to a June 28, 2009, MSNBC
MSNBC
MSNBC is a cable news channel based in the United States available in the US, Germany , South Africa, the Middle East and Canada...
article, that would make the Picowers the biggest beneficiaries of Madoff's scam, exceeding even Madoff himself. The Picowers' lawyer, William D. Zabel of Schulte Roth & Zabel, responded that, "They were totally shocked by his fraud and were in no way complicit in it."
On November 1, 2009, an additional court filing from the Madoff trustee documented an apparently fraudulent gain benefiting Picower.
"According to the new filing, Mr. Picower opened an account with Mr. Madoff on April 18, 2006, by wiring a check for $125 million, more than a quarter of the entire sum he invested with Mr. Madoff over time. Within two weeks, the $125 million deposit had purportedly grown to $164 million because of a dramatic ‘gain’ on the securities held in the account—all of which supposedly had been purchased three months earlier ... Five months later, Mr. Picower withdrew his original $125 million, leaving $81 million in the account. There is no legitimate explanation for these events nor any possibility that they escaped Picower’s notice."
On 17 December, 2010, it was announced that a settlement of $7.2 billion had been reached with the Picower estate to resolve the Madoff trustee suit, and repay losses in the Madoff fraud. Madoff has suggested that Picower was allowed to remain as a client because he was "the Ponzi equivalent of a bank too big to fail: an investor too big to fire." It would have been impossible for Madoff to find enough cah to completely redeem his multi-billion account.
Death
On October 25, 2009, Jeffry Picower died at his Palm Beach home. Picower's wife, BarbaraBarbara Picower
Barbara Picower is Jeffry Picower's widow. She and her daughters were willed some $250 million from Jeffry's estate. The Picowers were family friends, early investors and massive beneficiaries of Bernard Madoff's criminal Ponzi scheme over 35 years, as was revealed in 2008...
, told dispatchers she found him "at the bottom of their swimming pool" at their oceanfront estate shortly after noon, Palm Beach police said. He was taken to Good Samaritan Hospital
Good Samaritan Hospital
Good Samaritan Hospital may refer to:In the United States:*Good Samaritan Hospital — San Jose, California*Good Samaritan Hospital — Los Angeles*Advocate Good Samaritan Hospital — Downers Grove, Illinois...
, where he was pronounced dead about 80 minutes later.
According to the Palm Beach Police Department, "An autopsy of the body of Jeffry M. Picower was performed this morning. The Palm Beach County Medical Examiner's Office determined that Mr. Picower suffered a massive heart attack while in the swimming pool resulting in accidental drowning."
He was buried on October 27, 2009, in Mount Ararat Cemetery in Farmingdale, New York
Farmingdale, New York
The Village of Farmingdale is an incorporated village on Long Island within the Town of Oyster Bay in Nassau County, New York in the United States...
.