(Reuters) - The court-appointed trustee liquidating Bernard Madoff’s firm said on Friday he has reached a settlement with the family of late Beverly Hills money manager Stanley Chais that will provide more than $277 million to victims of Madoff’s Ponzi scheme.

Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo. REUTERS/Brendan McDermid/File Photo

Irving Picard, the trustee, said victims will receive at least $232 million of cash, and the rights to $30.7 million of assets that are expected to be sold.

A separate $15 million fund will pay claims by California investors, resolving litigation by that state’s Attorney General Kamala Harris, and which had been brought in 2009 by her predecessor, California Governor Jerry Brown.

Friday’s settlement requires approval by U.S. Bankruptcy Judge Stuart Bernstein in Manhattan, who oversees the liquidation of Bernard L. Madoff Investment Securities LLC. A hearing is scheduled for Nov. 22.

The cash payout would boost to $11.46 billion the sum that Picard has recovered for former Madoff customers, or 65 percent of their estimated $17.5 billion loss. Picard has said half of the 2,597 accounts with valid claims have been fully paid off.

Madoff, 78, is serving a 150-year prison term after pleading guilty to running a decades-long fraud uncovered in December 2008.

Chais, who died in September 2010 at the age of 84, once handled investments for elite Hollywood clients like Oscar-winning director Steven Spielberg, and had been a close friend of Madoff since the 1960s.

Picard had sought to recoup $1.32 billion of “fictitious profits” that he claimed the Chais defendants, including Chais’ widow Pamela, withdrew from Madoff’s firm.

The U.S. Securities and Exchange Commission in June 2009 filed a related civil lawsuit against Chais, claiming he ignored red flags that Madoff’s seemingly steady returns were bogus.

In a court filing, Picard’s lawyers said the settlement covered all of Stanley Chais’ estate and substantially all of his widow’s assets, and represented “a good faith, complete and total compromise.”

Chais had maintained that he was also a Madoff victim and had lost nearly all of his own money.

Lawyers for the Chais defendants did not immediately respond to requests for comment.

Through Sept. 30, more than $1.42 billion has been spent on recovery efforts, including $824.6 million for legal fees for Picard’s law firm Baker & Hostetler and $370.2 million for consultant fees, a Thursday court filing shows.

A $4 billion fund overseen by former SEC Chairman Richard Breeden will also compensate Madoff victims.

The cases are Picard v Chais et al, U.S. Bankruptcy Court, Southern District of New York, No. 09-ap-01172; and In re: Bernard L. Madoff Investment Securities LLC in the same court, No. 08-01789.</s>SACRAMENTO, Calif. (AP) — California will recover $15 million related to the massive Ponzi scheme engineered by Bernard Madoff as part of a larger agreement liquefying the $277 million estate of a Beverly Hills investment adviser, officials said Friday.

The settlement ends a 7-year-old lawsuit filed by the state attorney general against Stanley Chais, who charged what officials called astronomical fees to invest hundreds of millions of dollars from more than 460 often-elderly victims.

Chais, who died in 2010, collected nearly $270 million in fees between 1995 and 2008 while presenting himself as an “investment wizard,” according to the lawsuit filed in Los Angeles Superior Court.

In fact, he simply funneled investors’ life savings to Madoff, the one-time Nasdaq chairman whose $20 billion financial pyramid collapsed in 2008, the lawsuit said.

The agreement filed in federal bankruptcy court in New York settles separate lawsuits against Chais that trustees said will essentially turn over his estate to his victims.

That includes nearly $263 million in cash and other assets to the Bernard L. Madoff Investment Securities customer fund, and another $15 million that will be administered by the California attorney general’s office to pay claims by investors in companies operated by Chais.

Investors in the Chais-operated companies cannot lay claim to the larger amount of money because that share will go to those who invested directly with Madoff, not through so-called “feeder funds,” said Kristin Ford, a spokeswoman for California Attorney General Kamala Harris.

The lawsuit estimates there are more than 460 defrauded investors in three Chais-related companies, which would work out to reimbursements of about $32,600 each. Ford said the actual awards will be decided by an administrator and depend in part on how many former clients file claims. The state can also use up to $750,000 of the settlement money for its administrative costs.

Chais’ investors had no idea the money that they had invested since the 1970s was being sent to Madoff, who now is serving a 150-year prison sentence after pleading guilty to fraud charges. The state’s lawsuit says some lost their homes and had to move in with their adult children.

“For over 30 years, Stanley Chais unscrupulously defrauded Californians, many of them elderly, by taking their life savings, charging steep fees, and funneling their money to Bernie Madoff’s elaborate Ponzi scheme,” Harris said in a statement.

The settlement with Chais’ widow and other family members brings total recoveries related to Madoff to more than $11.4 billion, Stephen Harbeck, president and chief executive officer of the Securities Investor Protection Corporation, said in a statement.

Nearly $9.5 billion of that money has already been distributed. Distributing all of it is expected to return more than 65 percent of the principal estimated to have been lost by Madoff customers whose claims have been allowed by trustees.

Officials did not say how much of Chais’ estate would be left for his widow and other survivors.

The California lawsuit accusing Chais of securities and investment fraud was filed by Harris’ predecessor, now-Gov. Jerry Brown. But the settlement was negotiated over the last four years under the tenure of Harris, who is running for the U.S. Senate against a fellow Democrat.
Irving Picard, a court-appointed trustee liquidating the Madoff asset management firm, says that he has reached a settlement with the family of the late Stanley Chais, in connection with monies that had been funneled from California investors, through Chais, into Madoff's Ponzi scheme.