|Madoff faces a maximum sentence of 150 years.|
Boston firm close to $15m deal to buy part of Madoff's business
NEW YORK - A deal has been reached to sell the part of Bernard Madoff's company that investigators are fairly certain was honestly run, and the company buying the operation said it is confident it is not acquiring a den of thieves.
A court-appointed trustee overseeing the liquidation of Madoff's assets announced Friday he has reached a potential $15 million deal to sell his market-making business to the Boston firm Castor Pollux Securities.
The agreement leaves open the possibility that the operation could go to a higher bidder before the sale is finalized, trustee Irving Picard said in a statement.
The sale price is just a fraction of the $700 million that Madoff recently estimated the business was worth, a figure that had been laughed off as irrational by some observers.
Revenue generated by the sale will be used to partially reimburse Madoff's victims.
The market-making division managed by Madoff's brother and two sons was separate from the secretive investment advisory business central to the scam. At a forum for victims last month, Picard said investigators had concluded the trading operation was legitimate and should be sold to the highest bidder.
Under the terms of the deal, Castor Pollux would take over office equipment and the business data. The firm would pay $500,000 at closing and then payments of up to $15 million in revenues from trades through 2012.
The remaining employees of the operation were fired Friday, but Castor Pollux said in a statement that it intends to rehire some of them if the deal is finalized.
Darin Oliver, Castor Pollux's president, said the firm had been impressed by the business's sophistication and the professionalism of its workers.
"The operation and employees have been extensively scrutinized by numerous federal agencies," the company's statement said.
"It has cutting-edge technology," Oliver said. "We look forward to leveraging these capabilities into a strong and vital market-making business in the years to come."
The trustee has been selling off Madoff's business assets, including works of art in his midtown Manhattan office, to cover thousands of claims brought by victims of the former Nasdaq chairman's multibillion-dollar pyramid scheme.
Madoff, 70, faces a maximum sentence of 150 years in prison after pleading guilty this month to 11 charges including fraud, perjury, and money laundering.
During the plea, Madoff described the investment advisory business as "the vehicle of my wrongdoing." But he also maintained "the other businesses my firm engaged in, proprietary trading and market making, were legitimate, profitable, and successful in all respects."
In November, Madoff notified 4,800 investors that their money had grown in value to nearly $65 billion, a sum investigators say was fictitious. Authorities believe the amount clients probably trusted with Madoff may have been closer to $17 billion, money he admitted he never invested.
The FBI and regulators are still trying to determine whether members of Madoff's inner circle were in on the fraud.