New York state’s attorney general, Eric Schneiderman, has won a court battle with Irving Picard, the trustee liquidating the estate of Ponzi schemer, Bernie Madoff, which will see several hundred million dollars returned to certain Madoff victims.

Schneiderman announced that the Second Circuit Court of Appeals has given the go ahead for his US$410 million settlement with J. Ezra Merkin, who invested over US$2 billion with Madoff on behalf of hundreds of investors. Picard, who is also engaged in recovering as much money as possible for Madoff’s victims, had sought to block the attorney general’s office from distributing the proceeds of the settlement directly to those investors.

In April 2009, the attorney general charged Merkin with concealing Madoff’s control of the Merkin Funds and for breaches of his fiduciary duty. In June 2012, it reached a deal with Merkin to settle that lawsuit. However, Picard claimed that he had priority over Merkin’s assets under U.S. bankruptcy law, and that the attorney general should be prevented from distributing the proceeds of that settlement to Madoff’s victims, pending resolution of his claims against Merkin.

As a result of this latest ruling, investors should begin receiving the money in the coming months, Schneiderman said.

“This ruling is a victory for justice and accountability. Many New Yorkers entrusted their investments to Mr. Merkin, who then steered money to Madoff and received millions of dollars in management and incentive fees,” he said. “By paving the way for my office to disburse the proceeds of this $410 million settlement to the investors and charities harmed by Mr. Merkin’s actions, this ruling will help bring justice for these people and institutions that lost millions of dollars.”

The attorney general notes that, depending on the size of their losses, eligible investors will be entitled to receive over 40% of their cash losses from the settlement. Investors who were not aware of Merkin’s delegation to Madoff will receive a defined percentage of their losses, and those who were aware of Madoff’s role will be eligible to receive a smaller recovery. Additionally, investors may receive additional payments from any money that is recovered by Picard.