The US Justice Department has now paid out $1.2 billion to victims of Bernie Madoff's Ponzi scheme

New York (AFP) - Victims of Bernie Madoff’s multi-billion-dollar fraud, who lost their savings and were ruined when the investment scheme collapsed in 2008, are receiving additional compensation, US officials announced Thursday.

The Madoff Victim Fund paid out another $504 million to 21,000 victims of the scam, bringing the total payout so far to $1.2 billion of the $4 billion expected, the Justice Department said in a statement.

“In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle,” Attorney General Jeff Sessions said in the statement.

The fund, established by the Justice Department to handle victim complaints, was tasked with returning $4 billion seized by American authorities. It has received 65,000 complaints from investors in 136 countries who lost a total of $40 billion to Madoff.

“We cannot undo the damage that Bernie Madoff has done, but today’s distribution will provide significant relief to many of the victims of one of the worst frauds of all time,” Sessions said.

The Madoff scheme was revealed during the financial crisis in 2008 when he was unable to satisfy growing client demands to withdraw their investments.

Madoff currently is serving a 150-year prison sentence for orchestrating the world’s largest Ponzi scheme, which bilked investors of an estimated $65 billion when principal and lost interest are counted.

A pyramid, or Ponzi scheme, is a form of fraud in which returns on investments are generated only by bringing in fresh investments from new victims. Cash from new clients is used to pay existing clients until the scheme eventually collapses.