By Jonathan Stempel
NEW YORK (Reuters) - The trustee recovering money for Bernard Madoff's victims on Wednesday announced his biggest settlement in six years, recouping $687 million from an Irish fund that began sending client money to the imprisoned Ponzi schemer in the 1990s.
Thema International Fund Plc's payment would boost the recovery by the trustee Irving Picard to about $12.7 billion, or more than 72 percent of the $17.5 billion in principal he has said Madoff's customers lost.
The payment represents transfers that Dublin-based Thema received from Bernard L. Madoff Investment Securities LLC in the six years before Madoff's fraud was uncovered in December 2008, plus 19.26 percent of earlier withdrawals.
Wednesday's settlement requires approval by U.S. Bankruptcy Judge Stuart Bernstein. A hearing is scheduled for Oct. 25.
The accord is the trustee's largest since a more than $1 billion settlement in July 2011 with Rye, New York-based Tremont Group Holdings Inc, one of Madoff's largest "feeder funds."
Such funds often funneled customer money to Madoff without telling the customers.
Wednesday's settlement stemmed from litigation begun in 2009 against non-U.S. entities linked to Sonja Kohn, founder of the now-defunct Bank Medici AG in Vienna, and Switzerland's Benbassat family.
Kohn had been a friend of Mario Benbassat, his family's patriarch, and according to the trustee had been "instrumental" in getting European investors to invest in Madoff feeder funds.
Neither Kohn nor the Benbassats have been accused of criminal wrongdoing.
Lagoon Investment Ltd and Thema Fund Ltd, two offshore funds created by the Benbassat family, agreed to repay roughly $370.8 million to Madoff customers in settlements announced on June 27, according to court papers.
The trustee said he will allow Thema International to maintain its so-called net equity claim in the Madoff firm's liquidation.
Madoff, 79, is serving a 150-year prison term. He pleaded guilty to fraud on March 2009.
The cases are Securities Investor Protection Corp v. Bernard L. Madoff Investment Securities LLC, U.S. Bankruptcy Court, Southern District of New York, No. 08-01789; and Picard v HSBC Bank Plc et al in the same court, No. 09-01364.