Updated

Nearly half the money invested by thousands of people in Wall Street swindler Bernard Madoff's multi-decade fraud has been recovered, a court-appointed trustee announced Thursday as he revealed a settlement that adds more than a billion dollars to the total.

Trustee Irving Picard said the latest agreement was reached with more than a dozen domestic and foreign investment funds, their affiliates and a former chief executive associated with Tremont Group Holdings Inc., a multibillion-dollar money management company based in Rye, just north of New York City.

The settlement will boost recoveries of money available to jilted investors to more than $8.6 billion, nearly half the approximately $17.3 billion in principal lost by Madoff, who pleaded guilty to federal fraud charges and is serving a 150-year prison sentence in Butner, N.C., Picard said.

Picard has been locked in dispute with some investors over the fairest way to calculate losses. He maintains that investors are only entitled to a portion of their original investments while investors insist that they made financial decisions based on how Madoff said their investments had grown.

Madoff's investment advisory service was a giant pyramid scheme, using money from new investors to pay returns to existing clients while financing a lavish lifestyle for him and cheating rich people, charities, celebrities and institutional investors.

Madoff notified investors in statements mailed just days before his December 2008 arrest that they had about $68 billion in their accounts. He actually had only a few hundred thousand dollars left.

In a release Thursday, Picard said the settlement includes Oppenheimer Acquisition Corp., an affiliate of the Oppenheimer family of mutual funds, and Oppenheimer's parent corporations, MassMutual Holding LLC and the Massachusetts Mutual Life Insurance Co. Oppenheimer acquired Tremont in 2001.

Picard said the more than $1 billion raised through the deal will be combined with $2.6 billion already in a customer fund and $5 billion collected from a settlement with the estate of businessman and philanthropist Jeffry Picower, who drowned after suffering a heart attack in the swimming pool of his Palm Beach, Fla., mansion in October 2009. Picower was the biggest beneficiary of Madoff's fraud.

Picard had sued the Tremont Group and related entities, saying they had been warned through internal communications and publicly available information that Madoff's private investment business could be a fraud.

Tremont said Thursday it concluded that resolving the matter was the best outcome for investors in its funds.

"Tremont is pleased to have negotiated an agreement with the Trustee that gives investors in our funds the potential to recover a substantial portion of their losses incurred as a result of Madoff's fraud," spokesman Montieth Illingworth said.

The deal must still be approved by the U.S. Bankruptcy Court in Manhattan. The Picower settlement remains on appeal.

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