Bermuda-based investment fund Thema is to fork out $130 million to repay victims of US fraudster Bernie Madoff.

Thema was among many feeder funds that directed cash to Madoff’s New York-based investment advisory business, often without their clients’ knowledge.

Thousands of investors lost around $17.5 billion in principal after the 2008 collapse of the Ponzi scheme run by Madoff, who was sentenced to 150 years in prison in 2009.

Thema itself lost around $1 billion.

Details of the settlement, announced yesterday by Securities Investment Protection Act trustee Irving Picard, were filed in a US Bankruptcy Court in Manhattan.

Stephen Harbeck, CEO of the industry-financed Securities Investor Protection Corporation, which hired Mr Ricard, said the Thema settlement, together with a $240 million settlement by Lagoon Investment, based in the British Virgin Islands, were “significant accomplishments” given the difficulty of recovering funds from offshore accounts.

He added: “Recovering funds from offshore defendants is always challenging.

“The settlements announced today represent significant accomplishments by the SIPA trustee and his legal team.”

Oren Warshavsky, a partner in law firm BakerHostetler, which worked with Mr Picard, added: “Settlements like these are highly beneficial to Madoff’s victims.

“Not only do we resolve all claims, but we also avoid litigation, which can delay additional restitutions to Madoff’s victims.

“Together, the settlements represent slightly more than a one per cent increase in recovery for future distributions to customers with allowed claims.”

Under the agreement, Thema and Lagoon will turn over all the money they withdrew from their accounts in the six-year period before Madoff’s arrest.

The settlement clears the way for the funds to get approved claims in the bankruptcy case, meaning they will get a share in Mr Picard’s recoveries and distribute the money to their own customers.

The case involved Thema Fund Ltd and Thema Wise Investments, with the Thema funds based in the British Virgin Islands.

Thema and Lagoon were among a dozen funds that used HSBC Holdings as a custodian.

Mr Picard sued the London-based bank for $9 billion in 2010 for allegedly aiding Madoff’s fraud through the network of feeder funds, but lost the case, as well as cases against other banks with Madoff connections, on the grounds that trustees can only collect money owed to the estate, not sums owed to creditors.

The deals with Thema and Lagoon were announced only a day after the estates of Madoff’s dead sons, Andrew and Mark, agreed to pay a total of $23 million to settle lawsuits by Mr Picard which accused them of profiting from their father’s fraud for years.

Mr Picard has so far raised more than $11.6 billion for victims through hundreds of lawsuits against funds and customers who profited from the Madoff scam.