Before his death, Jeffry M. Picower had benefited more than anyone from Bernard Madoff's fraud.

A longtime investor with the disgraced money manager, he had withdrawn more than $7 billion in other people's money before the Ponzi scheme was revealed in December 2008. And federal prosecutors, securities regulators and the Internal Revenue Service were investigating whether he was complicit in the fraud.

Twenty-four stories above Manhattan, in a law office just one block from Madoff's old headquarters, his widow, Barbara Picower, had a decision to make about what to do with the fortune that had been amassed by her husband, a financier and philanthropist.

He was gone, having drowned in the swimming pool of their Palm Beach home after suffering a heart attack in October 2009.

Barbara Picower was told by her lawyers they could successfully preserve most of his wealth by fighting for it in court - perhaps all but $2 billion.

But about three months ago, she told them she wanted to give back all the money they made made through the Madoff fraud.

On Friday, Picower agreed to turn over $7.2 billion to Madoff's victims, the largest settlement to date related to the scheme.

When combined with other Madoff-related settlements, the Picower agreement brings Madoff's victims halfway toward being fully compensated for their losses in the scheme, according to officials overseeing the victims fund.

"We will return every penny received from almost 35 years of investing with Bernard Madoff," Picower said in a statement.

"I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering."

The vast majority of the money being returned to Madoff investors would have otherwise gone to charitable groups. And neither Picower nor her family is left wanting by the settlement. She will receive $200 million from her husband's estate, their only daughter will receive $25 million and a collection of close family friends and charitable associations will receive $25 million - all money unrelated to the Madoff case, according to her lawyer.

An unspecified amount will go to fund a new philanthropic foundation. The Picowers shuttered their last foundation, which backed causes ranging from Alzheimer's disease research to the nonprofit anti-poverty group Harlem Children's Zone, after the disclosure of the Madoff fraud.