In a settlement likely to stand as the single largest victory for Bernard Madoff's victims, the widow of a wealthy beneficiary of his Ponzi scheme has agreed to pay $7.2bn to make up for others' losses in the fraud.

The decision by Barbara Picower to return the profits earned in the fraud by her late husband Jeffry Picower, who befriended Madoff almost three decades ago, brings to nearly $10bn the amount that a court-appointed bankruptcy trustee will be able to return to those cheated by the convicted felon now serving a 150-year sentence.