For Madoff’s Victims, Here’s a Guide to the Complex World of Legal Restitution
By Alison Cies and Nathaniel Popper
Now that Bernard L. Madoff’s fate has been sealed by a 150 year-long prison sentence, many victims are shifting their focus to the issue of recouping some part of their finan-cial loss. What follows is a list of the different avenues through which victims of the fraud, including individuals, charities, and universities, may win back some of their money — a seemingly complex process that already has many people shaking their heads in dismay.
Those seeking to recoup money fall into two categories — those who invested directly with Madoff and those who invested in his scheme through an intermediary, such as J. Ezra Merkin, the philanthropist and investment advisor who funneled money from many Jewish non-profits into Madoff’s Ponzi scheme.
For the direct investors, the most high-profile chance for some restitution will come from the trustee overseeing the bankruptcy of Madoff’s estate, Irving Picard, who is tasked with doing everything in his power to gather up Madoff’s ill-gained assets — suing, settling, and even seizing yachts and jewelry owned by the Madoff family. In January, Picard notified 8,000 investors who may be eligible to receive some of the proceeds. Direct investors may also be able to receive up to $500,000 from an insurance fund run by the Securities Investor Protection Corporation (SIPC), which has already begun making payouts to destitute investors.
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For those investors, such as Yeshiva University, who went through an intermediary, the benefits from Picard and SIPC are far more limited. The best hope for these victims lies in the courts. Some indirect investors are bringing their own lawsuits against individuals like Merkin, and a number of class-action lawsuits and suits are being brought by public bodies, such as the New York Attorney General, Andrew Cuomo. Cuomo recently announced plans to sell Merkin’s art collection, and some of the proceeds will be given to victims.
Sally Blinken, who worked in the New York Attorney General’s office, said that lawsuits are a risky undertaking because they have to meet a high standard of proof to win in the courts — and even then, the suits could go on for years.
“It could take a long, long time to recoup money,” Blinken said.
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Thank you for the information. I will call my congressman to insist that he vote against any attempt by Meek and Ackerman to stick the public with the Madoff investors' losses. What an arrogant attempt at looting the treasury for the benefit of rich people who should have known better. The investors let their greed overrule their prudence and fell for the scam, whole hog. Part of the reason, I'm sure, was because the large Jewish clientele was convinced that Bernie Madoff was just another Jewish genius. It turned out he was of sorts, but not exactly the way they had imagined.
The swindled investors should not be able to collect anything from the federal government, i.e. our tax money. The "Legislation for Tax Breaks" is a grab from the public till to compensate the investors' losses, even though the rest of us had nothing to do with the greed that was the engine fueling Madoff's Ponzi scheme. "Enhanced tax deductions," my &ss. If they hadn't lost their money but made out big, would the investors have offered to pay "enhanced taxes" to the government? I didn't think so. In my opinion, the people who had money to burn, who had more than enough to be able to hand Madoff their excess, should bear their misfortune without trying to spread the misery to the rest of us who had nothing to do with their attempt at getting rich by capitalist speculation. Wall Street is full of crooks and thieves, didn't they know that? Everybody else seems to, and always has.
Many charities fell under the Madoff spell. They lost untold millions. In my estimation, they are entitled to a "refund". Harvey Silverman
Perhaps very limited tax credit for taxes actually paid on real bogus income from Madoff. Otherwise, Harvey you are overruled. Richard, you are exactly right on. The capitalist pig class was and still is deaf and blind - intentionally & knowingly so - to the affinity schemes on Wall Street where private banking, hedge funds leverage public insured bank deposits. The moral hazard preference for those who control large "collective" aggragations of capital build our perverse economy. Its architects shift risk to a degree that "laws" of supply & demand do not apply to them. They can "risk" adverse outcomes with consequences having no commeasurate connection to the losses produced and little to show in the way of efficient allocations of capital for public goods. Christian no-fault moral hazard capitalism must be altered not salved.
Mr. Kefalos' arrogant comment referring to Madoff investors wanting to loot the Treasury is just the opposite of the reality. The IRS, which should have known better, accepted billions in taxes from investors which should never have been paid in the first place. In case Mr. Kefalso doesn't understand, Madoff investors were already paying, what he calls "enhanced taxes." There is no place for a government to continue to withhold tax revenues that should never have been paid in the first place. Mr. Kefalos, Madoff investors are not interested in getting your tax dollars, or anyone else's for that matter. A greater understanding of the issues here is strongly advised. Madoff investors want back their own tax dollars. Not only did they lose their entire investment, but they paid taxes on income that never existed. By the government's refusal to return those tax dollars, that they have admitted receiving (see IRS rulings), the US Treasury becomes an accomplice in Madoff's crime, keeping money that does not belong to them. If tax dollars are paid in error, it should be returned. How difficult is that concept for you to understand? Maybe you prefer that senior citizens remain destitute because they can't get their tax dollars back and instead have to live on food stamps. The only person trying to "spread...misery" here Mr Kefalos is you.
Yes, Wall Street is full of "crooks and thieves" (kind of redundant don't you think), but apparently the once feared and respected agency, the SEC, did not think so publicly. All they had to do 18 years ago was simply ask for the trading tickets or stock certificates and Madoff would have been shot down then. It was once, but no longer, thought that nobody could do better "due diligence" than the SEC. 6 additional investigation failed to uncover any wrongdoing.
Where is your criticism of the SEC, that not only failed Madoff investors time and again, but all investors, for they have permanently damaged investors confidence in the securities industry.
I think your misplaced anger should be directed elsewhere. The Madoff investors are not your enemy.
Please. I paid taxes for fifteen years on supposed capital gains. There were NO capital gains. Thus, I should get those taxes back. What is so complicated about that? I don't want YOUR tax dollars. I'm not even asking for interest on the/my money that has been accumulated over the past 15 years in the IRS coffers (your gain not mine!!). People ask for refunds all the time AND get them, if it turns out that they overpaid their taxes. I put money into Madoff's hands in the mid nineties and never withdrew a penny. Why should YOU, the other taxpayers, keep the taxes that I paid on capital gains that NEVER enriched me, that I NEVER touched, and that NEVER existed???
Richard Friedman - thank you. It's high time people start understanding that we do not want other people's money and tax dollars. We ONLY want the taxes we paid on money that we THOUGHT we'd earned. Money which never really existed. We only want OUR OWN MONEY back from our government! We were not all rich. We'd just like to be able to live out our senior years in peace. My husband and I have given up our home of 31 years, our small condo in Florida and have moved to Northern New England to live on two social security checks and 10% of our former assets. Mr. Kefalos, your totally erroneous and unfounded comments merely pour salt on the wounds of Mr. Madoff's innocent victims.
Dear Mr. Kefalos:
I'm sorry you think that Madoff investors are asking to "loot the Treasury for the benefit of rich people who should have known better." I guess for you, laws only apply if you like them.
First of all, these investors paid taxes on income that was phantom. Explain to me why the government should be able to keep that money? If you paid more taxes than required, based on your income, do you not expect a refund? Surely, the government should not be entitled to these taxes.
Secondly, who said they were "rich people?" There were TENS OF THOUSANDS affected by this unprecedented crime -- does it make you feel better that union laborers -- Pipe and Steamfitters Unions, Electrical Unions, Police and Fire Unions -- affected by this crime with their PENSIONS WIPED OUT???
And on what bases do you make your comments? It is obvious that you have an opinion that is based neither on fact or history.
They should also seize the assets of the entire Madoff family and anyone else who worked there in some capacity of authority.
The entire Madoff family was part of the scam or at the very least benefitted from it. Allowing his wife to keep $2 million is outrageous to me. She should be on welfare and living with a distant family member.
The people who do not think the taxes incorrectly paid by victims, should now be returned, are anti-semetic and should be ignored. And not all of the victims were jewish anyway.
Bill Zardus WRZ
A sinful love flames between mankind and sin. Look at the sorrow, that this sin has caused, pray for all. One sin is not greater than another......one sin in the garden brought death into our world. Let us put sin out of our world. You can read how David, in Psalm 101, turned back to G-D and put sin out of his life. It is said, David was a man after G-D'S own heart.
Psalm 101 I will sing of mercy and judgment: unto thee, O LORD, will I sing. I will behave myself wisely in a perfect way. O when wilt thou come unto me? I will wald within my house with a perfect heart. I will set no wicked thing before mine eyes: I hate the work of them that turn aside it shall not cleave to me. A froward heart shall depart from me: I will nto know a wicked person. Whoso privily slandereth his meighbour, him will I cut off: him that hath an high look and a proud heart will not I suffer. Mine eyes shall be upon the faithful of the land, that they may dwell with me: he that walketh in a perfect way, he shall I serve me. He that worketh deceit shall not dwell within my house: he that elleth lies shall not tarry in my sight. I will early destroy all the wicked of the land; that I may cut off all wicked doers from the city of the LORD.
Think, what a nation, it would be if the leaders as well as all the people did all that is written in Psalm 101. What a world this would be. Why do we not turn? I look around an see the world embraces sin and loves it. "A Sinful Love Flames Between All Of Us."
Saw Rep. Jackie Speier n C-Span this morning. She wants to give ALL the lost money back to the victims in FULL RETITUTIION, BECAUSE IT WAS THE FAULT OF THE SEC! THAT MEANS OUR TAX DOLLARS WILL FULLY RESTITUTE THESE INVESTORS AT OUT EXPENSE! THAT IS WHAT THEY ARE TRYING FOR. DON'T KID YOURSELVES. STAY INFORMED.