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Shapiro Agrees to $625 Million Forfeiture for Victims of Madoff’s Ponzi Scheme
Department of Justice ^ | December 7, 2010 | United States Attorney's Office Southern District of New York

Posted on 12/10/2010 7:44:57 AM PST by Larry381

NEW YORK—Carl J. Shapiro and various related people and entities have agreed to forfeit $625 million to the United States, all of which will be made available to the victims of the fraudulent investment advisory business which was owned and operated by Bernard L. Madoff. The distribution of funds to victims will be administered by Irving H. Picard in his dual capacities as the newly-appointed special master to assist the department in connection with the victim remission proceedings, and as the court-appointed trustee overseeing the liquidation of Bernard L. Madoff Investment Securities LLC, under the Securities Investor Protection Act. The agreement was submitted to and approved by U.S. District Judge Thomas P. Griesa today.

The announcement was made by Preet Bharara, U.S. Attorney for the Southern District of New York; Orlan Johnson, Chairman of the Securities Investor Protection Corporation (SIPC); Janice K. Fedarcyk, Assistant Director-in-Charge of the New York Field Division of the FBI; and Charles R. Pine, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service (IRS), Criminal Investigation Division, announced today that

According to the stipulation and order of settlement and accompanying civil forfeiture complaint filed in Manhattan federal court earlier today, the investment advisory business of Bernard L. Madoff Investment Securities LLC (BLMIS) was operated from at least as early as the 1980s as a massive Ponzi scheme, defrauding investors of billions of dollars. Rather than use client funds to invest in securities, as promised, BLMIS diverted those funds to (a) pay other clients’ redemption requests; (b) fund transactions to disguise BLMIS’s fraud; and (c) enrich Madoff, his family, and his associates. In order to support the lie that BLMIS was operating a legitimate investment advisory business, BLMIS created and disseminated fictitious account statements that, among other things, showed trades that never actually took place. During the course of the fraud, Madoff’s clients lost approximately $20 billion in funds they invested with BLMIS.

Since at least the late 1960s, Carl J. Shapiro was an investor in BLMIS, holding an account in his own name and controlling accounts held by various related individuals and entities. Over the course of his approximately 40-year relationship with Madoff and BLMIS, Shapiro invested hundreds of millions of dollars into his BLMIS accounts, but withdrew hundreds of millions more. When Madoff was arrested in December 2008 and his fraud was revealed, it became clear that Shapiro—like all of BLMIS’s investors who withdrew more money than they invested—had profited at the expense of more recent BLMIS investors.

In order to resolve any potential civil claims by the government against Shapiro and his family, the Shapiro family has agreed to forfeit $625 million to the government—an amount in excess of Carl J. Shapiro and his wife’s current net worth, as well as in excess of the fictitious profits that Shapiro and his wife took out of BLMIS. The settlement contains no finding or admission of fault against Shapiro or his family; the settlement does not, however, release any party from criminal liability.

Simultaneously with the announcement of today’s historic settlement, U.S. Attorney Bharara announced that the department has appointed Irving H. Picard as special master to assist in identifying eligible victims, verifying their losses, and distributing the forfeited funds in accordance with department regulations governing remission or mitigation of forfeitures. For approximately two years, Picard has served as the court-appointed trustee for BLMIS under the Securities Investment Protection Act (SIPA). Under the terms of today’s settlement, and a related settlement submitted to the U.S. Bankruptcy Court for the Southern District of New York, Picard will administer $550 million of the funds being returned to investors by the Shapiro family through the SIPA liquidation proceedings, and the remaining $75 million through the department’s remission or mitigation process.

“For almost 40 years, Carl Shapiro invested hundreds of millions of dollars with Bernie Madoff but withdrew far more,” said U.S. Attorney Preet Bharara. “By requiring him to forfeit this money—more than he is currently worth—the government and the SIPA Trustee have sent an important message: those who profited as a result of Bernard Madoff’s fraud should disgorge those profits, which are rightfully other people's money. We will continue to work tirelessly with our partners from SIPC, the FBI, and the IRS, to track down any and all proceeds of Madoff’s Ponzi scheme and return them to their rightful owners. And, to be clear, the criminal and civil forfeiture investigations relating to the Madoff fraud are very much ongoing.”

“The trustee used the legal tools made available under the Bankruptcy Code and SIPA to benefit the victims here,” said SIPC Board Chairman Johnson. “The Madoff case is now entering a new phase. I hope this marks the beginning of a period that will see many such settlements.”

“As we approach the two-year anniversary of the Bernard Madoff arrest, this settlement represents a significant step in the restitution of retirements, pensions, and university endowments that were robbed with blatant disregard for the law,” said FBI Assistant Director-in-Charge Fedarcyk. “It takes a special depravity to victimize so many people so severely. The investigation of prodigious fraud, like that of Madoff, remains one of the FBI's top priorities. From robbers to fraudsters, the FBI will continue to bring to justice crooks who steal.”

“Investment fraud is never a victimless crime,” said IRS Criminal Investigation Special Agent-in-Charge Pine. “Financial distress left in the wake of a crumbling investment scheme leaves victims in financial ruins and feeling betrayed by individuals they trusted would help them make a better life. The victims in the case can know that IRS Criminal Investigation has resources devoted to assisting the U.S. Attorney to hold the perpetrators accountable, and to help re-coop some of their stolen money.”

U.S. Attorney Bharara praised the work of SIPC, the SIPA Trustee, the FBI, the IRS, the Department of Labor’s Employee Benefits Security Administration and Office of the Inspector General, the Department of Justice’s Criminal Division’s Asset Forfeiture and Money Laundering Section, and the U.S. Marshals Service. U.S. Attorney Bharara also thanked the Securities and Exchange Commission for their assistance.


TOPICS: News/Current Events
KEYWORDS: fbi; madoff; ponzi
What this appears to mean is that all those investors who actually made money from Bernie's racket, even not knowing it was illegal, can now be sued so that their profits can go to investors who lost money.
1 posted on 12/10/2010 7:45:02 AM PST by Larry381
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To: Larry381
Sort of a roundabout justice...

Mike

2 posted on 12/10/2010 7:48:57 AM PST by MichaelP (It's the end of the world as they know it, and I'm so glad!)
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To: Larry381

“In order to resolve any potential civil claims by the government against Shapiro and his family”

So you can sue family members in America? I don’t think so. The piece reads very poorly and unprofessionally.


3 posted on 12/10/2010 7:49:31 AM PST by Christian Engineer Mass (Leftys who zone in on Palin miss the point. America's not about single figures. That's for NK/Cuba.)
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To: Larry381
All profits are bad. All profits are ill-gotten gains. People who invest in good faith are indistinguishable from con men who run ponzi schemes.

The attack on property continues.

4 posted on 12/10/2010 7:51:11 AM PST by ClearCase_guy
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To: Larry381
FRom Wikipedia:

"Shapiro considered Madoff to be like a son. Shapiro is said to have invested with Madoff going back to the 1960s. He and his foundation reportedly lost some $550 million. Madoff received $250 million around December 1, 2008 from Shapiro, who was one of Madoff's oldest friends and one of his biggest financial backers. [6] [7][8][9] Shapiro expressed his sadness and disappointment at his friend’s dishonest dealings. There is no suggestion that Mr. Shapiro had any knowledge of the financial irregularities to which Madoff admitted.[1]

Regulators are looking into a brokerage firm, Cohmad Securities (taken from the names "Cohn" and "Madoff"), which is largely owned by Maurice Cohn (Maurice "Sonny" Cohn) and his daughter Marcia, President and Chief Compliance Officer, of whom Madoff shares 10-20 percent ownership stakes, and Madoff's firm's address in New York City. Peter Madoff, brother of Bernard, owns less than one share. Cohmad vice president Robert Jaffe's ownership of Cohmad was less than 5 percent.[10]"

It seems there are other family connections. And a whole lotta philanthropy going on.

5 posted on 12/10/2010 8:03:26 AM PST by decimon
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To: ClearCase_guy
I guess the only way to unravel this is to confiscate all the funds withdrawn from these accounts, and Madoff’s liquidated estate and put into a trust.

Then divide the above by a prorated investor base. Forget interest, early funds worth just as much as recent investments. Then disseminate. Lucky to be 10% recovery in my opinion.

The lesson is to never place more than 10% of your assets into one thing. Especially opaque instruments.

6 posted on 12/10/2010 8:05:57 AM PST by cicero2k
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To: ClearCase_guy

“It takes a special depravity to victimize so many people so severely.”

Zero took the Indiana Teacher’s Retirement Fund (Secure Bondholders), and gave it to the UAW in the Chrysler bankruptcy.

What is the difference?


7 posted on 12/10/2010 8:08:54 AM PST by patton
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To: Larry381

Share the wealth, Hillary said.


8 posted on 12/10/2010 8:16:15 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: Larry381

Bernie is small fish compared to BO, Reid, B Fag, Piglosi et al stripping of funds from taxpayers in order to bribe unions, steal money from equity investors in GM and declare this equity is now the property of corrupt unions. I ask, who is the bigger criminal?


9 posted on 12/10/2010 8:20:16 AM PST by Neoliberalnot ((Read "The Grey Book" for an alternative to corruption in DC))
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To: ClearCase_guy

I’m surprised that Madoff is still above ground. I thought that he would be missing some key pieces by now.


10 posted on 12/10/2010 8:22:09 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: cicero2k

The other angle to this is how the government makes out with this mess. Presuming the “investors” paid capital gains, the government is the recipient of ill-gotten “gains”. Will they put that money in the victim relief pool as well?


11 posted on 12/10/2010 8:22:19 AM PST by C210N (0bama, Making the US safe for Global Marxism)
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To: B4Ranch

I heard that he “fell off his bed” in prison and was pretty badly injured.


12 posted on 12/10/2010 8:24:31 AM PST by ClearCase_guy
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To: C210N
The other angle to this is how the government makes out with this mess. Presuming the “investors” paid capital gains, the government is the recipient of ill-gotten “gains”. Will they put that money in the victim relief pool as well?

Correct. This is why these things take years to figure out. There have been many Ponzi scams in the past so there must be precedent.

I figure there must be some statute of limitations applicable. That is, if the disbursement was over 7 years ago the recipient keeps it. Since that time the recipient can restate their cap gains and get taxes refunded from the IRS.

13 posted on 12/10/2010 8:41:04 AM PST by cicero2k
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To: ClearCase_guy

Shapiro, his son in law and their gang of insiders with Madoff were POS. They knew or they thought Bernie made his returns “front running” the trades at his legitimate market making firm which is also illegal.

Most of their investors were libs with BS foundations where the gains were not taxable including Obama boot licker Elie Weisel.


14 posted on 12/10/2010 8:53:40 AM PST by Frantzie
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To: ClearCase_guy

Shapiro, his son in law and their gang of insiders with Madoff were POS. They knew or they thought Bernie made his returns “front running” the trades at his legitimate market making firm which is also illegal.

Most of their investors were libs with BS foundations where the gains were not taxable including Obama boot licker Elie Weisel.


15 posted on 12/10/2010 8:53:49 AM PST by Frantzie
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To: Larry381
In order to resolve any potential civil claims by the government against Shapiro and his family, the Shapiro family has agreed to forfeit $625 million to the government—an amount in excess of Carl J. Shapiro and his wife’s current net worth, as well as in excess of the fictitious profits that Shapiro and his wife took out of BLMIS.

Seems fair, in a communist kind of way.

Too bad he didn't have any companies they could nationalize.

16 posted on 12/10/2010 9:12:58 AM PST by Rome2000 (OBAMA IS A COMMUNIST CRYPTO-MUSLIM)
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To: Larry381
“By requiring him to forfeit this money—more than he is currently worth—the government and the SIPA Trustee have sent an important message: those who profited as a result of Bernard Madoff’s fraud should disgorge those profits, which are rightfully other people's money.

So, how exactly do you forfeit or disgorge more than you are worth?

Write an IOU? Borrow from the mob? Rob a bank? Get a government-backed loan? Print your own money? Go to debtor's prison? Start a new Ponzi scheme? Work it off over the next 200 years? Sell your body parts? Sell other family members into slavery or prostitution? Flee to Paraguay?

Inquiring minds want to know.

17 posted on 12/10/2010 9:28:59 AM PST by Zeppo ("Happy Pony is on - and I'm NOT missing Happy Pony")
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To: Larry381
Jon Stewart's family lost some money, I believe, to Bernie Madoff.

There were so many Marxist celebs involved with Madoff that I lost sympathy for the victims long ago.

It's a hoot to hear Hanoi Jane fulminate about her wishes for some violent end for Madoff. It's only private property, Old Dear. You know, the kind Ho Chi Minh disapproved of.

My theory that a lot of losers invested in Madoff, knowing his results were too good to be true, because they believed he had an inside track to Nasdaq. Invest in a gangster, become a gangster.

18 posted on 12/10/2010 10:23:25 AM PST by Mamzelle
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To: Larry381

How dare an investor think he should profit from his investment!


19 posted on 12/10/2010 10:28:48 AM PST by skr (May God confound the enemy)
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To: Larry381

In order to resolve any potential civil claims by the government against Shapiro and his family, the Shapiro family has agreed to forfeit $625 million to the government—an amount in excess of Carl J. Shapiro and his wife’s current net worth


Poor reporting or something is not quite right in that statement.


20 posted on 12/10/2010 11:07:46 AM PST by PeterPrinciple ( Seeking the truth here folks.)
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To: Frantzie; Neoliberalnot
If you haven't seen it yet (Frantzie, I know you don't watch much TV). check out the last season of “Damages”.

The season was based on the Madoff situation and they used foundations to hide loot, move loot around, etc. Very well done.

FWIW, if I'm the Feds I make this deal: Offer Bernie a full pardon if he gives up the loot. The loot (or at least parts of it) get recovered and there's no way he lives a week after he gets released.

21 posted on 12/10/2010 1:27:44 PM PST by GOPsterinMA
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To: GOPsterinMA

Never heard of the show since I don’t watch much TV either. What about Barney Fag, Dodd, and BO’s allies that were paid off with other people’s money? Again, who is the biggest criminal?


22 posted on 12/10/2010 2:39:20 PM PST by Neoliberalnot ((Read "The Grey Book" for an alternative to corruption in DC))
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To: GOPsterinMA

I just saw a few minutes ago they are going after that b**ch Sonja Kohn of Medici bank in Austria. Another real Madoff slime enabler. Some of the money she lost may be Russian. Uh oh. This Irving Picard, the trustee, is making some good moves.

Madoff’s investors and bundlers like Kohn are real scum.


23 posted on 12/10/2010 3:19:41 PM PST by Frantzie
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To: Neoliberalnot

“Again, who is the biggest criminal?”

The politicians, for sure.


24 posted on 12/10/2010 4:52:10 PM PST by GOPsterinMA
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To: Frantzie

That whole Madoff group needs to disappear.


25 posted on 12/10/2010 4:53:15 PM PST by GOPsterinMA
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To: GOPsterinMA

Just recently only one civil suit was brought in the amount of $6.2 billion against all those who reaped profits from the Ponzi scheme, and this one clears the debts at ten cents on the dollar,...in response to just one such claim?

The Ponzi scheme touched on bank rolls of those in firmly placed positions of established institutions in multiple power structures. IMHO, these actions manifest as much corruption in the system as the initial convictions.


26 posted on 12/13/2010 5:10:12 AM PST by Cvengr (Adversity in life and death is inevitable. Thru faith in Christ, stress is optional.)
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To: Cvengr

You’re right.


27 posted on 12/13/2010 5:34:36 AM PST by GOPsterinMA
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