Half of Madoff's Clients Didn't Lose Money: Court Papers

FOXBusiness ^ | September 23, 2009 | Dunstan Prial

[george76]

Many of Bernard Madoff’s victims have moved beyond the jailed Ponzi schemer himself and targeted their anger toward the trustee and investigators charged with uncovering and distributing Madoff’s ill-gotten assets.

That anger has only sharpened now that federal prosecutors have filed papers stating as many as half of Madoff’s customers at the time of his arrest didn’t actually lose any money because over the years they withdrew more cash from their accounts than they originally invested.

In the same court filing, prosecutors told a judge there is no need to order restitution because all of Madoff's assets will be distributed to investors through forfeiture requirements.

Naturally, this hasn’t gone over well with victims.

Most of the customers who had current accounts have made claims with the trustee, prosecutors wrote. Of those, nearly 50% had a net loss, meaning they contributed more funds to their accounts than they withdrew, while about half had no net loss because they withdrew more funds than they contributed, prosecutors said.

At Madoff's sentencing, prosecutors secured a $171 billion forfeiture order which mirrors the amount they estimate that flowed in and out of Madoff's investment business over the decades.

Madoff is serving a 150-year sentence in a federal prison in North Carolina.

[the invisib1e hand]

So, it really was a $65 billion lie. But it was a great distraction for a long time, wasn't it?

[BGHater]

‘papers stating as many as half of Madoff’s customers at the time of his arrest didn’t actually lose any money because over the years they withdrew more cash from their accounts than they originally invested.’

Heh.

[Frantzie]

Obama supporters like Elie Weisel perhaps and his tax scam “foundation”? Bernie was giving some investors preferential treatment.

The half who made money need to be sued by the other half in the clawback statute. This is what the administrator (Irving Piccard?) is supposed to be doing.

[PghBaldy]

The biggest crimes the past few years have been the insider dealing between govt and Wall St, but instead, we get sideshows like this, so we never look at the govt’s actions. Both parties have catered to Wall St at the expense of the nation. We have transferred the private risk onto the taxpayer, through lies and omissions of facts. Madoff did wrong I am sure, but nothing like what Paulson, Geithner and Bernanke etc. have done.

[Brugmansian]

How many in the 50% were co-conspirators? We’ll never know I guess because the Feds seem totally disinterested in investigating. One indictment and we’re almost a year into this thing. Just incredible.

[Frantzie]

It is a huge coverup. Money went offshore and many other things. I think the little people investors take it in the neck while Bernie’s cronies keep their ill gotten gains.

I would bet the majority of invetsors were Dems and many had tax dogde phony foundations.

[Liz]

How many of the 50% were co-conspirators? One indictment and we’re almost a year into this thing. It's a huge coverup. Money went offshore and into many other things......little investors take it in the neck while Bernie’s cronies keep their ill-gotten gains. I would bet the majority of investors were Dems and many had tax dodge phony foundations.

The trustee ID'ing Madoff's assets unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth...... and assets and businesses, to date, in 11 places overseas.

Three also the legal matter of "fraudulent conveyance," meaning one cannot legally profit from a fraud. By law, those who took out more than they put in, should be forced to return the gains.

The huge tax-exempt dimension to Madoff's fraud is very fishy. The IRS has pinpointed "charities family foundations as the locus classicus of tax evasion and money laundering. The biggest frauds are foundations writing checks to other foundations.....how they skim off monies for personal use, tax-free.

Madoff was connected to numerous so-called tax-exempt "charities, and family foundations:" The Picower Foundation, The Chais Family Foundation, Robert I. Lappin Charitable Foundation, Steven Spielberg's tax-exempt Wunderkind Foundation, tax-exempt Yeshiva University, the Kehilath Jeshurun synagogue, the Maimonides, Ramaz and SAR day schools---and more---all "invested" with Madoff.

Some of the named foundations are now under investigation.

THE RELIGIOUS, SOCIAL, AND BUSINESS CONNECTIONS
(4800 INVESTORS) MADOFF USED TO RAKE IN BILLIONS.

MAP IS INTERACTIVE AT WEB SITE http://news.muckety.com/2008/12/28/madoff-used-social-family-networks-to-rake-in-billions/9031

[Liz]

Bernie was hightailing it to global money-laundering havens before he got nailed. $12B was pulled out of Bernard L. Madoff’s firm in 2008, and $6B just three months before he was arrested last Dec.....BVI's Vizcaya Partners Ltd. and Gibraltar-based Banque Jacob Safra Ltd. got $150M (that we know of) about six weeks before Madoff was exposed.

It was recently uncovered that Madoff kept detailed notes about his activites and that some "investors" made deals, demanding specific returns on investments.....meaning they were in on the scam. Some investors also wrote Madoff personal checks......evidence of tax evasion and money laundering.

REFERENCE Madoff Investors Probed by U.S. Prosecutors
May 18, 2009 | Reuters
FR Posted 05/18/2009 by CutePuppy

EXCERPT U.S. prosecutors have broadened their criminal investigation of the Bernard Madoff case to at least eight investors and associates, The Wall Street Journal reported......named as under investigation by the U.S. Attorney's Office, are Jeffry Picower and Stanley Chais, two philanthropists who are the target of lawsuits brought by the trustee liquidating the Madoff firm. Carl Shapiro, a women's clothing entrepreneur and close friend of Madoff, is also under criminal investigation.......

Investigators have gathered evidence of Picower and Chais telling Madoff how much in returns they wanted and that their accounts would reflect the amounts, the paper said. It said investigators were also reviewing evidence suggesting Shapiro knew his returns were fraudulent. (Excerpt) Read more at cnbc.com ...

Brighton Co Investments is headed by Stanley Chais, a Beverly Hills "philanthropist" who served on "charitable" boards with Madoff. Chais (pronounced Chase) told the Jewish Journal of Los Angeles that he not only personally invested with Madoff, but he also "facilitated" others who wished to do likewise.

However, spokesmen for the SEC and the California Dept of Corporations said they could find no record of Chais registering as an investment advisor or a broker.

Stanley Chais offers remarks at the Weizmann Institute of Science.

[Ken H]

Hey, Dillinger didn't rob most banks. Fat lot of good that did him!

[CutePuppy]

Half of Madoff’s Clients Didn’t Lose Money - CNBC / AP, 2009 September 22.

Federal prosecutors in New York say a review of most customer accounts show that about half of the customers jailed financier Bernard Madoff had when his business shut down had not lost money.

Prosecutors made the revelation as they told a judge Tuesday that there was no need to order restitution because all of Madoff’s assets will be distributed to investors anyway.

The prosecutors say a review of claims from most of the customers who had investment accounts with Madoff shows that nearly 50 percent of the active customers invested more money than they withdrew while the other 50 percent of active withdrew more than they invested.

Not quite the "news" for those who followed this, but makes sense that the length of time during which the fraud took place would show exactly that - Ponzi is a "snowball" / "avalanche" type of scheme, it picks up a lot more "snow" towards the end of its run.

Let's keep in mind that they are talking about the percentage of number of clients that sustained the losses or gained, not percentage of total amount of money that was lost vs gained. But it also points out that quite a few of the "victims," especially old investors with Madoff, have not been really or significantly hurt. It also helps explain why the whole affair has been wrapped up relatively fast and went much quieter than schemes of this size and impact can be expected to go.

Madoff Prosecutors May Hire Picard to Help Distribute Assets - BL, 2009 September 23, by David Glovin.

The U.S. may hire Irving Picard, the trustee for Bernard L. Madoff Investment Securities, to help distribute forfeited assets to Madoff’s investors, federal prosecutors said in a court filing.

Picard has identified about 2,336 account holders who collectively lost more than $13 billion, prosecutors said in the filing yesterday. The total number of claims to Picard so far is 15,870, they said. About half of Madoff’s clients suffered a loss, in that they contributed more to their accounts than they withdrew, prosecutors said.

Prosecutors disclosed the claims details and their plans to repay victims of Madoff’s fraud in a request that they be allowed to rely on forfeiture law rather than restitution statutes. They said they have already won a court order requiring Madoff to pay $177 billion in forfeiture, while it will be very difficult to calculate losses and the total number of victims as required under restitution rules. .....

“BLMIS’s records have not yet allowed for a definitive compilation of victims or a precise computation of the amount of loss suffered by each identified victim,” prosecutors wrote.

As evidence of the complexity of their task, prosecutors say there were approximately 8,094 customer accounts at Madoff Securities from 2000 to Dec. 11 and that there were 4,902 active customer accounts on the day of Madoff’s arrest.

“Nearly 50 percent of the active customers sustained a net loss,” prosecutors said in the court filing. “Approximately 50 percent of the active customers did not sustain a net loss, in that they withdrew more from their BLMIS accounts than they contributed.” ..... Prosecutors said 83 of the Madoff accounts were held by “feeder funds” that invested their own client’s funds with the money manager. Of them, about 60 percent have filed claims for reimbursement, prosecutors said. .....

[Oztrich Boy]

Well that’s kinda how Ponzi schemes are supposed to work. Gotta lay out the ground bait.