LOL

these were accounts at a broker/dealer, just because they had the same “investment manager” doesn’t change the fact that we titled in each individual’s name. some were IRA’s some corporate accounts, some UGMA’s, some joint with tenants in common or with rights of survivorship…

nobody’s unwinding that on former clients who are (fortunately) long gone…give me a break

TRB

Dec. 19 (Bloomberg) — U.S. regulators, trying to unravel the breadth of Bernard Madoff’s alleged $50 billion fraud, have found evidence of misconduct stretching back to at least the 1970s, two people familiar with the inquiry said.

Madoff’s investment advisory business, where he allegedly operated the biggest Ponzi scheme in history, is now estimated to have had more than 4,000 customers, the people said, declining to be identified because the inquiry isn’t public. An advisory unit Madoff registered with the Securities and Exchange Commission claimed in a January filing to have no more than 25 clients. People familiar with the investigation said Dec. 14 he also ran a secret unregistered business.

http://economix.blogs.nytimes.com/2008/12/19/madoff-as-consistent-a-golfer-as-he-was-an-investor/?partner=rss&emc=rss

It’s funny he reported a handicap of 9.8, my experience is that real golfers don’t use decimal places. In addition, I play off a 15 handicap and I can’t tell you how many times I shot 90 and beat guys by several strokes in head-to-head competition, even though they had claimed a single digit handicap. Usually it was because they “had a bad day”, “didn’t like the course” or “have to get used to a new driver”. Might also be because I don’t let them cheat….

It is true that it isn’t fraud to do so, but legitimate belief that it is your money does not mean that it really is your money to pull out.

Remember, Madoff was sending phony statements to his investors. Their legitimate beliefs were misinformed by the fraudulent statements.

With the large number of years and large number of dollars involved in the Madoff case, it will be an unholy mess to unscramble.

Forensic accounting might offer the best job security over the next decade.

“Even good faith purchasers of property who are the recipients of fraudulent transfers are only partially protected by the law in the U.S. Under the Bankruptcy Code, they get to keep the transfer to the extent of the value they gave for it, which means that they may lose much of the benefit of their bargain even though they have no knowledge that the transfer to them is fraudulent.”
http://en.wikipedia.org/wiki/Fraudulent_conveyance

Here is what the LA Times said about the bankruptcy trustees’ plans at the time to recover those supposed “profits” paid to investors. http://articles.latimes.com/2001/dec/21/business/fi-16855

‘Investors who profited from Reed Slatkin’s alleged Ponzi scheme will be asked–and if necessary sued–to pay back millions of dollars they received in bogus gains, a U.S. Bankruptcy Court trustee said Thursday.

Trustee R. Todd Neilson said he is reviewing a list of 75 people who allegedly reaped $151 million in profits from their investment with Slatkin to determine who will receive a letter demanding they return the money. Those who do not comply could face lawsuits, Neilson said.

The list of investors includes CNN legal commentator Greta Van Susteren, actor Peter Coyote, Hollywood producer Armyan Bernstein and HGTV host Susie Coelho–all of whom said they were unaware they were benefiting from a Ponzi scheme.

The investors were among the 800 people who gave Slatkin $593 million to invest during the last 15 years, according to a report Neilson filed Dec. 14 in Bankruptcy Court in Santa Barbara. Slatkin told investors he was buying stocks, but instead used money from new investors to pay bogus returns to prior investors in what’s known as a Ponzi scheme, the report alleges.

About half of Slatkin’s investors ultimately lost money and about half got back more than they invested, Neilson said. The 75 investors on his list got back much more than they put in, he said.

Neilson said he would decide “in the near future” which investors would be asked to return money under laws that prohibit “fraudulent conveyance,” or the transfer of money or property to one party when it rightly belongs to another. Neilson said he can legally recapture phony profits that were paid out in the last seven years, when the bulk of the $151 million was distributed.

Even innocent parties usually are required to return money that was fraudulently transferred, Neilson said. A request for repayment doesn’t necessarily mean the investors are suspected of fraud or that they knew Slatkin was operating a Ponzi scheme, he said.’

As predicted in the quoted LA Times Article, Neilson filed fraudulent conveyance actions under bankruptcy law and borrowing California state law, and was very successful in forcing winners to at least return their gains to the bankruptcy estate. I don’t recall if they also had to pay back principal that had been returned to them. Susteren and her husband began the case saying they would never pay the money back, but they did. Same with Peter Coyote, even though he claimed it was money he needed to live on in retirement. The end result was most victims received approx. 80% of their losses back, after law firms, financial institutions and other parties also settled claims alleging they allowed the fraud to fester or helped make it possible.

It is much too early to think that Madoff’s victims will enjoy anywhere close to that recovery, because no one seems to know where the money went. After a lengthy forensic accounting, it was clear Slatkin used the bulk of the missing money to pay earlier investors. If Madoff did the same and there is a similarly aggressive bankruptcy trustee, and those who received profits are still in a position to return them, it is possible the victims will see some of their losses returned. But it will likely take several years at least. And for each of those victims there may be a sad story of a retiree who was living off the payouts from Madoff and now will be asked to return money they can ill afford to part with.

Per statutory law
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“___________________________” (To be filled in by appropriate state law relating to such matters.)

as in ““yashudanodebeddah”