Madoff investors may have to cough up profits

[StageLeft]

http://money.cnn.com/2010/07/26/news/companies/madoff_investors/index.htm

Harsh! You dodge a bullet getting out in time and then the money you made may be taken anyway. I can see both sides to it. Some were ignorantly going along and just got lucky and probably others did know it was a Ponzi but stayed in it anyway.

I assume he'd take all profits, not just those above a "reasonable" mutual fund, which could really screw some of these profit takers.

 

[waggy]

damn. thats just wrong.

 

[highland145]

How many investors and how much $$? Anyone know?

That $20B, although a lot of $$, is short of the media inflated $60B.

 

[Craig234]

Makes some sense to me to help equalize the losses from the crime, rather than leave some very profitable and others with huge losses for no deserving reason.

 

[highland145]

Makes some sense to me to help equalize the losses from the crime, rather than leave some very profitable and others with huge losses for no deserving reason.

Other than the fact Bernie is a crook, everyone in the market is gambling and get what they get. Everyone, except apparently, the traders that are making nice bonuses.

 

[MotF Bane]

Makes some sense to me to help equalize the losses from the crime, rather than leave some very profitable and others with huge losses for no deserving reason.

They pulled out.

 

[highland145]

They pulled out.

And the others said they would. Screwed the pooch one time too many.

 

[Vette73]

I also see both side but unless you were in on it or knew then I think it should be left alone.

Kinda like saying anybody that made money off of BP stock and sold it in the last 6months should have to give it back. As already said the stock market is gamble unless you have inside information.

 

[MotF Bane]

I also see both side but unless you were in on it or knew then I think it should be left alone.

Kinda like saying anybody that made money off of BP stock and sold it in the last 6months should have to give it back. As already said the stock market is gamble unless you have inside information.

I can agree with that; the trouble is of course proving that they knew.

 

[StageLeft]

I also see both side but unless you were in on it or knew then I think it should be left alone.

Kinda like saying anybody that made money off of BP stock and sold it in the last 6months should have to give it back. As already said the stock market is gamble unless you have inside information.

Something to that, and although this was patently illegal, most probably did not know it was illegal and the risks/rewards were perceived (and until the final hour were) far less than gambling with common stocks.

 

[Jaskalas]

Makes some sense to me to help equalize the losses from the crime, rather than leave some very profitable and others with huge losses for no deserving reason.

That all sounds so very communist.

 

[Blackjack200]

No, it is not at all analogous with BP and has nothing to do with what the investors might have known.

The point is that Bernie Madoff was taking new investors money and paying it to existing investors as fake investment gains. Of course the money should be returned, the investment gains never existed in the first place.

 

[nobodyknows]

Before they do something like this they need to take ALL of Madoff's assets to pay off his victims. Everything.

 

[highland145]

No, it is not at all analogous with BP and has nothing to do with what the investors might have known.

The point is that Bernie Madoff was taking new investors money and paying it to existing investors as fake investment gains. Of course the money should be returned, the investment gains never existed in the first place.

Sounds just like the stock market when is bottoms out. They all were jumping, voluntarily, into the same boat. Just so happened Bernie's was made of smoke, mirrors and lies. Wait, that sounds like business as usual at wall street.

Sucks all the way around for the parties involved.

 

[Blackjack200]

Before they do something like this they need to take ALL of Madoff's assets to pay off his victims. Everything.

The move would represent a new tack in Picard's efforts to compensate Madoff's victims. Thus far, most of his energies have been focused on recovering money from those who were closest to Madoff, including his family members, and from funds that invested with him as well.

Seems like they've pretty much done that already.

 

[MotF Bane]

Seems like they've pretty much done that already.

So far, investigators say they have confiscated about $1.5 billion worth of assets from Madoff's estate, which falls far short of the approximately $20 billion in investor funds that were lost to his scheme.

Doesn't sound like they've gotten all of it yet.

 

[Blackjack200]

Doesn't sound like they've gotten all of it yet.

I'm not sure what you're arguing, but Madoff's estate is not worth $20 billion.

After the $1.5 billion that's already recovered, there's probably only table scraps left in vehicles that are difficult to liquidate or claim. Cash Value Life Insurance Policies, or Trusts for example.

It also says that the money has to be recovered before December, so they need to persue these additional avenues now.

 

[Thump553]

From that vaguely written CNN article it appears the trustee is enforcing a statute in the bankruptcy code to recover preferences. Very simply put, this means that the trustee can recover payments made within 90 days prior to the bankruptcy filing (one year for insiders) made when the debtor is insolvent and which would result in a larger distribution to that creditor than would result under the bankruptcy.

If the facts fit, there is essentially no defense to this statute. There are pros and cons to this statute (it's kind of a share the pain equally mechanism, and also tends to wack creditors whose actions precipitated the bankruptcy) but the fact remains that most lawyers who have to explain this statute to their clients are usually talking to soon-to-be ex-clients.

It's possible also that the trustee is going after fraudulent conveyances instead of preferences, but it is impossible to tell from the article.

 

[MotF Bane]

I'm not sure what you're arguing, but Madoff's estate is not worth $20 billion.

After the $1.5 billion that's already recovered, there's probably only table scraps left in vehicles that are difficult to liquidate or claim. Cash Value Life Insurance Policies, or Trusts for example.

It also says that the money has to be recovered before December, so they need to persue these additional avenues now.

Picard will have until the end of December to file any lawsuit looking to reclaim funds from that group of investors.

To file, not to reclaim.

What I'm saying is that there is nothing in that article that actually shows they have recovered everything from his assets/family/whatever.

 

[Craig234]

That all sounds so very communist.

Almost everything sounds communist to the nuts.

Having said that, it's not black and white. If a criminal steals similar items from two people, and one person's items are recovered, should have have to give half to the other person?

No, he shouldn't. Those were separate crimes, but it shows how then a hair we're cutting looking at these crimes, which are slightly different because of the Ponzi scheme.

These are hairs to split. If the thief steals from person #1 and sells the stolen goods to person #2, what do you do? How much did person #2 have to be negligent to justify removing some or all the goods from him? As I understand it's not uncommon for #2 to have to forfeit the stolen good for them to be returned to #1 and then he's the victim.

Yes, I see some fairness when a bunch of people invest in a scheme that's fraudulent, that it's fairer for the losses to be more than less equally distributed.

That's not 'communism' except to a nut.

 

[MotF Bane]

Almost everything sounds communist to the nuts.

Having said that, it's not black and white. If a criminal steals similar items from two people, and one person's items are recovered, should have have to give half to the other person?

No, he shouldn't. Those were separate crimes, but it shows how then a hair we're cutting looking at these crimes, which are slightly different because of the Ponzi scheme.

These are hairs to split. If the thief steals from person #1 and sells the stolen goods to person #2, what do you do? How much did person #2 have to be negligent to justify removing some or all the goods from him? As I understand it's not uncommon for #2 to have to forfeit the stolen good for them to be returned to #1 and then he's the victim.

Yes, I see some fairness when a bunch of people invest in a scheme that's fraudulent, that it's fairer for the losses to be more than less equally distributed.

That's not 'communism' except to a nut.

hahahaha

 

[GuitarDaddy]

Good, from what I gather he only distributed gains to those who knew or were suspitious that it was a scam to keep them quiet. Nobody deserves to keep any gains they got thru Madoff IMO.

 

[highland145]

These are hairs to split. If the thief steals from person #1 and sells the stolen goods to person #2, what do you do? How much did person #2 have to be negligent to justify removing some or all the goods from him? As I understand it's not uncommon for #2 to have to forfeit the stolen good for them to be returned to #1 and then he's the victim.

With this analogy, I could see the profits being seized and divided among the losers.

 

[Blackjack200]

To file, not to reclaim.

What I'm saying is that there is nothing in that article that actually shows they have recovered everything from his assets/family/whatever.

Well, they'll never recover "everything" from Madoff & family. What I take from the article is that their primary focus was on Madoff's assets and assets of his closest family & business partners.

 

[Blackjack200]

With this analogy, I could see the profits being seized and divided among the losers.

That's what I thought was happening. They should not be taking people's principal investment.