The Justice Department issued the following statement yesterday.
The Justice Department announced today that the Madoff Victim Fund (MVF) began its 10th and final distribution of over $131.4 million to victims of the Bernard L. Madoff fraud scheme. These funds were forfeited by the U.S. government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme. In this distribution, payments will be sent to more than 23,000 victims across the globe. With this 10th distribution, over 40,000 victims in the Madoff scheme will have recovered 93.71% of their fraud losses. Most of these victims were small investors who lost less than $500,000 in the fraud. Through its 10 distributions, MVF has paid over $4.3 billion from forfeited funds to 40,930 victims in 127 countries for losses they suffered from the collapse of BLMIS. “The Criminal Division, through its Money Laundering and Asset Recovery Section (MLARS), is proud to administer the department’s remission program to compensate victims using forfeited assets,” said Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division. “The unprecedented scope and complexity of the Madoff remission process shows the power of forfeiture to recover assets and to compensate victims — a primary goal of the department’s Asset Forfeiture Program. This 10th and final distribution, led by MLARS’ dedicated victim compensation team, achieves the department’s goal of compensating victims by returning over $4 billion in forfeited assets to more than 40,000 victims of Madoff’s crimes and achieving nearly full recovery for these victims.” “This office has never stopped at pursuing justice for victims of history’s largest Ponzi scheme,” said Acting U.S. Attorney Edward Y. Kim for the Southern District of New York. “With this 10th and final distribution, we have succeeded in compensating 40,930 victims with close to 94% of their losses. As this extraordinary effort demonstrates, this office and MLARS are committed to protecting and assisting victims of crime, no matter how long it takes and no matter how complicated the endeavor.” “Today’s distribution represents an unprecedented conclusion of victim compensation from civil forfeiture actions related to the Madoff scheme with more than $4 billion repaid to over 40,000 victims,” said Assistant Director in Charge James E. Dennehy of the FBI New York Field Office. “These victims implicitly trusted Madoff with their investments only to ultimately lose significant monies to his selfish plan. With the Justice Department’s steadfast support, the FBI will continue its tireless seizure of assets from criminals who steal from others and seek to recover those assets for victim losses.” This 10th and final distribution represents the culmination of a decade of work identifying thousands of victims around the world and unwinding layers of complex financial transactions to provide compensation to eligible victims. According to court documents and information presented in related proceedings, for decades, Bernard L. Madoff used his position as chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle. On June 29, 2009, Madoff was sentenced to 150 years in prison for running the largest fraudulent scheme in history. Of the over $4 billion that has been made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower. An additional $1.7 billion was collected as part of a deferred prosecution agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action. The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff, and their co-conspirators. Compensation from the MVF is possible due to the extraordinary efforts of MLARS, which administers the forfeiture victim compensation program; the U.S. Attorney’s Office for the Southern District of New York; and the FBI, which led the prosecution of Madoff’s crimes and the recovery of assets supporting the forfeiture in this case. The MVF is overseen by Richard Breeden, former Chairman of the U.S. Securities and Exchange Commission, who serves as Special Master appointed by the Justice Department to assist in connection with the victim remission proceedings. Mr. Breeden and his team at MVF have been essential in working with the department to evaluate over 66,000 remission petitions involving billions in cash flows, and to compute each victim’s fraud losses to enable payments to be made. More information about MVF and its compensation to victims of BLMIS is available at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions. Further questions may be directed to the MVF at 866-624-3670 or info@madoffvictimfund.com. Returning assets to victims of crime is a primary goal of the department’s Asset Forfeiture Program. Since 2000, the victim compensation program has returned more than $12 billion in forfeited assets to victims. MLARS, through its Program Management and Training Unit, coordinates with U.S. Attorneys’ Offices, federal law enforcement and regulatory agencies, and private parties to ensure consistent and efficient return of forfeited assets to victims.Kingfish note: Meanwhile, back in Mississippi, the Receiver in the Lamar Adams case has not sued a single investor who received ill-gotten profits from the Ponzi scheme.
20 comments:
I'm glad Madoff's victims have nearly been made whole, but I agree with you, KF, that something is rotten with the Lamar Adams situation.
Correction: His name is Bernie Made-Off (Well, it should be).
Why sue investors who were not on the wrong side of the caper? You don't know to what extremes or through what personal travails they might have gone through in order to raise investment cash.
"Ill Gotten" is a nebulous and curious adjective.
Worth repeating: "Meanwhile, back in Mississippi, the Receiver in the Lamar Adams case has not sued a single investor who received ill-gotten profits from the Ponzi scheme."
A few big operators with deep pockets.
In fairness to the Adams team a recovery like that takes teams of forensic accountants and researchers. Very complicated to claw back gains from hundreds of investors over multiple years. I am certainly not an expert, but I am not sure we have the resources to pull that off?
KF is correct
This substantial percentage recovery was due to the receiver's willingness to pursue and clawback money from early investors who held ill gotten gains at the expense of later investors.
This is something the Madison Receiver will not do.
I believe it may have something to do with a conflict of interest
Where does this money come from? Thin air, I expect. Green ink on paper. Big money investors made whole again, what a heart-warming Hanukkah season feel-good miracle story. Seriously, if the feds make any pronouncement, I’m supposed to believe it why?
There's more out there just like him.
Additionally, the Receive in Lamar Adams is receiving a percentage of the recover as attorney's fees, so the victims will never be made whole.
10:39, do you have a problem with the arrangement whereby the receiver is compensated for the effort in recovering funds? I wonder, what other option would you propose? Who would be willing to pursue a recovery absent compensation? And, how else will the victims achieve ANY recovery but for the arrangement for fees?
9:24, you need to do the research on how ponzi schemes work. There are no profits, so people who withdrew ‘profits’ have to pay them back to make everyone as close to whole as possible. Judge Reeves should have appointed a receiver who had the stones to go after the ponzi scheme winners.
The Dollar has lost 32% of its value since 2008. (and that's the official number, which generally and purposely UNDERestimates Inflation) So, unless the figures endlessly repeated in this release, reflect "adjusted for inflation" percentages, then I'm not thinking the victims are anywhere near being made whole. Too, victims would have incurred all manner of associated expenses/losses (liquidating assets at disadvantageous times, among other things).
Still, this is better than the messes Austria and Switzerland have managed to make, in compensating Holocaust victims for stolen assets. And it's been a whole lot faster - a matter of years, instead of generations. And this is a whole lot different from the blatant theft of General Motors from its shareholders. So, putting things in perspective...
The difference probably isn't in the receiver, it's the size of the scam. Bernie Madoff couldn't spend all the money he made. The total lost to his spending and administrative costs of recovery were somewhere around $275M (really probably more than that because Madoff was already rich and probably had legitimately gained assets to put towards recovery). Lamar Adams probably spent a much larger percentage of the income he took in, so there was going to be much less to recover.
Also, the small size of Adam's investments probably make recovery hard. Madoff had plenty of individual and institutional investors that had 6 and 7 figure profits to claw back. Adams was taking investments as small as $100k. Somebody that put $100k in at the beginning and constantly rolled it over the entire 7 years probably had a $100k of profits to recover. Probably much more common would be investors that had $100k left in over 2 or 3 years. Even if they were lucky enough to redeem before it fell apart, you're looking at $25k to $30k to recover. Not easy to recover that economically if people don't want to cooperate.
People were putting as low as $100,000 into the Adams Scheme. Even if they were in early enough to get all their money back and some profit, they were probably sitting on $20k or $30k in profit. If they don't want to cooperate, not the easiest thing to economically recover.
For the last 10+ years of the Madoff scheme, there was a finding that the investors knew or should have known they were participating in a fraud.
That's why their "profits" were disgorged, and that's the difference with the Lamar Adams timber scheme.
I never said the Receiver should work to pursue a recovery absent any compensation, and the suggestion that I did is absolutely ridiculous. I was simply saying that the Receiver is being compensated on a contingency basis, so the victims will never be made whole. The Receiver should be paid, and paid well, but her fees should be capped at the end of the day. She is the only winner in this situation.
2:35: I don't believe the receiver is working on a contingency fee basis, though I have seen this information repeated a lot.
Apparently, she was chosen because she and her team agreed to work on a hourly basis, and cap the fees for partners at $325 an hour, while other candidates wanted for charge in excess of $1,000 per hour.
The order appointing the receiver can be found by visiting the link below, and clicking on "receivership order."
https://www.sec.gov/enforcement-litigation/litigation-releases/lr-24228
Meanwhile: William B. McHenry...
$325/hour? A fella could have a pretty good time in Vegas with that kind of money.
"$325/hour? A fella could have a pretty good time in Vegas with that kind of money."
Not for long. Have you ever been to Vegas?
@6:59 PM - Yes, at least 10 times, and I have seen Dr. Strangelove 2-3 times. (Get it?)
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