If you watch television, read the newspaper, or surf news sites, you’re sure to have hears about the $50 billion Ponzi scheme masterminded by Bernard Madoff.
The $50 billion in losses is merely an estimate. Some experts (like me) think that the actual losses will be much higher.
Stockbroker Fraud Blog discusses several options victims have for recovery:
- Securities Industry Protection Corporation (SIPC) could provide up to $500,000 per account. (Although I think the customers of the “investment advisory” business which is allegedly where the Ponzi scheme occurred won’t qualify. Only regular brokerage accounts would qualify. And fraud doesn’t qualify either, only unauthorized trading or theft. It will be interesting to see how this one pans out.)
- Victims could go after Madoff personally, seeking to get their hands on his personal or company assets.
- There may be third parties that could be liable to the victims.
- Victims might be able to get some money back from the IRS for taxes paid on phantom capital gains in prior years. There’s also a possibility of claiming a theft loss on tax returns.
So there is some potential recovery for victims, but that wouldn’t make me feel all that good, however. Investors are sure to lose money no matter how you slice it. Now they’re waiting to see how much they will lose.
I talked about this fraud and Ponzi schemes in general on CNBC’s On the Money last night. Check out the videos here.
Hi
Obviously things are moving at a pace and are becoming more complicated. Would be good to see the ACFE publish some views on what should be happening about reforming Regulation.
Best Regards,
WHAT IS A PONZI SCHEME?
According to SEC filing dated October 30, 2006 – Sidney D. “Trip” Camper was fired from Elandia Inc. when the Ahkoy family fell victim to investment fraud headed by Elandia’s Allen Stanford and Trip Camper. Forced to resign by Allen Stanford himself (see SEC link below), Trip Camper moved on to his next victim, a private company in Los Angeles. In true School of Stanford form, Trip Camper promised to take the private company public. Instead, Trip Camper recruited a new partner in crime, Ed Berkhof and together they formed a “shell” holding company, milked the private company of thousands of dollars, illegally obtained company stock and pretended to be the company owners- and owners of all the assets. By pretending to own the company’s assets, Trip Camper and Ed Berkhof worked to dupe private investors out of capitol that they used to pay themselves and their creditors. This is a Ponzi Scheme. Instead of taking the company public, Trip Camper and Ed Berkhof spent thousands of dollars, took a trip to London on a company American Express card, performed a hostile takeover, and ruined the honest, profitable company. Since then, the Ahkoy family is suing Elandia Inc., Allen Stanford is in Federal prison, and Trip Camper is still using The Stanford Group as a reference on his curriculum vitae. FBI will hopefully catch up with Allen Stanford’s den of thieves. Don’t let this happen to you.
http://www.secinfo.com/d14D5a.v6Q98.c.htm